Keystone's Morning Wake Up 11-30-11

EOM today and tomorrow ushers in the cold December winds. Futures were down large overnight, about 1% for the S&P, on the bank downgrade news and continued Eurozone dithering. That changed about an hour ago with the futures up almost a percent now, acoounting for a 2% move in the overnight session overall.  China is easing reserve requirements for the first time in three years so the futures jumped large.

Platinum is coming very close to the critical 1500 level and this bears watching. Italy 10-year yields remain well above 7% and Germany 10-year's are 2.3%. John Paulson apologizes for this year's performance, probably more an attempt at lessening redemption requests more than anything. The EU Summit next Friday, 12/9/11, is gaining momo, the markets want firm action taken so this date will serve as a crescendo. BAC is on the verge of losing the 5 handle; in the afterhours action last night after the bank downgrade it danced a bit under.

Ecomomic data includes Productivity and Costs, Chicago PMI, Pending Home Sales, Oil Inventories and Beige Book.  Potential market pivot points at 10 AM and 2 PM but the strong futures should simply keep the day happy.

Sticking to the things that can be measured, the retail sector, RTH, and volatilty, VIX, continue to determine broad market direction. If the market bulls gain upside steam today, watch semiconductors, copper, commodities and financials for further signs of strength.  As long as RTH stays above 108.40, now at 109.97 to start the session, the markets will remain buoyant. As long as VIX stays below 32.85, now at 30.64 to start the session, the markets will remain buoyant. If either the RTH or VIX violates their respective levels, then the markets will weaken and the selling will increase. If both lose the levels shown, the bears will be pushing strongly to the downside.

Watch SPX overhead resistance at 1204 and 1210.  The Nasdaq futures are up 0.59% and the S&P futures are up 0.57% at this writing, a couple hours before the open,  so the upside market move would have limited juice.  The Nasdaq will need to lead the parade if the bulls want to run strongly but now both indexes are lining out for the same gains percentage-wise. Keep watching this relationship as the pre-market plays out.