Keystone's Morning Wake Up 10-13-11

JPM earnings beat on top and bottom lines but have not inspired the red futures. China exports did not meet expectations, further signs of a slowing global economy, especially interesting since we are entering the holiday shopping season now. Financials lifted the broad markets yesterday, you saw that by the behavior of the XLF. The semi's, retail and now financials, have provided the fuel for the bull rally the last few days so continue to watch them for any hint of a market pull back.

The utes, UTIL, are under 439 so this is bear-friendly. For a further move up for the indexes, the utes or volatilty must cooperate. The VIX, now at 31.26, remains bear-friendly, and would need to drop under 28.75 to become bull-friendly. Thus, if UTIL moves above 439, or VIX below 28.75, the market bulls will have further legs upward. If the market bears can prevent this from occurring, and at the same time drive the financials, XLF, now at 12.74, below 12.60, then the bears can usher in stronger selling.

For the SPX today, starting at 1207, the market bulls need to see 1220 to get the upside enthusiasm rolling again. By the look of the futures now, that does not appear on tap.  The market bears need to move under 1196, if so, they can accelerate the downside several more handles. If the markets sell off and XLF falls under 12.60, then the selling will continue. If the markets sell off but XLF stays above 12.60, then the broad markets will recover and move higher for the bulls. A move thru 1197-1219 is sideways action.

Oil Inventories are out at 11 AM today rather than the regular Wednesday release. The 30-Year Bond Auction at 1 PM is a potential market pivot point and requires close attention today. GOOG and SWY earnings are important. For today, to determine broad market direction, watch XLF 12.60, VIX 28.75, UTIL 439 and SPX 1220/1196.