Keystone's Morning Wake Up 6-23-11

This morning's downbeat futures now makes sense of why Keystone's proprietary algorithm did not flip long over the last couple days.  Equities are headed for a lower open.

This week is down 18 of last 20 times seasonality-wise so it looks to be extending that trend.  Big down days on Wednesday's typically lead to weak Thursday mornings, which appears to be the case, but Keystone will not be surprised to see buyers come in mid to late morning.

Watch the SPX:VIX ratio to see if it falls thru 68, which it should the way things are setting up now.  That means the indexes will sell off large today, as long as the ratio stays under 68, the Dow Industrials typically down from 100 to 300 points.

Watch the NYA 40 week MA cross.  Price remains above to keep the secular bull market alive, but watch to see if the NYA loses the 40 week MA which means long term trouble ahead for the broad markets.

For the SPX for today, the market bulls have to reach up to touch 1298-1299 today,which is not going to happen in the early going at least.  The market bears are in the drivers seat and will test several support levels below such as 1282, 1279, 1277, 1273, 1270, 1268, 1262 and 1258--the start of year number. Look for a bounce off one of these levels.  If the utes maintain buoyancy, or at least flatish, watch the UTIL, then the selling event may be short-lived and the indexes will meander upwards again. Let's see what the SPX:VIX ratio shows and the NYA 40 week MA.  If the NYA 40 week MA does not fail, and/or the utes do not weaken, those will be signs that the bulls will want to come back in to buy again.