Keystone's Morning Wake Up 6-1-11

The bulls ran like wild fire yesterday.  The bounce in the euro from the Greece positive news slapped the dollar silly.  Then, in turn, commodities climbed as well as the indexes.  Asset relationship; euro up=dollar down=commodities up=equities up.

Financials and copper remain steadfast in their bearishness.  Despite the rally in copper the last few days, Keystone's proprietary algorithm labels copper as bearish, but, all it needs is to move above 419.13, and that would be bullish for copper and bullish for the broad markets.

Similarly, the financials, measured with the XLF, is 15.84.  Watch the 16 level that signals that the banks may have been down but not out, and they now plan to move on up again.  The projection is for the financials and copper to remain bearish, under the levels highlighted, and once again drag down other major sectors in the days and weeks ahead due to their leadership qualities.  But, a move above for either of these signals that the broad market bulls mean business and the indexes will run higher in the near term. Simply watch these two to see what happens today.

SPY daily chart printed a wicked hanging man candle yesterday so this may signify a trend change today, revesing the four day climb.  SPY only has one gap above that will need filled, at 136.  Similarly and expectedly, the SPX has only one gap remaining above, at 1360.

Today a host of data includes motor vehicle sales numbers, job data, ISM, construction spending and 4-week and 52-week bill auctions.  Retail earnings will shed more light on the consumer and the effects of the higher gasoline price.

Also watch to see if any news comes out of Bahrain as they continue to try to return to normalcy.  Bad news will drive up oil, gold and silver.  China PMI's came in lower but still above the 50 level, thus slowing growth and rising rate environment there.

Hurricane season begins today.  Hurricane news releases typically occur at 2:30 PM EST each Tuesday afternoon here on out so this effects oil price moving forward.

Critical day for the markets. We'll see if the new moon has any goofy effects on trading.  SPX probably continues up to tag that 1360 gap now, or, will resume the downward action putting an end to the last few days of buoyancy. Any move above 1345 and the trip to 1360 should occur. Projection continues to be down for the weeks and months ahead as we finish this topping and rolling over behavior as the summer sun shines.

Let XLF 16.00 and copper 419.13 light the way for the broad markets today; if either is above, the indexes run higher, below and the indexes run lower.

Watch Keystone's 2-10 Spread Indicator as well.  255 represents a cliff.  At this writing we are almost there.  This means weaker banks and weaker markets.