Keystone's Morning Wake-Up 5/2/13; ECB Rate Decision Imminent

The HSBC China PMI verified the official PMI showing slower growth in manufacturing activity. Commodities are stumbling along sideways today, trying to base, with copper and oil receiving dead cat bounces after the -3% drubbings yesterday. The ECB Rate Decision is 7:45 AM EST followed by the Press Conference at 8:30 AM. Draghi's words today will move markets. Germany's DAX is back above 7900. The market bears flexed muscles yesterday with the higher volatility but will need to see weakness in other sectors such as financials, retail and/or semiconductors to begin a more substantial market down move. The Fed's announcement provides something for everyone; bulls are waving the 'increase' word for QE and the projection that the economy will remain weak while the bears are waving the 'reduce' wording for QE and the need for Congress to become more involved. Chairman Bernanke must realize that the Fed's programs are not helping and may actually be hurting the economy; many analysts now expect GDP to drop to 1.0% or 1.5% for H2 2013. Bernanke also bowed out of Jackson Hole this summer which should send a message that the Fed will likely stay status quo or taper away as time moves along, however, the Fed is backed into a corner now and the doves (Bernanke, Yellen, Dudley) may simply increase QE until the wheels fall off.

VIX 14 remains key; bears win if the VIX stays above 14, bulls win if the VIX drops under 14. For the SPX starting at 1583, the bulls need to recover to 1598 to accelerate the upside and begin the move to the 1620's.  The bears need less than two points lower, under 1581, to accelerate the downside. A move through 1582-1597 is sideways action today. S/R is 1593, 1589, 1586, 1579, 1576, 1572.60 (20-day MA), 1569, 1565, 1563, 1561, 1556, 1554.00 (50-day MA), and strong support at 1552-1553. The SPX initial move today either above 1586 R or below 1579 S will set the tone. The 8 MA is under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours and days ahead so watch this closely for market direction today. The 8 MA is at 1587.31 so as long as the SPX stays under 1587, the bears will maintain market selling pressure.

The Challenger Job-Cut Report is minutes away. At 8:30 AM, futures will be impacted by Draghi's press conference in Europe as well as Jobless Claims, Productivity and Costs and International Trade data in the States. Natty Gas Inventories are 10:30 AM. The earnings parade continues with CBI, GM-auto's, GNRC-generators, HK, IP-paper, K, LNKD and MHK-housing, all of interest.

Before Draghi carries the tablets down from on high, and delivers the message to the waiting masses, the S&P futures are up +4, Dow +37 and Nasdaq +7. The 10-year yield is 1.64%. The euro is 1.3157. The dollar/yen is 97.32.  WTIC crude oil is 91.47.  Gold is 1457.

Note Added 7:50 AM:  The ECB cuts by one-quarter point lowering the rate to 0.50% as expected. The markets yawn, so far.  S&P futures are up +6, Dow +51 and Nasdaq +12.  The 10-year yield is unchanged at 1.64%. The euro is 1.3199 (moves higher).  Thus, the higher euro = higher equities asset relationship (and lower euro = lower equities) is in in tact. The dollar/yen is 97.29 (flat). Crude oil is 91.67. Gold 1458. Draghi's press conference at 8:30 AM will tell the tale since he will either announce more programs to help the flailing European economy, or not.

Note Added 8:53 AM:  Jobless Claims are lower. Draghi hints at keeping the door open to additional programs but is playing coy as the Q&A begins.  Without a firm commitment to more easy-money good news, the S&P's drift a touch lower from near +10 to now +7. The 10-year yield inches up to 1.65%. The euro is 1.3158, very jumpy, up to 1.32 then back down; note that it is exactly where it started at before today's ECB drama.  The dollar/yen is 98.12 experiencing a robust move higher over the last hour reflecting the weakening yen, and, considering the buoyant futures over the last hour, the BOJ is once again pumping equities higher with the weaker yen.  Crude oil is 91.37.  Gold is 1464.  There is a slight market exhale on Draghi's comments with European equities moving a touch lower.

Note Added 9:17 AM:  The euro drops to 1.3086.  Note the asset relationship down euro = down equities.  The dollar/yen is 97.95 moving down (stronger yen). S&P's are now +5.  The 10-year yield has dropped back down to 1.64%. Gold 1572. The following asset relationships should serve as a guide today; happy bulls are higher euro, higher dollar/yen, weaker yen, higher 10-year yield, higher commodities, higher equities, and, happy bears are lower euro, lower dollar/yen, stronger yen, lower 10-year yield, lower commodities, lower equities.