Keystone's Morning Wake Up 9-16-11

Another trading week draws to a close but plenty of drama remains before the weekend begins. The major central banks coordinated effort yesterday obviously provided market buoyancy and a less dire outlook to equities.  This move is minor, however, and a much larger program will have to be released in the coming weeks.

Of interest, is that Chairman Bernanke has breathing room for his QE3 strategies in light of the inflation data a little hotter than expected yesterday. Thus, a scenario may play out, say in the November time frame, where treasury yields remain low drifting lower, the commodities, CRB, drifts down towards 300, the dollar continues along to the upside, copper continues to weaken, and the disinflation and deflation scenario plays out; all at the same time that Europe finalizes a large recovery TALF-like plan, and thus we may see the first global style quantitiative easing measure ever taken for the world, as Europe implements a plan at ths same time Chairman Bernanke kicks off a QE3 plan. Of course, if this occurs, at that point, the world markets will be at much lower levels than now with global worry and panic on the table.

But, lets's deal with the here and now and the technicals. Markets will remain buoyant as long as the utes, semiconductors and retail sectors remain bullish. RIMM may effect tech negatively today, however.  Thus, watch those three sectors closely, weakness in any of the three will indicate cracks in the recovery rally. The SPX closed at the high yesterday so all the market bulls needed was the slightest hint of green in the futures and the indexes will launch, but, at this writing the futures are negative.  If the SPX moves above 1209 today, the upside move will accelerate in short order. If the market bears come to play today and move the SPX under 1190, the sellers will enter in force and much lower levels will be explored. A move thru 1191-1208 is sideways slop into the weekend.

Today is quadruple witching so some odd fluctuations in pricing may occur. Typically, in 'normal' markets, Friday's are buoyant after lunch as short traders pare back positions to lessen weekend risk, thus, the bulls typically have the upper hand heading into the weekend. As today progresses, traders will gauge the success of the weekend Eurozone meeting in Poland.

Utes, semiconductors and retail led the markets up the last few days. Copper, commodities, financials and higher volatility continue to act as a heavy weight keeping the bulls in check. The movement of these major sectors will forecast broad market direction today. Treasury International Capital (TIC) data hits within a half hour. The big market pivot point is 10 AM, actually five minutes before then, as the University of Michigan Sentiment prints. This sentiment is highly dependent on gasoline price since higher gasoline equates to sad consumers and the gasoline prices have not given anyone reason to cheer lately. Also watch the final hour or so of trading since Monday's morning action is typically opposite of the OPEX action you'll see into the close today.