Keystone's Morning Wake Up 2/16/12

Last evening, Moody's rating agency threatens to downgrade 17 banks including BAC, GS, JPM, MS and European banks. Traders poked fun at Moody's last week with the late-to-the-party downgrades of Italy, Portugal and Spain, and placing France and the U.K. on a watch for a future downgrade, but the threat to banks last night has at least some bite to it today.  Despite the bulls running the indexes higher in yesterday's futures and early trading into lunchtime, several indicators such as the SPX:VIX dropping under 68, the utilities remaining weak, copper weak and volatility higher, showed that the bull's goose was cooked.  To the bulls credit, they did punch up thru that critical 1354 R that it battled since last week. This hints that the SPX likely wants to come back up again to take another look after a pull back occurs.

AAPL is the markets now.  Easily over 80% to 90% of the funds and hedgies own Apple stock so traders are patting themselves on the back telling each other how smart they all are.  AAPL performs a key reversal yesterday trading above Tuesday's high but then closing well below Tuesday's low, which is a bearish signal. Once AAPL rolled over yesterday, the broad indexes followed along lower.

The utilities remain important, the UTIL 451.17 is key today and tomorrow and the market bears continue to hold this sector underneath.  Copper, JJC, is very important since it will forecast the strengh, or lack thereof, of this market move lower.  If JJC, now at 49, drops under 48, the bears will have game.  If the CRB drops under 311.40 the broad market selling will be much more extended and stronger than anyone thought would occur. The dollar is key, if the buck moves up, then JJC and CRB will move lower. The euro fell thru 130 this morning so down euro=up dollar=down commodities.

For the SPX, starting at 1343, the bears have the wind at their backs today, only needing a couple points or so lower, to push under 1340.80, to ignite accelerated downside action for the broad indexes. Bulls are trying to stop the downward slide by preventing the JJC and CRB reaching the levels listed above. A move thru SPX 1342-1354 is sideways action.

Jobless Claims, PPI and Housing Starts are released at 8:30 AM EST.  Chairman Bernnake speaks. Philly Fed Survey and Natty Inventories will also have a market impact.  Watch the utilities, UTIL, since DTE and DUK report earnings today. The GM national embarassment reports earnings as well.  Also watch JWN to see if the wealthy folks are still spending, or not. The retail sector, RTH, will react. 

Markets are closed on Monday and typically, seasonality-wise, markets tend to be buoyant the two days in front of the three-day holiday weekend, so this favors market bulls.  To further add to the drama, today is a Bradley turn date, so the markets are subject to a trend change now.  Perhaps this roll over for the indexes is the turn the Bradley was looking for? Interestingly, another Bradley turn follows along quickly next week on 2/22/12 which hints that markets may have two trend changes in this short time frame now thru the end of the month. Buckle up since whipsaws may be on tap that slap both bulls and bears alike in the coming days. Stay nimble with day and short term trading.