Keystone is on the long side for the indexes now after the successful run on the short side from 7/11/11 thru yesterday. We will see if there is any whipsaw effect over the next day or two. Watch the utilities to gauge broad market direction today. If UTIL, now at 423.21, stays above the 50 week MA, now at 414.58, then the bull recovery rally should be fine. If 414.58 is lost, the markets will sell off large. With UTIL nine points above, it should be safe for a day or few, and therefore reinforce the bull buoyancy in the broad markets.
Keystone's SPX:VIX ratio has not cooperated yet. Especially considering the huge up move yesterday, the ratio should have moved above 35 to signal an all clear for the bulls to run. Thus, at 32.05 to start today, the market bears have something to hang their hat on. If the ratio springs above 35 today, that will be an all clear signal for the recovery rally and the Dow Industrials should make another triple digit gain. If the SPX:VIX ratio cannot attain 35 today, that tells you that this recovery rally may be short-lived.
Watch the behavior of the SPX in relation to the 200 week MA today since this is vital S/R since April 2010. The 200 week MA is 1152.12. Thus, for the bulls to maintain a recovery rally they need to hold support at 1152. If the SPX loses 1152, that will be a hint that all is not well with the recovery rally.
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