Keystone's Morning Wake Up 12-5-11

Futures up large overnight. Looks like the Friday bell saved the descending triangle breakdown on the 5-minute chart. SPX 1260 is key, this opens up the upside. Despite how strong an opening may occur, if the SPX does not attain 1260, the bulls got nothing.  This is why the futures have shown increased buoyancy as the SPX drifted up towards 1260 and even over it to 1261, now moving thru 1259. Thus, watch 1260 when the bell rings.

SPX has showed late day weakness in both the Thursday and Friday sessions. Friday closed near the lows for the day. The dollar fell in concert with equities rallying last week, as would be expected, but note how the move down for the greenback is not all that significant bolstering its street cred for further upside. The dollar moves opposite to equities, thus, dollar up=equities down. These factors provide the bears some morning breakfast.

For the bulls, everything went their way last week.  If SPX 1260 is hit at the open, this week will start with a big party as well.  The first sign of any chinks in the armour will manifest in the semiconductor, financial or copper sectors. Watch SOX 370.50, XLF 12.75 and JJC 45.25, all currently bullish providing the upside oomph. If any turn bearish that will equate to broad market selling.

Utilities are very important here on out.  The utes were weak all day Friday as equities bounced, then equities turned around to follow utes. If utilities lead any broad market down move, that would be ominous for markets. Watch UTIL 424-425 this week, consider that a line in the sand for bullish vesus bearish markets.

Factory Orders and ISM Non-Manufacturing hit at 10 AM so consider this a market pivot point for today. Thus, a large upside pop may retreat come 10 AM. The Merkozy (Germany's Merkel and France's Sarkozy) press conference should begin shortly discussing any results from today's meeting. Markets remain at the mercy of Europe debt news, thus, the Merkozy conference is important. Note the gold weakeness down about 15 to 20 bucks today. This is odd since gold was moving with equities. Watch gold closely today to see if it is leading or lagging the equities markets.

Watch SPX 1260/1243, SOX 370.50, XLF 12.75 and JJC 45.25. The S&P futures are up 1.34% sitting smack dab on the 1260 level while the Nasdaq futures are up 1.36%. Thus, since both are up an equal percentage, that limits the market upside to the opening pop. High drama ahead for the early fight today at SPX 1260, this will set the tone. There you go, pop now up and over SPX 1261.

Note Added 12/5/11 at 9:50 AM:  SPX blew up thru 1260 but retreated and is now traveling sideways across 1260 waiting for the data in a few minutes.  The SPX is now positive on the year. Potential market pivot point as the data hits. Use SPX 1260 as a guide.  Nice pop with NAT off the positive divergence today.

Note Added 12/5/11 at 10:02 AM: The data was weaker than estimated so the markets dipped slightly.  The SPX is up 1.38% but the Nasdaq is lagging up only 1.27%, hinting that the upsdie is limited. There is no tech leadership, at least currently. SPX is remaining above 1260 which is a feather in the bulls cap. NYAD currently printing a lofty 2186 so this favors the bears and a snap back for equities coming. If the Nasdaq continues to lag the S&P, the upside should peter out.

Note Added 12/5/11 at 10:08 AM: Utes popped at the open but are drifting lower now. SPX drifting lower as well to test the 1260 support. Bulls must maintain the 1260 level. SPX minute charts are negatively diverged..........

Note Added 12/5/11 at 10:24 AM: SPX drifting up but indicators moving lower, the peak of negative divergence now............the next minutes should be interesting......

Note Added 12/5/11 at 11:01 AM: SPX only dropped a couple points off the top. The SPX and Nasdaq are both up 1.58% which hints at a continued flat move from here for the indexes.  RIMM recovered from the down move from Friday thru today's open on lower company guidance, and is favored for the long side moving forward.