Keystone's Morning Wake Up 8-31-11

EOM today. Even though August was a sad one for bulls, September seasonality offers no comfort since it is a negative month seasonality-wise.  The Congress clowns will return all relaxed and tan ready to dial up the budget rhetoric again. The political talk will send a negative vibe to the markets as it did during the debt talks.

Let's stay in August, however, albeit one more day.  Futures are green.  The key SPX level to watch is 1220 today, above and bulls will rock lots higher. The SPX:VIX ratio remains above 35 so this continues to favor market bulls. Watch RTH 104.02, JJC 54.53 and CRB 342; any of these higher will boost the markets higher, if price for these three sectors remain under the levels shown, the market bears remain in the game. If the market bears do start a slide, they need to lose the 1196 handle. If they touch 1195, the selling will increase substantially and the indexes will quickly drop several handles. A move thru 1197-1219 is sideways action.

Watch gold today since the CME announced gold margin raises on Wednesday's, 8/10/11 and 8/24/11. Thus, today is a likely target for a third margin raise for gold, watch for an announcement between 2 PM and 8 PM EST. Like last week, insiders will probably sniff it out ahead of time so weakness in gold price today may hint at the announcement coming.

The Bradely turn was yesterday but its effects remain in full force so if the bears are going to reverse this multi-day rally, today is the likely candidate. At the same time, seasonality says Thursday and Friday will be buoyant, thus, based on the Bradley and seasonality only, a move down would occur for the indexes into Thursday morning, then some market buoyancy would reappear as the weekend draws near.

But, the technicals rule, so for today, to sum it up most easily, watch SPX 1220 and 1196; SPX:VIX 35; RTH 104.02; JJC 54.53; and CRB 342. These indicators will show you the broad market direction.