The ECB rate decision and press conference kicks off the days excitment, leaving rates unchanged as expected. Trichet raised rates starting in April, exactly at the wrong time just like July 2008, so watch for language in the press conference that indicates when he will reverse his tune and actually forecast lower rates ahead. International Trade and Jobless Claims are out at 8:30 AM followed by Natty Inventories and Oil Inventories mid-morning; oil data is out a day late due to the holiday.
The fun continues with Chairman Bernanke speaking at 1 PM and President Obama speaks this evening to unveil another jobs package. Thus, lots of drama ahead today. Watch the oil inventories data and Chairman Bernanke's talk as potential market pivot points today. Today also kicks off the time frame to watch max pain indicators for upcoming Opex next week, the Thursday (today) thru next Thursday time frame most important in reference to max pain.
Morgan Stanley released an interesting statement this morning expecting a big coordinated policy move this weekend by the Fed, ECB, BOE and BOJ. This will provide weekend drama in between the fooball games.
Focusing on the technicals, our instrument gauges moving forward, the retail sector was the key to the broad market buoyancy yesterday. Sure, the banks and other sectors did well, but the retail sector was key. For today, the RTH, now at 103.91, is above the 103.53 level, a key level identified by Keystone's proprietary trading algorithm, Keybot the Quant. This creates buoyancy in the broad markets so watch RTH 103.53 closely today. If RTH stays above, the market bulls will continue a move upwards, if the 103.53 level fails, the bears will regain control of the markets.
Keystone's algo is also watching the commodities sector, CRB, very closely. If the CRB moves above 340.44 (latest print 339.83), the market bulls will be running strong. If the CRB stays under 340.44, then any upside in the markets is limited.
An important development yesterday was Keystone's SPX:VIX Ratio Indicator moving above 35. This signaled a huge up day on tap for the markets which occurred. If the ratio stays above 35, the market bulls will continue to float the indexes upwards, if the ratio drops back under 35, then the sellers will reenter the markets.
Yesterday marked two weeks since the last CME gold margin hike. The first hike was announced 8/10/11, then the second on 8/24/11, thus, the target date yesterday, 9/7/11, came and went. Watch for an announcement today, but, if the CME does not raise, this will help support the gold price moving forward. The daily and weekly charts, however, are negatively diverged, and more agreeable to a downside move in gold price. At this writing, gold is up over 30 bucks today. If the CME raises gold margins, this will create a double whammy effect, considering the charts, and gold price will drop substantially. If the CME does not raise, that helps maintain price buoyancy offsetting the negative charts to some extent. If the CME raises, it would probably occur between 2 PM and 8 PM today.
Pace yourself, lots of drama at regular intervals all day long today. Markets remain at the mercy of Euro news.
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