Keystone's Morning Wake Up 12/20/11

Here comes Santa Claus, here comes Santa Claus, right down Santa Claus lane......Well, futures are up large currently with Wall Street expecting a big open. The Nasdaq is up 1.33% and the S&P futures are up 1.43% so the move up may not have legs. The retail sector broke down yesterday.  Watch RTH 109.60 today. It will likely reverse back into the bull camp at the open and help the broad markets remain buoyant.

Financials collapsed yesterday, BAC dropped under five bucks, so the upside for the broad markets is limited without strong paticipation by the banks.  XLF, now at 12.26, needs to move above 12.82 to signal the all-clear for a sustained Santa Claus rally, this is a tall order. JEF earnings were better than expected (after reducing the expectations) so this will help the financials.

Housing Starts were very strong today which is especially odd as the northern States move deeper into winter. Nevertheless, since this is one of Keystone's key monthly indicators, you can see the reaction in the markets, the positive housing numbers pumping the futures higher. TRIN printed 2.7 yesterday, uber bearish, and consistent with where markets bounce the following day, to remedy the uber bearish sentiment.

For the SPX today, starting at 1205, the 1220 resistance will likely be tested.  If the SPX moves above 1224.50 today, that will open up additional upside into the high 1220's and low 1230's. Market bears only needed to move the SPX under 1202 and the 1190's will print quickly but this is not on tap considering the futures.  A move thru 1204-1222 is sideways action. Watch RTH 109.60, XLF 12.82 and SPX 1224.50 to determine market direction. Key SPX S/R is 1240, 1235, 1227, 1225, 1220, 1216, 1210, 1209, 1204.