Keystone's Morning Wake-Up 3/17/14; Empire State; Industrial Production

Banzai! The BOJ and Fed continue to control the markets. The dollar/yen was at 101.31 last evening with the S&P futures -5. The BOJ bludgeons the yen sending the dollar/yen to 101.50 which creates S&P's +3. Then, about 3 or 4 hours ago, the BOJ beats the yen further sending dollar/yen to 101.85 so the S&P futures catapult to +12. The dollar/yen backs off to 101.71 right now so the S&P futures are +8. Traders yawn at the Crimea referendum which approves secession. Traders appear relaxed and care-free. As Alfred E. Neuman quips, "What, me worry?" The EU finance ministers are meeting to discuss sanctions against Russia but the moves appear meek and timid. Thus, markets are not pricing in any risk figuring the status quo will continue. Any sanction announcement from the EU, the West in general, the US, and/or the G7 will move markets.

The SPX is below the 200 EMA on the 60-minute chart and the 8 MA is below the 34 MA on the 30-minute chart both signaling bearish markets for the hours ahead, however, the bulls are going to try and reverse the 200 EMA cross now at 1848 (see this morning's chart). For the SPX today, starting at 1841, very strong support, the bulls need to push up through 1852 to accelerate the upside. The S&P futures are gunning for this goal. The bears only need less than one point lower, to drop under 1841, to accelerate the downside. A move through 1842-1851 is sideways action. March began at 1859.45. The year began at 1848.36.

Keybot the Quant remains short. Volatility remains key. Pay attention to the bull-bear line in the sand at VIX 14.15. VIX begins at 17.82, well above, but a big market rally would occur if VIX drops under 14.15. If VIX loses 14.15, and the SPX prints above 1852, and both remain bullish, Keybot will likely flip to the long side. Watch the VIX 200-day MA at 14.72. This is a key market metric. Market bears are fine and have no concerns as long as VIX remains above the 200-day MA. If VIX falls under the 200, this will be the first signal that the bulls plan on running higher with a strong market rally. The bears need either XLF 21.65, GTX 4856 and/or RTH 59.40 to receive downside juice.

A full moon occurred yesterday and markets are typically bullish moving through a full moon so the futures receive this memo. A Bradley turn date is Saturday, 3/22/14. Bradley's do not predict market direction, only that a trend change, or acceleration, typically occurs in a +/- 7-day window, and more typically, a +/- 3-day window. Thus, the Bradley window is open for a market trend change to occur between now and Friday, 3/28/14, and more specifically, between tomorrow, 3/18/14, and next Wednesday, 3/26/14. So Chair Yellen, at her debut FOMC meeting on Wednesday this week, may create the catalyst to kick in the Bradley turn. The SPX is flat for six weeks through 1840-1880 so flip a coin on direction. For weeks, the SPX has been trending with up Monday's and down Tuesday's. Last week was a down Monday and Tuesday.

Empire State Mfg Index is 8:30 AM. TIC foreign investment data is 9 AM and very key to see if China and/or Russia holdings are changing. Industrial Production is important at 9:15 AM and will bump futures one way or the other. The NAHB Housing Index hits at 10 AM. Watch VIX as described, the SPX 200 EMA cross on the 60-minute, and SPX 1852-1853 and 1859 resistance levels, to gauge market direction today.

Note Added 8:47 AM:  Empire State Mfg Index is weaker than expected at 5.6 but components are bullish. S&P +8.5.

Note Added 9:54 AM: TIC data is moved to tomorrow. Industrial Production is better than expected. EU announces sanctions that are barely a slap on the wrist so equities explode higher. Shorts cover. Machines drive all indexes uniformly +1.1% higher. SPX testing the 1859 resistance. The 20-day MA is 1855.27 so the bulls have a feather in their cap. The SPX also moves above the 200 EMA on the 60-minute at 1845.24 signaling bullish markets for the hours ahead. The 8 MA remains under the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead. VIX is 15.59 remaining above the 200-day MA at 14.72 and important bull-bear line in the sand at 14.15. Market bears are fine unless the VIX loses the 200-day MA.

Note Added 10:03 AM: The housing data is a touch better than expected on the headline number but digging down, the future sales projections turn sour. SPX moves up through 1859.45, the starting number for March. Next resistance is 1868, 1871, and very strong resistance at 1874. Bears need to spank price under 1859 right away, otherwise, price will likely want to move up to 1868 and perhaps higher. VIX 15.37. Dollar/yen 101.80. Banzai!! The BOJ is the best friend of long traders. The 10-year yield remains flat at 2.67%.

Note Added 1:57 PM:  Dollar/yen is 101.63 slightly lower off the highs so the SPX drops from the HOD 1862.30 to 1858.55 now printing. Price is sticky around the strong S/R and March starting number at 1859.45. The closing price will be important in relation to this number. Also the 20-day MA at 1855.24. Semiconductors are outperforming as traders buy any chips they can find with both hands; even potato chips and poker chips. The sales of electronics is not particularly robust so are they buying based on fundamentals? A chip is in almost every product nowadays so semiconductors are a key market indicator. All traders know this. Perhaps traders buy because they believe that semiconductors should lead the market higher if the economy improves. Buying the cart knowing the horse is coming any minute. Just like the long traders buy financials for the same reason; the jury is out as to whether or not the fundamentals support a gangbusters economy going forward. VIX is 15.74 with a LOD at 15.37. Intraday, with the SPX recovering a few handles trying to move back to the highs, VIX does not move lower and instead sideways with some upside buoyancy. GTX is 4888. Keybot the Quant identifies GTX 4862 as the bull-bear line in the sand and this is only 26 points away. If GTX falls under 4862, this will create market negativity and selling. This relationship will be in place for the days ahead so keep an eye on this parameter to determine broad market direction. The 10-year yield is 2.69% creeping a touch higher. XLF is fighting to hold 22.

Note Added 2:54 PM:  SPX 1859.45 is a key pivot today. VIX 15.64. GTX 4883 with new LOD at 4879 only 17 points away from causing negativity. The SPX is above the 200 EMA on the 60-minute and the 8 MA is above the 34 MA on the 30-minute, both flip-flopping today now signalling bullish markets for the hours ahead. The Dow is teasing around the 20-day MA at 16245.92, price is at 16248.08, so this will be telling depending on which side it closes. Dollar/yen 101.75 so the SPX is a point or so higher. You can calibrate the stock market to the move in yen. The BOJ and Fed central bankers control the market. The volume is light, stocks are heading higher on vapor and fumes with the volume run rate at only 60% of a day's average expected volume.

Note Added 3:37 PM:  Dow 16245. The 20-day MA 16245.