Keystone's Morning Wake-Up; Good Friday; US Markets Closed Until Monday

US markets are closed today in observance of Good Friday. Easter is Sunday. Markets reopen on Monday. This week results in a strong upside market move negating the downside action the previous week, however, on far lighter volume. The MS and GS earnings pre-market yesterday set the happy tone for financials which in turn set a happy mood for equities. SNDK earnings were better than expected so this pumps the chip stocks. Semiconductors catapult higher providing bull juice and slapping the bears in the face. The energy sector is the new favorite son jumping over +3% this week.

The 10-year yield pops 8 basis points to 2.73% settling at 2.72% representing a risk-on trade. Money flows out of notes and bonds (creating lower prices for Treasuries and correspondingly higher yields) and into stocks. A back kiss of the sideways triangle on the TNX daily chart (scroll back a few pages or type TNX into the search box at the right) at 2.67%-ish was expected, which creates a bounce, or die pivot, and yield decides to rocket launch higher back inside the safety of the sideways triangle. Looking at that chart, which shows the death cross, note how yield tagged the top of the triangle at 2.73% and fell. The range is 2.67%-2.73% of the triangle so note and bond bears, inflationists, will cheer for 2.73% and higher. Note and bond bulls, deflationists, will cheer for a drop under 2.67% again. The range keeps narrowing skinnier and skinnier to 2.68%-2.72%, then 2.69%-2.71%, and bingo, a decision has to be made next week for the 10-year Treasury.

The US and European docile approach to Ukraine causes traders to remain complacent concerning geopolitics. Apparently, Putin will be allowed to take East Ukraine since the West does not have the will to defend the region. Putin threatens to cut off natural gas supplies creating a wild +5% pop in natty gas. He says he will wait a month, however, jerking the string of the natty gas puppet any way he pleases. One-third of Europe's energy needs come from Russia.

The broad markets end mixed for Thursday. The Nasdaq and RUT small caps ran higher; biotech backed away but is up strongly for the week. IBM creates a drag on the Dow contributing 50 negative Dow points (take any Dow component point move and multiply by a rule of thumb of 8 to note its affect on the Dow). AXP and UNH blue chips also created weakness. The XLF stays above 21.77 so higher financials, along with higher semi's and lower volatility, all join to create a triumphant market rally this week.

The bulls are pushing copper higher already laying ground work for next week so start watching the 'other yellow metal' more closely in the days ahead. The SPX dropped into the 1858-1859 support zone that the bears needed and lower, but the bulls simply back tested and then ran higher to close the SPX at 1865. The SPX broke out above the 20-day MA at 1858.51. Also the 200 EMA on the 60-minute at 1854.78 which signals bullish markets for the hours and days ahead. Bears got nothing unless they push back under these critical 1858-1859 and 1855 support levels.

Bulls perform a strong comeback albeit on light volume and benefiting from the seasonal bullishness and happy talk concerning Ukraine. Last weekend the thought was raised about a wall-to-wall bull run, which occurred. The full moon was Tuesday and markets are typically bullish through the full moon nearly 70% of the time. During OpEx week the path from Tuesday to Wednesday is typically bullish. Markets are bullish the two days in front of a three-day holiday weekend. All true this time around. So seasonality favoritism overcomes the negativity associated with the up move on weaker volume. The BPSPX chart (see this morning's chart) remains on a sell signal.

On trades, Keystone added to the ongoing ARO (long retail), SSNI (long power), SMN (short basic materials) and SJB (short high-yield) long trades. ARO has to make a decision next week. Either it wants to perform a successful positive divergence bounce like JCP or will result in a crumbling mess like RSH. Note the ARO weekly chart shows a slipping money flow so some additional time, a few weeks, will be needed to place an official bottom. In the very short term, ARO should bounce from the daily chart. Also bot FUEL opening a new long position. FUEL is bludgeoned from 73 to 35 and is set up or setting up with positive divergence on the daily chart so it is sitting on the launch pad. How appropriate that its name is Rocket Fuel. A launch is expected, however, the weekly chart remains weak so in this trade timing is everything. A very short term bounce is expected then likely more weakness but FUEL should base as the weeks play out and recover higher and can likely be considered as a longer term hold moving through the year. Keystone is watching SDRL with interest for a potential long trade but give it a few more days to simmer and it can be considered next week.

Happy Easter. Stomachs are already aching percolating from a mixture of chocolate, jelly beans, hard-boiled eggs, ham and peeps.