Keystone's Morning Wake Up 12/23/11

The bulls keep running, moving up from SPX 1202 LOD Tuesday to the 1255 HOD yesterday, 53 handles, or 4.4%.  It's interesting to see such a major index move as that, in less than 20 hours of trading, behaving more like a speculative casino stock.  No wonder Joe Six does not want to go near the stock market these days.  One of the big stories the last couple days is the drop in volatilty.  Seasonality-wise, some of the drop towards complacency is expected around the holidays. The VIX was printing a 20 handle yesterday, a print with a 19 handle seems inevitable (lower volatilty correlates to higher equities markets).

The retail, financial and utility sectors provided the major broad market oomph over the last couple days. XLF is at 13.06, the BAC sub 5 number long forgotten already, yesterday printing 5.47.  RTH is over 112. Utes are up in nose-bleed territory setting up for a nice short. But for now, the broad markets head higher.  The semiconductors will next determine if the broad indexes move higher, or not.  Keystone's algo is currently scanning 368.50 on the SOX.  The SOX starts the day at 366.81, briefly tagging the 368 handle in yesteday's trading. If SOX moves above 368.50, and that number should be refined once today's trading begins, the broad market bulls will top off a Santa Claus rally in spectacular fashion, overtaking the SPX starting year number at 1258 easily, then some. If the SOX does not move above 368.50-ish than the broad market up move will peter out and the broad markets will flatten and lose steam satisfying the NYHL. At that time, when the broad indexes move lower, the XLF 12.82 will come back into play again. But, one step at a time, watch SOX 368.50 closely after the open.

NYAD bouncing in the center range so that tells us nothing. NYHL is 215 overtaking the late October high that marked the market top then.  NYHL is forecasting that the markets are now making a short-term top and need to reverse back down.  NYMO is 35, moving up into the 30 to 90 range that would be consistent at where a market pull back should occur. The BPSPX remains bull-friendly since a six percentage point reversal has not occurred, yet.  Thus, the VST indicators are not saying much today except for the NYHL that wants to see a market pull back. 

For the SPX today, starting at 1254, the market bulls continue to have the wind at their backs.  If the SPX moves above 1255.25, only about a point higher, the upside will accelerate several handles higher and the starting year number of 1258 will be taken out. The 200-day MA at 1259.38 should play a key role today. This 200-day MA resistance ceiling has held ever since it was lost during the August crash; the price reaction here is uber importante. If the market bears can push the SPX down to lose the 1244 handle the bears can get the negativity ball rolling again.  A move thru SPX 1245-1254 is sideways action.

Futures are green right now.  The S&P is up 0.39% while the Nasdaq is up 0.28% so this is hinting that the up move expected at the open will not have legs.  Watch SOX 368.50 and SPX 1255.25 to determine broad market direction today.

Note Added 12/23/11 at 8:02 AM: The S&P futures are up 0.53% and Nasdaq futures are up 0.41% so the market up move projected for the open will probably not have legs.