Keystone's Morning Wake-Up and Midday Market Action 3/28/14; Consumer Sentiment; Russian Troops Massing at Ukraine Border

The bulls refuse to give up the 1848-1851 support gauntlet! The SPX fell through the gauntlet yesterday and bounced off the 1841-1843 support and then moved above 1851 foiling the bears once again. There is only one day remaining in the month, Monday, EOM. March began at 1859 so pay attention to that level. The year began at 1848 so price decided to spend the night at 1849 between these two key levels, only one single point higher on the year. The 8 MA is below the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead. The SPX is under the 200 EMA on the 60-minute at 1853.66 signaling bearish markets for the hours and days ahead. Watch the 1853.66 like a hawk today since it tells you who is winning.

The 20-day MA is 1863.17 and 50-day is 1833.86 so the price move from this bracket chooses the winner moving forward. Key S/R is at 1884, 1878, 1874, 1868, 1863 (20-day MA), 1859 (March began here), 1855, 1854 (200 EMA on the 60-minute), 1848-1851 support gauntlet (the year began at 1848) and 1841-1843 support gauntlet, the last stop on the way lower to the low 1800's.

Volatility remains key. Note how the VIX  closed at 14.62 exactly at the 200-day MA signal line. Scroll back to study the VIX chart. Whichever way the VIX pivots equities pivot in the opposite direction. Considering the positive futures the VIX will move down at the opening bell and equities up. Keybot the Quant remains short as the daily roller coaster ride continues. The algo identifies VIX 14.39 and XLF 21.76 as the two key parameters controlling market direction currently. Bulls need VIX under 14.39 to guarantee market upside. Bears need XLF under 21.76 to guarantee market downside. Equities will float sideways today if VIX remains above 14.39 and XLF above 21.76. Bulls can also receive strength with RTH 59.60. If the VIX drops under 14.39 and the RTH moves above the 59.50-59.60 area, Keybot will likely flip long.

For the SPX starting at 1849, the bulls need to push up through 1855.50, about 6 to 7 points higher, and an upside acceleration into the 1860's will occur. S&P futures are +4 to +6 all morning long. The bears need to push under 1842 to accelerate the downside. A move through 1843-1855 is sideways action into the weekend.

There are lots of balls in the air currently affecting markets. Global traders have increased their attention on geopolitics so equities may have been pricing-in some of this potential negativity creating selling pressure. A Bradley turn date occurred last Saturday, 3/22/14, and another occurs 4/6/14 so markets are prone for some wild gyrations and trend changes. Window dressing occurs at quarter-end as funds want to show their clients that they owned the outperforming stocks in Q1 and not the underperforming stocks so this typically creates market buoyancy. With only one day remaining in the month and quarter, however, the boost from window dressing should have played out. Copper is higher this morning which will maintain equity buoyancy today.

Consumer Sentiment is 9:55 AM so markets will pivot at the top of the hour. BPSPX drops to 71.60 about five percentage points from the peak at 76.50 five days ago. The bears will receive a market sell signal on the BPSPX under the 70.50 and 70 levels so check this chart this evening. Bulls must bounce the stock market today to prevent the BPSPX sell signal from occurring.

Concerning housekeeping on trades, profits were taken on the FB short and the trade was exited. ARO was entered as a long play due to encouraging positive divergence but it may take as much as one month to bottom; it is a very dangerous and speculative knife-catch expecting a bounce. PBR is moving up very strongly and now has the attention of analysts. Brazil popped yesterday. It was interesting to witness the exact birth of PBR nine days ago with the falling wedge and positive divergence as Keystone highlighted.

Note Added 9:43 AM: Equities pop higher as futures indicated and the SPX moves above the critical 200 EMA at 1854 signaling bullish markets for the hours and days ahead. The bears need to reverse this important 200 EMA cross signal today. The SPX tested 1855.50 in quick order and pushes up through so price is in the 1860's. Dollar/yen leaps higher to 102.50 so the weaker yen sends stocks higher. Banzai! The VIX is down to 13.85 crumbling through the key 14.39 identified by Keybot so this creates strong bull fuel. XLF 22.10 continuing to cause market bullishness. RTH 59.25 continuing to cause bearishness. The SPX moves up through the March starting number at 1859 and bumps its head on the resistance at the 20-day MA at 1863.27. HOD is 1862.40. Bears are okay if they maintain price under the 20-day MA. If bulls push above the 20-day, the bears will fold like a cheap suit. Consumer Sentiment is minutes away and markets should pivot.

Note Added 10:08 AM: Sentiment is 80; flat and uninspiring but markets float higher anyway. Everything is going the bulls way today. The SPX is 1864.11 above the 20-day MA at 1863.41. HOD is 1865.11 so watch to see if the bulls can take this level out. Resistance above is 1868.

Note Added 1:51 PM: Markets pop today on the lower volatility, higher copper, weaker yen (dollar/yen was up near 103 pumping the stock market higher) and talk of Chinese stimulus. Over the last hour, the dollar/yen drops to 102.84, so equities leak lower off the top. VIX is up to 14.35 but not yet above the critical 14.39 bull-bear line. Markets will weaken significantly if VIX moves above 14.39. RTH remains bearish at 59.35. XLF is 22.09 remaining bullish. SPX is 1860 fighting for the March starting number at 1859.45. This fight through Monday determines if March is an up or down month. The SPX tested the 20-day MA at 1863 and so far the bears spank price lower for a successful bear back test. The bulls can make a statement if they finish today above SPX 1859.45 and especially above the 20-day at 1863 while keeping VIX sub 14.39. The bears can make a statement if the SPX finishes under the 1859.45 and especially under 1855 support and also under the 200 EMA described above at 1853 while moving the VIX above 14.39. Who will make a statement into the weekend? The Russian troop count on the Ukraine border is now estimated at between 50K and 80K troops. They are not there for a dinner party.

Note Added 2:03 PM:  The VIX moves above 14.39 three minutes ago. This is critical and will tell you who wins into the closing bell. Bears win with VIX above 14.39. Bulls win with VIX under 14.39.

Note Added 3:08 PM: SPX 1854.92. The important 200 EMA is 1854.13 so this critical fight for the short term direction confirmation will go into the closing bell. Dollar/yen 102.76.  VIX 14.59. The bears are making the statement with plenty more trading time available. China PMI's hit on Monday, as well as other global PMI's, so this will greatly impact markets early in the week. Also, what is Putin up to? Does he want to keep annexing portions of Ukraine to create a land bridge region of Russia to connect to his new jewel Crimea? Bulls can recover if they push VIX under 14.39. Bears can create market carnage into the closing bell if XLF drops under 21.76 (now at 22.05) but this fight will likely occur next week.

Note Added 10:04 AM on 3/29/14: The SPX finishes at 1857.62 above the 200 EMA on the 60-minute at 1854.14 signaling bullish markets for the hours and days ahead, however, this is a see-saw battle that will continue on Monday. Price closed under the March starting number at 1859.45 with one day remaining to determine if the month is up, or down. Price closed under the 20-day MA at 1863.08 providing a feather in bear caps. VIX drops to 14.41 remaining two pennies above 14.39, identified by Keybot, causing market bearishness. How does Keybot always identify these key levels before they occur? VIX 14.39 is key at Monday's opening bell and immediately tells you who wins going forward. Bulls are happy because the VIX is below the 200-day MA. Next week is insanity with PMI's and month and quater-end to begin the week and the ECB Rate Decision and Monthly Jobs Report to end the week. Pay attention to the Nasdaq ($COMPQ) and RUT ($RUT) 20-week MA's now acting as pivot points. Prices will either bounce or die. The bounce would send equities strongly higher; the die would send equities crumbling lower. A new moon peaks in a few hours at 2 PM EST and markets are typically weak moving through the new moon. Markets are typically bullish the first few days of a new month. Russian troops continue massing on the Ukraine border. Traders continue to ignore geopolitical risk and are much more concerned about what type of steaks to buy for the weekend barbecue. The darkness created by the new moon provides a benefit for a military using night-vision technology.