Keystone's Morning Wake Up 2/13/12

Futures are higher on the Greece news and it appears that the SPX will test 1351.  The SPX begins the day at 1343.  If price breaks up thru 1351, and holds above for seven to ten minutes, the 1354 strong overhead resistance will be quickly tested. Remember last week price was slapped down from 1354 so it serves as an important line in the sand.  The market bears need to drop under 1337 today for the downside negativity to accelerate.  A move thru 1338-1350 is sideways action.

Utes, commodities, copper and volatility are in focus this week.  If UTIL stays under 451.17 the market bears are favored moving forward, so watch this especially as the bell rings. If UTIL shoots up above 451.17, it will signify bull strength today and moving forward.  The CRB remains comfortably three points above the critical 310.50 level, which represents a bull-bear line for markets.  The market bulls can maintain buoyancy in the indexes as long as the CRB stays above 310.50. If CRB fails 310.50, the broad indexes will noticeably deteriorate.

Watch copper, JJC, the 48 level.  If JJC remains above 48 the market bulls are fine.  Below, and the bears will be driving the broad markets lower.  Volatility, the VIX, jumped last week after resting in hibernation during the rally thus far this year.  Watch VIX 26. If the VIX stays below 26, like now, the market bulls continue to keep the indexes elevated.  If the VIX moves above 26, the broad market selling will accelerate and potentially become dramatic.

The SPX support and resistance levels of interest, shown on the weekend, are 1354, 1351, 1347, 1344, 1341, 1337, 1333 and 1326.  The S&P futures are up 0.61% and the Nasdaq futures are up 0.61%, dead even, thus, tech is not leading the upside push this morning. This places the bull strength into question, as well as the fact that the markets are not even recovering to the Friday highs as yet, thus, the SPX 1354 ceiling should hold. Remember the key asset relationship; euro up=dollar down=commodities up=equities up, and visa versa.  This morning the euro is up.

Keystone's SPX:VIX ratio is also a key indicator to watch at the open.  The ratio begins at 64.58 favoring market bears.  Despite any bullish pop you see in the markets after the open, if the SPX:VIX does not move above 68, the bulls got nothing.  If, however, the indexes move up and the SPX:VIX moves above 68, the bulls are back in party mode.