Keystone's Morning Wake Up 11-29-11

The retail sector, RTH, supplied the rally fuel yesterday. Many pundits are cheerleading the robust retail sales both on Black Friday, and on Cyber Monday, driving retail stocks higher, and thus the broader markets higher.  Maybe the crowds were a mall thing since the Friday shopping crowd at the local Walmart in good ole Pennsylvania was not as large as a typical Saturday.  The crowds showed up Friday for special deals, time will tell if the consumer has the stamina to go the distance.  Lots of cash exchanged hands on Black Friday but if the mark-ups deteriorate to grocery store levels the amount of cash taken in pales in comparison to the profit generated. In other words, if you are selling a lot but giving it away, this does not help the bottom line earnings numbers or the stock prices in the long run. For now, Keystone will not become a Scrooge. Pass the Kool-aid and those rose-colored glasses.

The lower volatilty, relatively, since numbers in the 30's are elevated overall, also encoraged the market bulls.  The VIX begins today at 32.13 and if it stays under 32.85, the bulls rule. RTH begins today at 108.74 and if it stays above 108.40, the bulls rule. Keystone's SPX:VIX Ratio at 37, above the critical 35 level, means the bulls are having a party with no worries.  Bears got nothing unless they can move the ratio under the 35 level.

For the SPX, if market bulls can push above 1197, this will open the door to much higher prices in short order.  SPX 1196-1199 is a sturdy resistance zone but if price moves above 1197, the zone should give way.  The next resistance above is 1204, then 1210.

Thus, to start things off, watch RTH 108.40, VIX 32.85 and SPX 1197+.

Note Added 11/29/11 at 9 AM:  Note the S&P futures are up 0.37% and the Nasdaq futures are up less at 0.14%, thus, the upside market move after the open should be muted.  The market bulls need SPX over that 1197 threshhold which would then open up the door for more broad market upside.