Keystone's Morning Wake Up 12/12/11

The E.U. Summit is looking like a sucker's rally with the futures down large ahead of the U.S. open.  Germany opposes more ECB bond buying placing the globe in a negative mood to start the week. Speaking of mood, Moody's says the summit did not provide anything notable to hold current ratings so look for some downgrades in the future. If they downgrade France that would send shock waves around the world.

There is no economic data today and earnings releases are minimal so markets are at the complete mercy of European news.  Let's stick to the technicals where we can gauge and measure the effect on markets. Last week, copper and semiconductors failed causing the Thursday market selloff. Both sectors then recovered on Friday to supply the bull fuel.  Thus, watch JJC 45.40 and SOX 371.30 to determine broad market direction today.  Both are bullish now so they are providing broad market lift. If one of them loses the levels shown, notable market selling will occur.  If both lose their levels, the market selling event is strong and may have further sustainable downside legs. If both maintain price above the levels shown, then the market bulls are fine despite any selling occurring.

As this mornings charts show, the NYAD wants to see a sell off to remedy its large number that printed on Friday.  The TRIN is in this boat as well since it prined a very bullish low at 0.54. A snap back to the bear side is needed to remedy these readings and a drop today would take care of things.  The CPC is moving into the territory above 1.20 towards 1.30 and higher that will signal time for a rally, but it is not soup yet, perhaps after today's selloff.  The BPSPX is still signaling bullish fun for markets and has not pulled back to any extent as yet.

Markets continue to move thru the seven, now eight day range of SPX 1235-1268 as Keystone highlighted last week.  Reference the SPX chart from last week for a close look at this range.  For the SPX today, starting at 1255, the bulls had an easy road ahead only needing a three point move to attain 1258 and higher and the upside will open up into a buying frenzy. With the futures red, however, this is not meant to be, at least at the open.  The market bears need to retrace Friday's move to get any downside momo to occur so that is a formidable task. A move thru SPX 1236-1256 is sideways action.

Keep an eye on the CRB as well since a drop under 300 indicates the U.S. falling into Disinflation. The CRB 200-week MA at 304.50 is trying to support price so see if it holds, or not.  Thus, SOX 371.30 and JJC 45.40 lead broad market direction today. The move out of the SPX 1235-1268 range is important, whenever it occurs. Gold is off 42 at this writing.

Note Added 12/12/11 at 9:04 AM EST:  CRB now printing 303.19 failing the 200-week MA.  Gold is down 43. Intel drops a bombshell that Q4 revenues will fall short due to hard drive shortages. Futures immediately drop lower.

Note Added 12/12/11 at 9:11 AM EST: If copper and semi's both fail as described above, watch XLF 12.75 and VIX 33 levels for signals of further market weakness.  This market downdraft today, perhaps into tomorrow for Retail Sales numbers in the morning, may provide a nice quickie long entry area since typically, markets are bullish from Tuesday into Wednesday during OpEx week.  Italy 10-year yield now at 6.72%.