Keystone's Morning Wake-Up 8/15/13; WMT; CPI; Empire State Mfg; Industrial Production; Philly Fed

WMT earnings lay an egg with weak forward guidance. WFC is down in early trading on Buffett's quarterly disclosures, where news releases initially indicated that the position was decreased, but in fact Buffett holds the WFC position in place with a slight increase during the quarter. CSCO earnings were in line last evening but the guidance was lowered. In addition, CEO Chambers says the global economic environment remains challenging and inconsistent and plans to axe 4,000 employees, about 5% of the Cisco workforce. LNKD should do better since they should see 4,000 new resume's pop up on their site. S&P futures are weak on the CSCO and WMT news indicating a drop of about 8 points in the SPX for the opening bell a couple hours away.

There is a lollapalooza of economic data on tap.  Jobless Claims, CPI and Empire State Mfg Survey hits at 8:30 AM EST. TIC data, which shows foreign investment interest in the U.S., is 9 AM. Industrial Production is 9:15 AM.  Housing Market Index, E-Commerce sales data and the Philly Fed Survey is 10 AM so expect a market stutter step one-half hour after the opening bell. Natty Gas inventories are 10:30 AM. KSS, EL and JWN retail earnings are key today especially in light of the Gloomy Gus WMT earnings released a short time ago. Copper is getting thwacked after several very strong up days.

Keybot the Quant is long but all that is required is a drop of the SPX under 1685 to trigger Keybot to flip to the short side. If the SPX gaps down 10 or 12 points or more, Keybot will likely not flip short right away and instead delay the move up to 90 minutes. Watch SOX 473.07 and XLF 20.12 as the two key market direction drivers. Bears need to keep semi's negative while pushing XLF under 20.12 to receive more bear fuel. Bulls need to keep financials elevated while pushing the SOX above 473.07. Keybot is also tracking VIX 14.20, RTH 54.15 and UTIL 483. All three are creating market bullishness but if any of the three fail, the markets will take another strong leg lower.  UTIL 483 represents a trap-door for equities if it fails. UTIL is at 493 comfortably 10 points above so this is not a direct worry right now, however, keep a close eye on UTIL 483 since if it fails, the SPX would likely fail 20 to 50 handles in very quick order.

For the SPX today, the bears only need one point lower, to drop under 1685, to accelerate the downside and likely trigger Keybot to the short side. The bulls need to move above 1695 to regain their momo. A move through 1686-1695 is sideways action. The 8 MA remains under the 34 MA on the SPX 30-minute chart signaling bearishness ahead. The tight standard deviation bands on the SPX daily chart are not yet resolved (see this morning's chart) but should make a decision today or tomorrow strongly pushing equities in one direction or the other. The Dow's tight bands appear to be resolving to the downside and may serve as a leader.  Watch the SPX 20-day MA at 1693.21. Watch the 200 EMA on the 1-hour chart at 1679.89 since this signals big trouble for the broad indexes. Equities are set for a sharp drop at the opening bell, however, watch SOX 473.07, XLF 20.12 and the 8/34 MA cross on the 30-minute chart for clues. The site is experiencing technical difficulties today already losing the Internet signal three times this morning.

Note Added 7:54 AM:  S&P futures -10. Dow -90.  Nasdaq -22. A gap-down open appears to be on tap. Copper is down -1.5%. European markets are down but only northern Europe is trading, in thin volume, since the continent is on holiday.  The 10-year yield is 2.74% now at the highs this year. Lots of drama today. The TNX charts posted yesterday (type 'TNX' in the search box to the right to bring the charts up or scroll backwards to find them) indicate that yields should top out in here so the days ahead will be interesting. Utilities and other interest-rate sensitive stocks will be sold off if yields rise. WFC remains -0.5% pre-market which may cast a dark shadow on financials (XLF) today.

Note Added 9:01 AM: The 10-year yield is at 2.80%. S&P's -14. Dow -120. Nasdaq -31. Brent oil 111+ on Egypt violence. WTIC crude oil approaching 108.