Keystone's Morning Wake Up 11-25-11

The turkey is in the frige, days of leftovers are planned, and the tryptophan affects are subsiding.  Sleepiness is now replaced with reality, and the turkey markets are front and center again as a holiday-shortened trading day takes shape. The futures have been weak overnight and remain red. The S&P is down -0.60% while the Nasdaq is down -0.65%. This gives the bearishness this morning some street cred reinforcing the new moon negativity vibe the last few days.  However, as evidenced by the charts this morning, NYAD, CPC, NYMO and TRIN, markets would like to see a bounce right now. A market bounce is more in tune with expected seasonality where today is typically the most up day for markets of the entire year.

Thus, the probable conclusion is that the futures are a gift today and may provide an ideal entry for a short term market pop. If the pop occurs, to satisfy the four charts this morning, shorts will cover creating more bounce fuel. This creates the opportunity to ride a quick pop, and exit without getting greedy, then determine the next proper short entry level as a 'short the rallies' mode is now ongoing.

SPX has strong support at 1155 so that would serve as an attractive entry for a possible long play for the bounce. Watching the Nasdaq percentage down is key this morning after the bell since if this reverses and then leads upwards, that may signal the time to play this long-side quickie pop.

The pop projected for the markets is only a very short term, VST, projection, perhaps now thru early next week. As evidenced by Keystone's algorithm, Keybot the Quant, the short side remains in favor overall, and is still very much in play. Keybot operates more in a short to intermediate term range, despite the recent whipaws, so the short position from SPX 1247 could very well continue for a while. The secular picture for the markets remains weak as well; Keystone's secular indicators have been signaling a Secular Bear Market in place for a few months now.

Thus, the market bears remain in control of the broad indexes overall for the short, intermediate and long term time frames, but, in this VST, the markets want to take a pop to relieve some of this current uber negativity. For today, watch NYAD, NYMO, CPC adn TRIN as highlighted this morning.  Also, pick up where we left off before Turkey Day, where utitlities collapsed on Wednesday as well as Keystone's SPX:VIX ratio.  Watch UTIL 424.32 (the 50-week MA), SPX:VIX 35 and SPX 1155 to determine broad market direction today. UTIL is 423.96 indicating continued market weakness while SPX:VIX ratio is 34.19 keeping market bears in charge of the markets for the foreseeable future--as long as the ratio stays under 35.

Note Added 11/25/11 at 8:21 AM: The S&P futures are now down -0.74% and the Nasdaq is down -0.62%. Note how this flip-flopped in the time it took to write this mornings missive. Since the Nasdaq is now not leading the downside, then the market move down will be muted today, and this flip-flop further reinforces the VST market pop projection. If UTIL pops above 424.32 at the open that will further signal that the market rally flag is waving.