Keystone's Morning Wake Up 8-4-11

Interesting that the LOD yesterday of 1234.56 pierced the 3/16/11 LOD of 1249.05. There is no other support remaining for this year. We are now back into Fall 2010 numbers, and November 2010 was not pretty for equities.  The 1235 support held so watch this level as future support.

Dollar/yen intervention occurs this morning sending price up over 80. Looks like 80 was the initial target and we will find out in the coming days if there are further moves to 82 and higher.  $USD dollar is moving up testing the 75 level.

For the SPX today, now at 1260, the equity bulls need to start things off with only a point higher, since the close yesterday was at the highs, and if the 1261 handle is hit, the bulls will be running the indexes higher today.  But, the futures look sick, red across the board.  Since the low yesterday was an important event, the bears would need to get down to 1235 again if any substantial selling is to occur.  1236-1260 range is a sideways move with neither side taking control.

ECB rate decision leaves rates unchanged, Trichet’s press conference is much more important since it will move the euro, and in turn, the dollar and equities. Trichet back pedaling a bit and the following asset relationship takes place; euro down=dollar up=equities down=commodities down.

An important thing happened yesterday that most traders would never notice.  The utes are key to whether or not the broad markets are making the final move down.  Looking back 15 weeks to determine if a weekly uptrend or downtrend is in place, shows that utes, UTIL, remain in a multi-month uptrend.  If UTIL loses 418.37 this week, all heck will break loose for the broad markets.  Yesterday, UTIL came down to take a look, but stopped at 419.02 before rebounding, only 65 cents away.  This shows that the broad markets are maintaining some underlying support right now, if that 418.37 fails, the story changes drastically negative. Interestingly, the comparison numbers for the next five weeks starting Monday is 429 or higher, thus, UTIL must stay above 429 for the next five weeks, otherwise, the broad markets will be in big trouble.  Note the current is 424.94, keeping its head above water for this week (418), but in trouble if it starts next week at this level.  Stay tuned and use the utes as the early signal for the sustained broad market move lower.

The SPX is now under the 12 month MA at 1274 for two days.  As this cross continues along and price stays under the 12 month MA, the secular bear is growling louder and louder every day.