Three more trading days remain for Father Time in 2011, replaced by Baby New Year. Poor baby is thrust into a hard cruel world, having to deal with a France downgrade coming, the ongoing Euro debt crisis, the Congress clown show and the China real estate bubble popping. Perhaps traders will be screaming for the comfort of their blankies as well when the new year begins. The drama picks up today with the SOX 368.60 again. Futures are flat currently and oil and gold are lower.
If the SOX stays under 368.60, no further broad market upside will occur. If the SOX moves above 368.60, the broad indexes will be tracking strongly higher. If SOX stays under 368.60, and now loses the 368 level and heads lower, the selling in the broad markets will be noticeable. If the markets weaken, watch RTH 110.25 and XLF 12.82. If either level fails, the bears will lock in some extended broad market downside action moving forward. These two numbers should fluctuate slightly as the markets begin trading and Keystone's algo begins recalculating.
For the SPX today, starting at 1265.43, if the market bulls can push up thru 1269 and touch that 1270 resistance number, the upside will accelerate and a happy year end will be all but assured. If the market bears come to play today and push the SPX down three points to the low 1262's that will be enough to trigger a larger downside push, large block sellers will enter and push the SPX down towards the 1258 starting year number to continue this suspense on whether or not the SPX closes positive on the year. A move thru 1263-1268 is sideways action.
Thus, SOX 368.60, RTH 110.25, XLF 12.82 and SPX 1270/1262 require close watching after the bell rings. Key SPX S/R is 1280, 1278, 1277, 1268, 1267.76 (50-week MA), 1267, 1261, 1259.03 (200-day MA), 1258, 1252. Lots of drama occurred at the 50-week MA yesterday; see if it holds as a ceiling today.
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