Keystone's Morning Wake Up 7-21-11

None of the three sectors mentioned yesterday, CRB, SOX or VIX, would change their bearish stance to bullish so the SPX failed at the test of that formidable 1329-1333 resistance zone, and drifted lower. Two of the three sectors above needed to join the bull camp to keep the rally going but none of them made the shift, all three remain bearish as measured by Keystone’s proprietary algorithm.

The positive divergence set-ups for semi’s and financials, see previous SOX and XLF charts on the blog, bounced price over the last couple days, the XLF regains 15.

Today's futures are currently red and will fluctuate at 8:30 AM on Claims data. Stay on guard for a market pivot area at 10 AM when house pricing data, Philly Fed and Leading Indicators data are released.  Today is the Lalapalooza of Earnings, huge earnings day, with about 50 key companies reporting. The heaviest hitters include AKPT, AMD, T, BX, CBI, CHNR, MSFT, MS, NUE, PEP, PM, PPG, SWY and SNDK.

The SPX starts today at 1326. If the bulls can push up to touch 1330.50, in that formidable resistance zone, then the buyers will come into the markets in force. With the current red futures, if the day starts out with the bears pushing lower, once the SPX moves under 1324 the indexes will be in trouble. If the SPX loses 1323.65 this morning, the selling will accelerate towards testing support levels at 1323, 1321, 1319, 1316 and 1314.

Just as 1329-1333 is formidable resistance above, 1314 is strong support below. Markets are at the mercy of the news wires especially the debt ceiling deadline and Euro woes.  Downbeat China news overnight is hinting that a hard landing is definitely possible there; this is helping set a dark tone today.  Copper is lower today after enjoying recent buoyancy on the expected continual global recovery. We may be placing that global recovery on a milk carton in the coming weeks. Watch copper as a market leader.  Weaker global recovery means weaker copper. Extended downside will not occur in the broad markets unless the utilities lead, so watch UTIL closely in the days and weeks ahead.  Stay on guard, markets remain highly unstable.