Keystone's Sunday Evening Nightcap 11-6-11

Europe continues along in disarray, markets reacting on any whiff of news. Papandreou's in, then he's out, China's in, then its out, you put your left foot in and shake it all about.  The Greece situation is out of control, such a tiny country controlling all world markets and we have not even dealth with the big boys yet; Italy and Spain.  China was all smiles today stating that talks are very productive and frutiful. Of course China is happy, they supply lip service and keep their wallets in their pockets.

Looking at the technicals, for tomorrow, the broad market direction is determined by VIX 30, SPX 1261 and 1239, and XLF 12.95. VIX starts at 30.16 so the market bulls will throw confetti with a move of only 16 pennies lower.

If VIX moves under 30 and SPX touches 1261, the upside wil take off like a rocket, the bulls will not look back.  If VIX moves under 30 but SPX cannot touch 1261, the upside is limited and the move up is not as strong as it seems. If VIX stays above 30 and SPX moves under 1239, the market bears will bludgeon the markets and drive them much lower. A move thru SPX 1240-1260 is sideways action.

In addition, watch XLF 12.95.  If XLF stays above, the markets will remain buoyant, if 12.95 fails, the markets are in big trouble. The world waits as Greece drops the sun tan lotion to spend time forming a new government, led by Papandreou's Hokey Pokey.