Keystone's Morning Wake Up 1/17/12

The holiday is over and U.S. traders return to uber bullish futures.  The S&P downgrades of France and other Euro nations, as well as the EFSF, have had little effect.  In fact, European markets are buoyant yesterday and today.  Rosie German sentiment also helped the bulls. China growth rate is 8.9%, the lowest in 2 1/2 years, but traders were expecting 8.7%, so they tripped over each other to buy the Shanghai Index, the SSEC popping 4% and now up and over the critical 2300 support/resistance line.

The huge short positions in the euro may perfom some unwinding resulting in short-covering bull fuel at the open. The asset relationship in place all these months remain in place.  For today's open at this juncture, euro up=dollar down=commodities up=copper up=gold up=equities up=treasury price down yield up.

C results just released missed on both the bottom and top lines. WFC beats by a penny on the bottom line.  JEF downgrades FDX and UPS. JPM downgrades AXP. JPM also downgrades INTC since no further earnings growth is forecasted moving forward. There is an eanings lollapalooza ongoing this week.

The SPX 1281 is a critical level but by the looks of the futures that is no worry for the start of today's action.  Watch the 40-week MA for NYA, at 7706, which is one of Keystone's secular signals. NYA only needs 74 points to move above 7706 to place a big feather in the bulls cap.  Also watch CRB 313 to see if the bulls can regain this level, latest print is 311. The bulls want to print the 1300 handle today. The push into commodities, gold and copper on the anticipated China easing, as well as the huge short positions in the euro setting up potential short-squeezes, are bullish developments outweighing any negative earnings news such as C. The S&P futures are up 0.88% while the Nasdaq is up 0.99%.  Thus, tech is leading this pop this morning which places a big smile on the bulls face. Watch this relationship as trading gets underway. Focus on NYA 7706 and CRB 313 to gauge the bull strength.

Note Added 1/17/12 at 9:02 AM: Futures are off the highs in front of the open but a robust pop remains on tap. C earnings and downgrades of bellwethers such as FDX, UPS, INTC and AXP are perhaps making a dent. Fitch rating agency says Greece is insolvent and a default is coming soon, before the 3/20/12 bond deadline. Also keep in mind that Moody's stated, after the S&P downgrade of France on Friday, that they may downgrade France moving forward.