Keystone's Morning Wake-Up 8/12/14

The key SPX S/R is 1960-1961, 1949-1951 and 1924. More specifically, 1949-1951, 1945, 1942, 1940, 1937, 1931 (August starts here), 1925 and 1924. Bulls win up through 1949-1951 (horizontal price resistance and also the 200 EMA on the 60-minute chart at 1949.62) and win big above 1960-1961 since breaking through that strong resistance will chart the path to all-time highs again; until then, the bears remain in control (under 1949-1951). 

Keybot the Quant remains bearish and is fixated on UTIL 543.81, JJC 38.91 and XLF 22.53. Utilities, copper and financials, respectively, are the main market directional drivers currently. Thus, the bears are fine if all three parameters remain in the bear camp. If one or more turn bullish, the SPX will begin climbing strongly higher. If 2 of the 3 parameters turn bullish, Keybot the Quant will likely flip long.

The dollar/yen is 102.28 climbing higher over the last couple days so the weaker yen creates higher US and Japanese stock markets. Equities are at an important inflection point right now. The market bears need to push the dollar/yen lower (stronger yen) to create market weakness. Otherwise, the bulls will be yelling "Banzai!" as they buy stocks on the long side with the weak yen (due to BOJ money printing) sending the dollar/yen currency pair higher and higher above 102.30. 

The 1-hour and 2-hour SPX charts show the MACD line remaining long and strong so a move back up to SPX 1945 cannot be ruled out but negative divergence should appear when price prints a higher high compared to yesterday's high 1944.90 print. Tuesday appears to be a pivot day so one side or the other will win and set the trend forward. The bears held their ground yesterday. Bulls need UTIL 543.81, JJC 38.91 and/or XLF 22.53 to receive upside oomph. Bears receive downside fuel with RTH 59.51 and retail earnings are on tap this week and Retail Sales data tomorrow morning. The SPX begins Tuesday at the 1937 S/R. S&P futures are +3. The 10-year yield remains subdued at 2.43%.

Note Added 9:03 AM: Futures run out of gas and turn negative after the NFIB Small Business Optimism Index. The dollar/yen drifts lower to 102.15 so the stronger yen sends futures lower. The central bankers are the market.