Keystone's Morning Wake Up 8-16-11

All eyes are fixed on Sarkozy/Merkel today. Housing Starts data remain weak and the red futures are consistent this morning for a much lower opening. That can change quickly after the bell, however.

The utilities had a break out day yesterday and Keystone told you to watch UTIL for indications that the bulls want to run the indexes higher.  UTIL is now at 426, well above the 414.20 level that separates broad market bulls from bears. Thus, the utes had a lot to do with yesterday's run higher. In fact, further confrimation of a more substantial run higher in the indexes will occur if UTIL tags the 429.81 level, so watch this key number for the remainder of the trading week.

For the SPX today, the bears only needed a tinge of green on the futures, since the close was at the high yesterday, and the indexes will jump several handles higher. But, the futures are bright red and that start is not on tap.  The market bulls only need to move above 1204.49 and the buying will accelerate substantially. If that occurs, watch to see if UTIL moves above 429.81, that will be firm confirmation that the bulls have wrestled back control of the markets.

For the market bears, they need to drive the SPX down to lose the 1179 handle, if they do, the selling will accelerate and the day will turn substantially bearish.  A move thru 1180-1204 is sideways slop with neither bull or bear taking control today. Markets are at the mercy of the Euro news for todays session.

Keystone's SPX:VIX ratio moved above 35 yesterday indicating a huge up day for the indexes, which occurred.  The ratio sits at 37.79 to start the day. Watch the ratio closely since a move back under 35 indicates that the bears have taken back the ball.  If the 35 level holds, that is confirmation that the bulls have seized control of the markets and further upside in the indexes will be expected.