Keystone's Morning Wake-Up 8/20/13; HD; BBY; DKS

India continues to try and stabilize the rupee as the dollar/rupee currency pair moves above 64. Indonesia and Thailand currencies are selling off. The Indonesia Jakarta Index is crashing -10% in the last two days. Fear grows over a currency crisis in India or Brazil. The Sensex loses another one percent. The India contagion is spreading across emerging markets with Asian indexes down from 1 to 2% or more overnight. Traders are exiting copper, commodities and basic materials. BHP loses -3.2%.  Glencore drops -4.0%. In Egypt, the Muslim Brotherhood leader, Mohamed Badie, is arrested for insighting violence. The Army continues to crackdown on the Mursi-supporters.   The 10-year yield drops to 2.81% losing almost 10 bips in the last few hours (2.90% yesterday). HD earnings beat but S&P futures are flat to down. BBY earnings beat on top and bottom lines. JCP earnings are a miss but the stock pops +5% anyways. Hedge funder Kyle Bass goes long JCP so traders are looking for a bottom.

Watch UTIL 483, VIX 14.21, XLF 20.13 and RTH 54.00 as highlighted in recent days. All four remain bearish and are creating market negativity. If any one turns bullish, that will signal a recovery rally on tap. For the SPX starting at 1646, the bears only need a smidge of red in the S&P futures to accelerate the downside. Bulls need to push 13 points higher to 1659 to regain their upside mojo. A move through 1647-1658 is sideways action today. Chicago Fed Activity Index is 8:30 AM. The full moon is 9:45 PM this evening and markets tend to be bullish moving through the full moon (reference the Other Market Signals page). Pay attention to the VIX 200-day MA at 14.68.  Bulls are toast moving forward if the VIX stays above 14.68. Bulls will recover today if they can push the VIX under 14.68, and will signal a recovery rally in progress if VIX loses 14.21. Keystone has a gas leak on the property, and the crews are now arriving to make the pipeline repairs, so updates may be sparse today.

Note Added 7:48 AM:  S&P futures are bouncing to +4 signaling a bounce for the opening bell two hours away. The HD and BBY earnings are in line or better which helps improve the market tone.

Note Added 8:33 AM:  S&P's +3.5.  Dow +27.  Nasdaq +9. DKS earnings lay an egg showing that the regular consumer is delaying purchases of new tennis shoes and sporting equipment, instead opting to eat a dinner of franks and beans. No one is buying books with BKS receiving a -10% beating. Both DKS and BKS should create further pressure on the retail sector offsetting the HD and BBY joy. The triple X SPXS ETF is under a 5:1 reverse stock split so that price will flip five times higher today (and any shares owned will decrease by five times) at the opening bell.

Note Added 10:29 AM:  SPX 1651.02.  The 1652 R is holding, for now. SPX S/R is 1685, 1675.24 (200 EMA on the 60-minute), 1675, 1669, 1666, 1661, 1659, 1657.62 (50-day MA), 1655-1656, 1652, 1649, 1647, 1639-1640, 1639.76 (20-week MA), 1636, 1633.03 (100-day MA), 1632 and strong support at 1627. Boiling these S/R numbers down to identify the important clusters are 1685, 1675, 1669, 1666, 1657, 1652, 1649, 1639-1640, 1633 and 1627. Thus, if the bulls can push up through 1652, a test of the 50-day MA should be on tap. Look at the big jump in UTIL now at 484.51 closing the trap-door at 483. XLF, VIX and RTH remain bearish but UTIL will allow a recovery rally. VIX is now fighting at the 200-day MA at 14.68. Bulls will receive more upside market fuel if volatility falls under the 200-day MA. Keystone took profits on SCO exiting this short oil ETF trade. Will consider reentering although Egypt is quite the unpredictable hot spot lately with social unrest occurring in the vicinity of the Suez Canal.

Note Added 10:39 AM:  VIX drops to 14.60 under the 200-day MA at 14.68 helping bulls but remains bearish overall for markets above Keybot's 14.21 level.

Note Added 10:59 AM:  UTIL 484.40. Watch the RTH 53.94 bull-bear line in the sand (use 53.94 instead of 54.00), now at 53.92 knocking on the door. Equities will continue higher if RTH moves above 53.94, if not, then sideways action should continue. TRIN 1.29, bearish for today.

Note Added 11:25 AM:  RTH is at 53.91 struggling to move higher. UTIL is 483.75 slipping a bit.  Equities continue higher if RTH exceeds 53.97, 54, and higher. Markets drift sideways if RTH stays under 53.97 and UTIL above 483. Markets will begin selling off in force again if the UTIL 483 trap-door reopens. VIX keeps fighting at the 200-day MA at 14.67. SPX HOD 1654.79 so watch this number closely.

Note Added 11:33 AM:  UTIL is 482.86 so the 483 trap-door reopens; see if the bears can hold UTIL under, or not. If so, markets should weaken. Bulls need to regain 483. SPX prints a new HOD at 1655.77. The 50-day MA is 1657.72.

Note Added 11:47 AM:  UTIL fails but the RTH is goosed over 54 and VIX is pushed under the 200-day MA. SPX runs higher to a HOD at 1657.46. The 50-day MA is 1657.75 only 29 pennies away, a critical back test.  Equity markets will now either bounce (SPX overtakes the 50-day), or die.

Note Added 6:19 AM on 8/21/13: It died. The SPX kept fighting at the 1658-1659 yesterday and then ran out of gas, collapsing to 1652 into the closing bell. The price action satisfies a back test for the 50-day and since price could not move above, it is a bearish indication. UTIL, RTH, XLF and VIX all remain in the bear camp causing market negativity and these four parameters will continue playing a key role this week.