Keystone's Morning Wake Up 9-19-11

Rise and shine. Futures have not improved much since last evening. The Eurozone meeting concludes without any conclusion, except further can kicking, and the can is starting to get heavier and the road longer. The delay in addressing Greece's potential default sends a continued message of uncertainty, so traders lock in last weeks profits and seek safe havens as treasury yields fall slightly and gold price is buoyed. Interestingly, silver and copper are lower. Copper continues to receive a slap down and the downward channel since the February top remains in place. Perhaps Keystone will see the collapse of copper he called for this year in his 2011 predictions?

Let's stick to the technical tools. Here are some items to watch to gauge if the early selling anticipated for today will be a short event, or a longer-lasting funk.   Typically, some market downside would be anticipated this morning since the OPEX close Friday showed up markets into the close. Also of interest is that seasonality says this week after September OPEX is down about 80% or more of the time.  In addition, a Bradley turn date is next Monday, 9/26/11, so the Bradley window is open for a turn now, especially watch Wednesday, 9/21/11, thru Thursday, 9/29/11 for increased market volatility.

Those broad brush market currents aside, more directly, watch Keystone's SPX:VIX ratio, now with a 39 handle. As long as this ratio stays above 35, the market bulls have no concerns, any selling will be short lived and the bulls will continue along with market buoyancy. If 35 is lost, then the market bears have regained control of the indexes.  The utes made large strides last week to favor bulls.  Watch UTIL, now at  439.29. If UTIL stays above 423.83 this week, then the market bulls will be fine, if this level is lost, it will confirm trouble starting again.

Semiconductors led this rally starting about a week ago and they should remain buoyant. Retail provided an additional upthrust to the broad markets. Watch RTH, now at 108. As long as RTH stays above 104, again, any market selling today should not be a big deal. If this level is lost, however, it is another nail in the coffin and signals that markets want to head much lower.

The critical levels for the SPX today are 1204.46 and 1220.06. Bulls need to touch 1220 to accelerate the upside, with the S&P futures down 20 handles this outcome is currently unlikely. The market bears need to move below 1204.46 and the downside will accelerate, and that looks like the preference at this juncture. Watch support at 1198-1199 and 1193. As selling occurs at the open, if the futures remain as is, simply monitor SPX:VIX ratio, UTIL and RTH as explained above.  This will tell you if the selling is some simple profit taking and no worries for the bulls, or, if there is something more sinister at play. And, most importantly, watch Dr. Copper, is he sick or is he well?