Keystone's Morning Wake Up 8-25-11

Claims come in higher minutes ago with continuing claims lower causing a slight leak lower in futures.  The Nasdaq futures are lower obviously due to Steve Jobs resigning and its effect on the tech sector.  Nearly all hedgies and institutionals own Apple stock. We receive a further gauge on manufacturing with the Kansas City Fed Manufacturing Index at 11 AM so treat this time as a potential market pivot point today. Remember the damage the Philly Fed did last week? The 7-year note auction at 1 PM will also require attention although this is the odd sister among the 2, 5 and 10-year family.

Earnings of interest today include ARUN, BEBE, BIG, HRL, KKD and OSIS, so tech, retail, spam--the kind you eat, donuts and security figure prominently.

The utilities, UTIL, placed significant distance higher above the 50 week MA placing a feather in the market bulls cap. In fact, if UTIL, now at 431.28, attains the 436.91 level either today or tomorrow, the market bulls will be in firm control of the indexes. Moving forward, however, continue to watch the UTIL 50 week MA, now at 414.74, since this level opens up a trap door for the broad markets.

Retail is the next major sector most closely poised to allow a recovery rally to continue. RTH, now at 102.32, needs less than two points, the 104 level, to signal continued broad market bullishness, so watch this closely today.

For the SPX today, the market bulls have the advantage, only needing to move a point higher to unleash further buying momo to the upside. If the SPX attains 1178.56, the indexes will gain several more handles in quick order. The market bears need to push the SPX over 20 points lower to get the bear side accelerating again. A move thru 1157-1177 today is sideways behavior representing a consolidation of this weeks gains.

Gold continues its sell off. The CME raised gold margin requirements 27% last night, the second move in two weeks time. The orchestrated silver slap down in April provides a guide moving forward. The CME continued raising margins several times over a couple week period until a 35% slap down was achieved for silver. Gold topped Tuesday in the overnight session at 1918 and has lost about 9% thus far. The first gold margin raise was a 22% increase of margins announced 8/10/11 that resulted in almost a $100 move lower. As always occurs in trading, insiders were probably aware of the announcement coming last night so some of gold's big $100 slap down yesterday was ahead of the news last night. Further down side pressure is expected for gold moving forward as the CME continues along with additional margin raises.

Trading may develop a sideways tone today as everyone awaits Chairman Bernanke's speech tomorrow morning.