Keystone's Morning Wake Up 9-20-11

Housing Starts slip by about 5% down to 571,000 well below the million plus during a stable and growing economy. The green futures back track a wee bit. The weak housing sector continues along which should lead to lower housing prices and Keystone's metric's continue to show that we have fallen into a double dip as of May.

Yesterday's market action shows Keystone's SPX:VIX dropping under 35 at the open but recovered in the 2 o'clock hour leading the broad market recovery late day. The ratio starts at 36.79 almost two above the critical 35 level so the market bulls are in control.  Similarly, the SPXA150R is at 27.60, above the critical 25 level, so the market bulls remain in control by this measure as well.

The semi's, retail and utes requre monitoring to determine if the bulls remain happy. The SOX, now at 377.49, is bull-friendly as long as it stays above 368.50. Yesterday it tested within two points of failure but recovered, this was a tell that the bulls were fine.  For retail, the RTH, now at 107.84, watch the 104.70 level. As long as the market bulls keep retail above this level, they are fine. Also keep watching the 423-424 level for UTIL, now at 438-ish, comfortably 14 points above, again, giving market bulls plenty of breating room and no worries.

The SPX closed at support at 1204 yesterday after bouncing between 1204 and 1209-1210 S/R late in the session. If the market bulls can touch the 1215 handle, the buyers will enter in force and increased large block buying will send markets much higher.  Market bears need some further bad news out of Euroland, or for Operation Twist to unravel, which would send the SPX down towards 1188. If 1188.36 is lost, the sellers will enter in force and they will drive markets much lower in short order. A move thru 1190-1214 is sideways slop with markets in a holding pattern in front of the Fed decision tomorrow.