Keystone's Evening Nightcap 4/15/14; Housing Starts

The SPX covers 80 points distance today, 3% of its total value, in the up and down roller coaster ride. This is unique behavior for a broad market index. Equities recover strongly off their lows but the 10-year yield remains subdued at 2.63% indicating a weak economy despite the bullish euphoria. Copper and gold collapsed today. Traders ignore Dr Copper as well as the Ukraine turmoil. All that matters to bullish traders is the Fed and BOJ money printing. The BOJ stabs the yen this afternoon so the jump in dollar/yen from 101.50 to 101.85 provides the bull fuel. The VIX drops from above 17 to under 16 providing bull fuel. The RUT and Nasdaq continue to threaten their respective 200-day MA's as described in today's charts but the bulls are able to keep the party going.

Semiconductors and financials provide the bull fuel. The SOX drops under 563.10 creating negativity but the bulls sent SOX back above 563.10 to create market upside. Bears need SOX under 563.10 to create market weakness or they got nothing. The XLF is 21.65 under the 21.77 line in the sand identified by Keybot. The market rally will be sustainable if XLF moves above 231.77. Keybot the Quant is short but if the XLF moves above 21.77 and the SPX above 1844, Keybot will likely flip long confirming a sustainable rally. This does not require much effort so the bulls have the markets on a silver platter to begin the Wednesday session.

For the SPX in the Wednesday session starting at 1843, bulls only need one point, to push up through 1844 and the upside will accelerate to tackle the strong 1848-1851 resistance level. The year began at 1848. The 1841 is strong support. The 50-day MA is 1846.75 so the bears have a tiny feather in their caps for holding this resistance, so far. The 20-week MA is 1831.19 so the bulls win big today regaining this level. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead (reference today's chart for further study). The SPX is below the 200 EMA on the 60-minute chart at 1854 signalling bearish markets for the hours and days ahead. As long as the bears remain under 1854 they are fine. Above 1854 and the bulls will be charging back to the all-time highs.

The BPSPX remains on a market sell signal and continues lower despite the up moves in the indexes this week. Copper collapsed today but traders do not pay any attention to Dr Copper the key indicator for the global economy. Traders also continue to ignore geopolitical events. Watch the overnight S&P futures since a +1 is all it takes for the bulls to launch higher with an upside market orgy for Wednesday. Watch SOX 563.10 and XLF 21.77 in the Wednesday session too see who wins moving forward. Housing Starts in the morning are a key market barometer and will set the market tone.

On trades, Keybot took profits on the TWTR bounce today closing this long position. The positive divergence highlighted a few days ago creates the rocket launch. Twitter likely has more upside ahead; sideways to sideways up. Keystone also bot more ARO for this ongoing long trade. Also bot more SSNI. Also bot more MGPHF. Keystone will likely hold SSNI and MGPHF indefinitely so they will be added to and simply left on the back burner as time moves along.