Keystone's Morning Wake Up 12/6/11

The S&P rating agency downgrade threat has European leaders in a tizzy. This places even more pressure on the E.U. Summit later this week. The euro currency direction will clarify once the ECB rate decision occurs Thursday and Summit on Friday. A quarter point rate cut is anticipated as Europe falls into recession. The French banks were down strongly on the S&P news.  U.S. futures, however, are buoyant this morning.

There is no economic data and only a few earnings reports. Autozone hit a few minutes ago looking in line with estimates. TOL will provide color on the housing sector. Moving into the technicals, watch copper closely because there is a high liklihood that this sector will show strain first if the bears start to push south.  JJC, now at 45.70, must stay above 45.25 to keep the broad markets buoyant.

Gold was interesting yesterday selling off, perhaps traders and hedgies reducing positions to raise cash for end of year redemptions and proper risk management. Paulson's funds, a large gold holder, continue to struggle. Gold was moving with equities since September except for yesterday so watch to see if this is a shift of trend, or just a one-off. Gold did lead, however, since it was weak all day, and equities turned south midday to follow gold's lead. Silver daily chart is ready to break out of a sideways triangle, one side or the  other, as shown in Keystone's chart a few posts back so this bears watching as well.

For the SPX today, starting at 1257, if the 1267 handle is touched, the market upside will accelerate strongly. If the market bears, however, push lower to touch 1244, the broad market selling will accelerate the downside. A move thru 1245-1265 is sideways indecision. Watch the critical moving average (MA) numbers below. Price pierced up thru the starting year number and the 200 day MA yesterday only to collapse back down and close under.

For the current futures, the Nasdaq is up a bit more than the S&P futures percentage-wise so this gives the upside move some street cred, but, the open is an hour and one-half away.  Here is the SPX S/R for today. Bold numbers are strong S/R and bold and underlined numbers are uber strong S/R.

1287
1285
1277-1280
1269.23 (50-week MA)
1268
1266.73 (Monday's HOD)
1264.52 (200-day MA)
1261
1260
1258
1257.64 (Start of 2011)
1257.08 (Monday's Close)
1252
1247
1244.33 (Monday's LOD)
1240
1235