Keystone's Morning Wake-Up 9/25/12; Consumer Confidence; CAT Lowers Guidance

CAT, a global economic bellwether since it is the world's largest construction and mining machinery manufacturer, lowers forward guidance.  SPLS announces store closings which is great for stock price but what it actually means is the business atmosphere is weak.  Keystone remembers the go-go 1990's and also the housing boom which continued to top off and roll over from 2004-2007 when the office supply stores were going gangbusters. Now you can walk into an office supply store and roll a bowling ball down the alley and never hit anyone. The smaller companies and start-ups make strong use of the office supply stores as an extension of their businesses so the news indicates a weak job environment moving forward.The futures are up pre-market. The SPX starts at 1457 today. The bulls need to touch 1461 and an upside acceleration occurs; bears need to push under 1452 to accelerate the downside. A move thru 1453-1460 is sideways action.

The 10-year yield, $TNX, continues to drift lower as the note price moves higher, showing that some traders are taking profits in the stock market and moving some money back into Treasuries.  The utilities sector was higher yesterday as well reinforcing this mini flight to safety theme.  The semiconductors SOX 395.43 level is very important; as long as price stays under 395.43, the market bearishness will remain in place despite any market up move that may be occurring. If SOX moves above 395.43, that shows the bulls have regained strength and further upside for the SPX is ahead.

UTIL 483.05 is an important level all this week.  The broad indexes have limited upside as long as UTIL does not go over 483.  Markets continue to wait on Spain's bailout decision, that is what holds the indexes in this suspended animation over the last week.  Traders are referencing Thursday as a decision day where Spain is supposed to ask for the bailout. Regardless of whether Spain decides over the next couple days, the important aspect is the markets are starting to think this way, thus, if Spain does not announce its intention to seek bailout relief by Thursday, the markets will likely sell off strongly. If Spain does request a bailout, the markets will bounce and the SPX will probably move up to retest the year's high at 1475-ish. Under this bullish scenario, the UTIL 483 level will come into play.

S&P's Case-Shiller hits in a few minutes providing a gauge on the housing sector.  The FHFA House Price Index is at 10 AM, also Consumer Confidence. A market pivot point will occur at 10 AM so the way the markets move in the first half hour may not be indicative of the day's preferred direction. The 2-year note auction is at 1 PM. Watch the euro 129 level.  The euro is using this level as support, if the euro drops under 129, the bears will sell the markets, if euro stays above 129, the bulls will buy the markets.