Keystone's Morning Wake Up 12/22/11

The financials boosted the broad markets yesterday afternoon. The European 'bazooka' is providing global equity lift today. The U.S. futures are up.

Lots of economic data today. Chicago Fed Activity Index, Corporate Profits, Jobless Claims and GDP all hit at 8:30 AM EST. One-half hour after the open, Consumer Sentiment and Leading Indicators hit so watch for a market pivot point at 10 AM. Natty Inventories are released at 10:30 AM. Natty gas has been bludgeoned for months but the charts remain favorable to a bottom here and for price to bounce.  Perhaps today will set the fuse for the launch.

Utilities exploded to the upside yesterday making new highs.  Unfortunately, the charts are negatively diverged so this is not a break out but rather a smack down coming.  Keystone comments repeatedly concerning utilties and their importance in leading market moves.  Thus, this set up in the utes should lead to a topping and rolling over for the utilities sector which means trouble for the broad markets.  In addition, traders have been parking money in divvy stocks for the last weeks and a lot of this action is starting to look like a bubble forming. If the broad markets sell off in 2012, the divvy stocks will tumble just like all the others.

The SPX printed a hanging man candle on the daily chart so perhaps this will indicate a trend change. Key SPX S/R is 1258, 1252, 1247, 1240, 1235, 1227, 1225.  The 200-day MA is 1259.59. The 150-day MA is 1237.92 (watch this as key support today).  The 50-day MA is 1231.66. The 20-day MA is 1225.50.

The financials remain the key sector to reference to determine broad market direction.  Watch XLF 12.71, above and market bulls are happy, below and market bears are happy.  For the SPX today, starting at 1244, the market bulls need to simply gain a point after the open to move above 1245 and this will accelerate a further upside move. Therefore, this morning's pre-market economic data is very important. The market bears need to push the SPX lower, under 1230, to restart market negativity. A move thru 1231-1244 is sideways markets.  Seasonality-wise, markets are typically bullish the two days in front of a three-day holiday weekend. Markets are closed on Monday.