The markets are set to bounce with an IMF rally. News last evening said the IMF is in talks with Italy over providing financing and thus, a move towards a Euro solution, but the IMF released a statement that the news is not true. Regardless, the futures are in rally mode anyways. Italy is not even convinced since 10-year yields remain above 7%. The NYAD, NYMO, CPC and TRIN charts discussed last week provide upside market fuel as well, especially the low -98 NYMO print right now and the CPC 1.32 print, both indicating that a market bounce is desired.
The indexes sold off into Friday's close but the utilities sector remained buoyant which favors the bullish move today. Watch the SPX:VIX ratio at the open, now at 33.61. If the ratio moves above 35, that verifies the market bulls in full control of the markets. If the ratio does not move above 35, the rally has no legs. Another indicator to gauge the bullish strength at the open is volatility, VIX, now at 34.47. If the VIX drops under 32, this provides the rally move street cred. If the VIX stays above 32, then the market bulls got nothing today. Retail is also key. Watch RTH, now at 106.42. If two points are gained to move the RTH above 108.50, then the market rally move has legs. If the RTH 108.50 ceiling holds, and price is unable to move above there, then the market bulls got nothing.
Cyber Monday requires a shout-out since it is the highest sales day ever recorded for Internet sales and today should not disappoint. The loss of productivity at companies today, as employees worry more about Amazon specials and shipping and handling costs instead of the 1 PM conference room meeting, probably rivals the loss of productivity due to the March Madness basketball polls during the spring time. Bosses will pace hallways today creating a presence to deter the office shoppers, much like the local patrol car driving thru the neighborhood to deter crime, but their actions will have little affect when it comes to purchasing a bike for Bill or a doll for Little Nell. Besides, the bosses return to their corner offices to perform their own cyber shopping anyway. Thus, if you are waiting on an important business call today, do not hold your breath.
Watch UTIL 424.35, SPX:VIX 35, VIX 32 and RTH 108.50 to gauge the bullish strength today and determine overall market direction. A market pivot point occurs at 10 AM due to the New Home Sales data release so the early action may change course one-half hour after the open.
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