Keystone's Morning Wake-Up 6/27/12

Lots of cross currents in markets now. Even Keystone's indicators are in conflict, the SPX:VIX ratio is under 68, bearish, but the 30-minute 8 and 34 MA cross is bullish. The CPC, instead of printing above 1.2 to signal a temporary bottom in the markets, dropped yesterday, leaving this tool in limbo as well. Durable Goods Orders a few minutes ago were upbeat but once you remove the airplane orders, you got nothing. As discussed in this morning's charts, the 1324.00-1324.24 area is vital today. Above and bulls will be on a rampage higher. Stay below and the bears will rule the day. Futures are flat to up but currently would be a tad short of 1324 at the open.

The Euro leaders continue to play around. Remember the old saying 'not making a decision is making a decision'. The Euro leaders keep delaying any solutions for the debt crisis and are not even performing the hard daily work necessary to find a way out of trouble. Therefore, the markets will make a decision for them as time runs out. Markets do not appear to have an 'event' priced in so the move may be quite dramatic. The Spain 10-year yield is 6.85% this morning. A bell will ring when Spain hits 7% and higher, and the bell tolls for thee.

Pending Home Sales hit at 10 AM so watch for a market pivot point. Oil Inventories are 10:30 AM and considering the importance of the oil markets now, this time also serves as a market pivot point. Oil and the equity markets are moving in lock-step. Seasonality-wise, oil is strong late June thru early July. For equities, seasonality-wise, July and August outperform in election years which this year is obviously an election year.

The retail sector provided bull fuel yesterday. Watch RTH 41.27, above and bulls take markets higher, below and the bears take markets lower.  Watch VIX 18.90, above and the bears take markets lower, below and the bulls take markets higher. For the SPX starting at 1320, if the 1324.00-1324.24 area (where  the uber +1200 TICK's occurred yesterday) gives way to the upside, the bulls will accelerate the move higher, thru the critical 1326 resistance and onward to 1330 in quick order. The bears need to push under 1310 to accelerate the downside. A move thru 1311-1323 is sideways action. The 20-day MA at 1319.69 provides additional drama today.  Markets are trading on vapor volume and this will peter away more as the holiday approaches next week, therefore, wild market gyrations may occur intraday as has been the case. To keep it simple, RTH 41.27, VIX 18.90, SPX 1324.24, SPX:VIX 68, and the SPX 30-minute 8 MA and 34 MA cross tells you everything you need to know for the broad market direction today. Watch the Spain 10-year yield and listen for the bell when it hits 7%.