Keystone's Morning Wake-Up 4/29/13

Only two trading days remaining in the month so it will be interesting to see if the solid upward movement on the monthly chart continues, or not. April started at SPX 1569. Keystone's Monthly Jobs report Market Indicator (on the Other Market Signals page) is looking for a down month for April and only two days remain. This morning, the futures are solidly higher with the SPX set to gain four or more points. Traders anticipate more market-friendly talk from both the Fed and ECB this week and European equities receive a boost today as well. The Italy 10-year yield drops under 4%, a two and one-half year low. The calming and return to normalcy of rates continues in Europe, however, more due to central banker money than economic conditions.

The central banker money continues to pump the dividend bubbles in utilities, staples, healthcare,   REIT's and high-yield instruments. The commodity and copper weakness over the last two months surprisingly does not have a negative effect on markets. Equities should respond lower but the easy money keeps the broad indexes elevated.  The 10-year yield moved through a sideways 1.68%-1.80% range for much of April resulting in a drop under the range to 1.66% and 1.67%. This shows a continual interest in bonds so money is not moving from bonds to stocks but instead, easy central banker money flows into both stocks and bonds. Euro-area sentiment is weaker than expected but trader's do not care since central bankers are at the ready. The currencies are very important this week with the dollar/yen at 98-ish, the dollar basket $USD at 83-ish and the euro/dollar at 1.31-ish. Metals and commodities are higher this morning.

Volatility is key moving forward. The market bears need VIX 14.16 or they got nothing. This level was teased on Friday but the bears ran out of gas.  Bulls will take the broad indexes higher if VIX stays under 14.16. The markets will sell off if VIX moves above 14.16.  For the SPX starting at 1582, the bulls need four points to push through 1586 to create an upside acceleration. The 1589 R would likely give way and another test of the all-time closing high at 1593.37 would be on tap.  The bears need four points lower to push under 1578 to accelerate the downside.  A test of the strong 1576 S would occur where failure is likely leading to the 1560's. A move through 1579-1585 is sideways action. Personal Income and Spending data, a Fed fave, is minutes away. Pending Home Sales are at 10 AM and the Dallas Fed Mfg Survey is 10:30 AM. MAS earnings will impact the housing sector stocks.

Note Added 8:33 AM:  Personal Income and Spending shows income rising at a slower rate; in general wages are stagnant. Folks are likely getting used to not receiving raises. Spending and consumption is up. So the magic plastic (credit cards) is purchasing more of the goods these days. Also, the hidden cash economy is likely growing as folks are starting to work under-the-table more and more to avoid paying taxes. These folks are not counted on the income side but do contribute on the consumption side. The global economy needs rising wages and jobs but they continue to appear on a milk carton. Futures remain higher, S&P's +5, perhaps losing a point or two on the data.