Keystone's Midday Market Action 11-7-11

Italy 10-year climbed over 6.5% this morning and up to 6.65%. The thermostat is turned up in the already heated room.  Berlusconi becoming a household word. We are now moving from Greek tragedy to Italian bologna.

The markets reversed to the downside after the open.  Nasdaq is like being married. For the men, if she is not happy, you are not happy.  Thus, if the Nasdaq is not happy, the broad markets are not happy. This was the case thus far today.  The S&P and Dow Industrials were higher in the early going but the Nasdaq was moving downwards, turning negative.  The markets then rolled over from a buoyant start and are now tracking south.  Watch to see if the 10-year note yield goes under 2% (last print 2.02%), that will be notable and allow the whiff of disinflation to waft thru the Autumn air. Dollar index is buoyant today keeping copper and commodities in check.

Following the technical path from last nights missive, The VIX jumped up at the opening bell today, now printing 31.80, so almost two points above, favoring market bears. This told you that market weakness is in place despite the opening pop in the broad markets.  The bears, however, got nothing unless they can lose that SPX 1239 handle, now printing, 1246.47. We are stumbling along sideways picking up exactly where we left off on Friday. Indexes are not tipping their hand as to which way is the preferred direction, but these technicals will; VIX 30, SPX 1261, SPX 1239 and XLF 12.95 tells you everything you need to know for today.

Note Added 11/7/11 at 7:25 PM: Note the VIX lost the 30 level this afternoon, that paved the way for the bulls running upwards. SPX 1261 was hit in the final minutes which should lead to a larger jump higher, but, the closing bell rang and the clock ran out.  How does Keystone know these levels, such as SPX 1261, in advance?