Keystone's Morning Wake-Up 5/29/13

Mortgage Applications are weak again for three consecutive weeks. This near real-time data carries more water than other lagging housing sector indicators. Cash buyers are supporting the housing recovery.  Hedge funds and other speculators are buying, not Jane and John starting a new life together.  This investor money is waiting for the influx of buyers so they can take a mark-up and move on. What happens if the housing recovery stalls and all these high-rollers realize that the buyers are still a few years away?  There is no other economic data today. Fed's Rosengren will provide QE spin at lunch time and the 5-Year Note Auction is at 1 PM. The Treasury auctions will gain interest with the up in yields occurring. Dollar/yen dropped under 102 overnight (stronger yen) down towards 101.20-ish creating the weakness in the S&P futures.

Copper, commodities and volatility remain important. Watch JJC 41.58, GTX 4785 and VIX 13.15. All three are bearish. The bulls need to bring at least one of these back into their camp so they can send equities higher again.  The bears will try to push the utilities, UTIL, under 481 to bring on more downside energy. UTIL is 492. For the SPX today starting at 1660, the bulls need to move above yesterday's high at 1674 to regain upside mojo. The bears need to push under 1653 to accelerate the downside. A move through 1654-1673 is sideways action today.  The S&P futures are off -9 a few minutes in front of the opening bell so it looks like the bears will receive the nod at least to begin the day. The 1649-1650 support is important. Simply lump these ideas together into a confluence at 1649-1653 for today. Bulls are okay staying above 1653. Bears will start to do more serious damage under 1649. A bull-bear fight will occur if price dances through the 1649-1653 area. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead but watch this closely during the first couple hours to see if a negative 8/34 cross occurs (reference this morning's chart). If the markets sell off but the 8 MA does not cross under the 34 MA, then the bears got nothing.

Note Added 9:32 AM:  SPX loses 1653 so price accelerates lower to test the 1649 support. Bounce or die from this critical level. VIX is up to 15.26 so watch for larger and larger intraday and day to day points swings in the broad indexes.

Note Added 9:37 AM:  Bounce.  TRIN plummets to 0.66 (bullish under one) so the SPX pops to 1652.

Note Added 9:43 AM:  Second test of 1649 on tap. There's failure. SPX 1646 handle now. TRIN up to 0.90. Bears need to stay sub 1649 and move the TRIN above one. Dollar/yen is down to 101.14 so yen is stronger creating the market selling. JGB 10-year yield is 0.942%.

Note Added 10:03 AM:  Dollar/yen up to 101.23. TRIN uber low at 0.57. Say no more. The slight weakening in the yen from the 101.14 dollar/yen results in a few up SPX points. The SPX may now settle in for the fight through 1649-1653 today. The 10-year yield is 2.14%.