Monday, April 30, 2012

Keystone's Midday Market Action 4/30/12

The market bears receive the early nod although markets have a sideways texture thus far today.  The Nasdaq is leading the broad market lower, mainly due to a red Apple, which reinforces bearishness. Copper, JJC, has only dropped by pennies, printing in the 48.90's still yet so the bears do not have any serious oomph to the downside.  SOX and UTIL are both weaker, albeit slightly, favoring the bear side. Keystone's SPX:VIX Ratio Indicator is at 82 well above the 68 danger level.   Markets are relatively well-behaved so far today and moving sideways. The financials are weak and require watching. XLF is printing 15.41, watch the 15.15 level. Watch the 10-year yield, now at 1.92%, see if it wants to venture under 1.9% which is equity market bearish as money moves out of stocks into Treasuries (Bond or note price up means yield moves down).  Here's the test of 1397.................

Note Added 4/30/12 at 9:48 AM:  Failure at 1397, now a back kiss occurs. Specifically watch 1397.30, as long as the bears can keep the index under this number for seven to ten minutes, the bears will accelerate markets lower.  Boiiiinnnng, as this is typed the SPX launches higher over 1398 to recover, the failure only held for three minutes so the bears could not lock it in. Watch for another push down thru; use 1397.30 as your guide.  SOX is about to break 414, bearish. JJC is at 48.85 well above danger, bullish. Here's another test, SPX now printing 1397.36 .....

Note Added 4/30/12 at 9:53 AM:  The strawberry patch needs weeding but we will have to see how markets settle in first.  Bears moved the SPX back under 1397.30, see if it holds for seven to ten minutes.

Note Added 4/30/12 at 9:58 AM:  Hello.  Failure thru 1397 again. The Nasdaq is leading lower which is bearish. SOX has a 413 handle now five points or more under the 418 plus the bulls need to see but JJC is at 48.84 well above the 48.25 the bears need to see.  The VIX is higher helping the bears.  SPX now has a 1395 handle, price needs to hold under 1397.30 for another couple minutes to lock in negativity for today. Without copper cooperating lower, however, the market downside is limited.  SPX S/R is 1397, 1394, 1391, 1389, 1388, 1387, 1386.33 (20-day MA), 1385.99 (10-day MA), 1385, 1384.11 (50-day MA), and 1378. Note the strong confluence of support at 1384-1388 as mentioned on the weekend.

Note Added 4/30/12 at 10:08 AM: SPX pops back above 1397.30. The bears are having difficulty moving the broad indexes lower since copper remains buoyant. Lots of sideways thus far today wth a mini bull-bear fight occurring at 1397.30.  AAPL is off 2% helping provide the market bias lower. The 50-day MA for AAPL is 580.06 so keep the 580 number in mind this week. The Nasdapple continues to lead the SPX lower which favors the bears.

Note Added 4/30/12 at 11:53 AM:  SOX leaps off the bottom at 11:38 AM so the bulls are trying to get something started. JJC is now positive by a couple pennies; the market bears will not make headway lower unless copper weakens.  XLF is flat today.  VIX is up a buck to 17.31 dancing between the 20-day MA above at 17.83 and 50-day MA below at 17.10; watch which side price exits.  The 20 MA above the 50 is bullish for volatility, bearish for markets. AAPL is down 2.3% today so the Nasdaq leads the SPX lower, albeit slightly, which favors the bearish bias. Volume is light today at a run rate of about three-quarters of a day's average expected volume. TRIN is 1.4 reflecting steady-eddy selling, which is occurring. Copper will not let the markets go lower.  The dollar is stronger, but only by a hair which allows the copper buoyancy.  Market bears need a higher dollar so commodities and copper are spanked down, which in turn will take the markets lower.  Some copper buoyancy may remain in anticipation of the RBA rate cut late this evening. SOX is continuing upwards now printing over 415; market bulls will be celebrating if semi's move over 418.25, now only three points higher.

Note Added 4/30/12 at 3:11 PM:  Same-o, same-o, dollar up but by a smidge unable to place pressure on copper or commodities so the broad markets experience limited downside today. SOX is 411 so the bulls are not making any progress.  Look at how SPX bounced off the 1394 support at 2:38 PM. Markets are moving up ever since.  The 1394 S now serves as a line in the sand for bulls and bears. VIX continues to sit inside the bracket formed by the 20 and 50-day MA's. Gold and the miners recovered as the day moved along. Typically since the low target gave way at SPX 1397, a move lower than 1394 would have been more likely to occur today, at least a test down to 1391 support.  Dr. Copper is Atlas holding the markets up today unless a late day swoon occurs.

Note Added 4/30/12 at 3:25 PM:  On the SPX 30-minute chart, the 8 MA crossed down thru the 34 MA at noon time which is bearish over the short term, as long as the 8 stays under the 34. Natty moving up nicely today but there is a gap that will need filled at 2.0-2.07 and the 20-day MA is 2.05 so a back kiss of this confluence would be in order. SPX has basically moved across 1395-1397 all day long, a couple point range. The calm before the storm? It's a fight between bulls, with copper in their corner, and bears, with semi's in their corner.  One or the other will win. Volume fell out of bed as the day went on, a run rate of 75% of a day's average volume has now eroded into a day that will experience only about 65% of a day's average volume. The trading floor looks like a wax museum, to steal Art Cashin's comment form years ago, 'everyone is standing around, standing still, you recognize all the faces, but no one is doing anything'.

Note Added 4/3012 at 3:38 PM: SPX is getting goosed; the fishing line is being tossed out to see who bites. Watch price at that 1397.30 level which played an important role all day long. This is a mini bull-bear battle, whichever side of 1397.30 the close occurs on.  Also, looks like the SPX will log a negative month for April ending a five-month winning streak and placing the first negative month of 2012.  Here's the test ..... 1397.21.... 1397.37 .......1397.48.......

Note Added 4/30/12 at 4:03 PM:  SPX closed on the top side of 1397.30, in the last minute, a small feather in the bulls cap.  Market bulls got nothing unless they boost SOX, bears got nothing unless they send copper lower. Bears need a stronger dollar. Markets are sideways waiting for a catalyst. The VIX move is important, closing at 17.18 pennies above the 50-day MA, a move under at 17.10 will crank the bull party up again, a move above the 20-day MA at 17.82 will drain the punch bowl. If VIX moves up above 18.10, the bears will be running strong with markets selling off. Bulls must prevent VIX 18.10 with all their might.

Keystone's Morning Wake-Up 4/30/12

EOM today so the monthly charts receive new data points. Japan and China markets were closed overnight due to holiday.  Sixteen Spanish banks receive a downgrade from S&P and Spain is confirmed to be in recession. The RBA expected cut of 25 bips this evening requires watching.  Markets should be unresponsive to the cut since it is priced in but a 50 bip cut (not expected) would bounce commodities and equities. Personal Income and Outlays, a fave data point for the Fed, hits shortly. Lots of Fed heads talking every day this week.

Sticking to the technicals, watch SPX 1407 which will launch further upside. Watch 1408.47 since this was the starting number for April.  At the close of trading today, above 1408.47 locks in another positive month but below 1408.47 locks in the first negative month since November 2011, five months ago.  Watch 1397 on the bear side since losing this level will usher in accelerated market selling.  A move thru 1398-1405 is sideways action today.

The dollar is stronger today, the euro weaker, thus, commodities, copper and equities should be weaker and that is the case currently.  Watch CRB 311 and JJC 48.25.  CRB is helping the bears right now and JJC is helping the bulls.  With copper projected to be a bit weaker today, JJC 48.25 will tell a lot.  If the markets sell off after the open but JJC stays above 48.25, the bears got nothing.  But if the markets sell off and JJC drops under 48.25, the bears got game.  SOX, semiconductors, are important, the 418.75 level is the bull-bear line, currently favoring bears and helping prevent the markets from moving higher.

Utilities are important as well moving almost 5% higher in twelve days. This is bullish for markets so watch to see if weakness appears in the utes moving forward, or not.  As long as UTIL stays above the 450-455 range bulls are fine. If price drops into and thru this range, the broad markets will be in trouble.  UTIL sits at 470 well above danger. JJC and SOX are the keys to broad market direction today. The Nasdaq futures are leading the S&P's lower pre-market which places a small feather in the market bears cap to start the day.

European Bond Yield Summary 4/30/12

10-Year Yields:
Greece 20.33%
Portugal 10.53%
Hungary 7.98%
Spain 5.88%
Italy 5.63%
Belgium 3.33%
France 3.00%

Netherlands 2.26%
U.K. 2.11%
Finland 2.08%
U.S. 1.93%
Germany 1.67%

S&P rating agency downgrades 16 Spanish banks, not too surprising since this always occurs after the sovereign downgrade.  The more important news is Spain's GDP, negative for another quarter, now meeting the technical definition of recession of two consecutive quarters of negative growth. In fact, including the zero growth last summer, Spain has been sick for many months. Yields, however, are all behaving themselves as a new week of trading is underway.  Portugal is about 200 basis points under severe danger which surfaces at 12.50% and higher.  For Hungary, watch 8%.  Watch the 6% threshold for Spain and Italy. France continues to sit on the 3% level.

For the safer haven grouping, note that the Finland yield is now under the U.K. so traders perceive Finland to be a bit safer than the U.K. The U.S. and Germany remain under 2%.  Euro is weaker, dollar is higher so commodities and equities should feel pressure and the U.S. futures are slightly lower.  RBA (Australia) is set to cut rates by 25 basis points tomorrow morning (Eastern U.S.A. time) which should be priced into markets already.  A 50 bip cut would be a surprise which would cause commodities and equities markets to move higher. Japan and China markets are closed today for holiday.

Sunday, April 29, 2012

Keystone's Key Events and Market Movers Week of 4/30/12

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Keystone presents the following underlying market currents, sometimes subtle, sometimes turbulent, that move global markets in real time.  The key dates and times below typically correspond to market pivot points.

Key Dates and Times for the Week Ahead:

·         Monday, 4/30/12:  The European debt crisis drama continues; Greece, Portugal, Hungary, Spain, Italy and France all remain at risk with yields moving up towards the November-December 2011 levels. Last week, Moody’s downgraded Spain’s debt two notches with negative outlook but the markets ignored the news (the downgrade was expected).  The France runoff election occurs on Sunday, 5/6/12.  Watch the European spreads closely such as the France-Germany 10-Year Yield Spread. Congress is not in session which is a market positive. Watch for China triple R cut that would pump markets higher with liquidity. Earnings continue this week.  Earnings have beat lowered expectations for the most part, about 75% beating which is about what is to be expected, although many companies are reporting lower revenue as compared to a year earlier—which is going in the wrong direction if folks are expecting companies to hire.  EOM today-monthly charts receive a new data point. Personal Income and Outlays 8:30 AM-a Fed favorite. Chicago PMI 9:45 AM. Dallas Fed Mfg Survey 10:30 AM. Farm Prices 3 PM. Lots of Fed Heads speaking every day this week. Fed’s Fisher speaks 5:30 PM. Earnings: APC, BALT, FLS, FMC, FST, GNK, GLRE, HAR, HLF, HEP, HUM, JEC, JKS, LDK, L, LMNX, MAS, MCK, NYX, PCX, PCL, KWR, FIRE, SBAC, SCCO, SPF, TEN, VECO, WPI, WPP, ZOLL.
·         Tuesday, 5/1/12: RBA (Australia) 25 bip rate cut probably priced into the markets but a 50 bip cut would bounce commodity and equity markets.  Fed’s Lacker speaks. Motor Vehicle Sales. Fed’s Kocherlakota speaks 9:30 AM.  Construction Spending and ISM Mfg Index 10 AM. ISM will affect the energy markets. Look for a market pivot point at 10 AM. Fed’s Williams speaks 11 AM. Fed’s Evans 12:30 PM. Fed’s Plosser speaks 2 PM.   Earnings: ACUR, ACI, ADM, ADP, AVP, BIIB, BRKR, CBT, CCC, CARB, CECO, CBS, CERS, CHK, CMI, CNW, CPO, CMI, CW, DPZ, ECL, EMR, EEP, FISV, FWLT, GGP, GNW, HRS, HUN, IDIX, KLIC, LM, MMC, MMI, MYGN, NSPH, NI, NTRI, ODP, OPEN, OSG, PEET, PFE, RDN, RGR, QUIK, SIRI, TNB, TRW, VLO, VRSK, WTS, XCO, YRCW.
·         Wednesday, 5/2/12:  Mortgage Purchase Applications 7 AM. Challenger Job Report 7:30 AM. Fed’s Tarullo speaks 8 AM.  ADP Employment Report 8:15 AM. Treasury Refunding Announcement 9 AM.  Factory Orders 10:00 AM. Oil Inventories 10:30 AM.  Fed’s Lacker speaks 12:30 PM. Markets are typically bullish about two-thirds of the time moving towards the full moon. Earnings: APKT, AGN, AWK, AGP, BZH, LNG, CLH, CLR, CLX, CTB, CVS, EIX, EE, EPD, EXPD, FARO, GERN, GRMN, HPOL, HSC, HTZ, IACI, ICE, IPI, IRIS, JBT, LGND, LDL, MRO, MSO, MA, MITK, MUR, NKTR, PVA, PCG, PRU, SMSI, SUN, SYMC, TSO, HIG, TWX, VCLK, V, WLT, WTW, WFM, WES, YELP, YOKU, Z.
·         Thursday, 5/3/12: ECB Rate Decision 7:45 AM and Draghi Press Conference 8:30 AM. Chain Store Sales data. Productivity and Costs and Jobless Claims 8:30 AM.  Ceridian-UCLA Diesel Indicator 9 AM.  ISM Non-Mfg Index 10 AM.  Natty Inventories 10:30 AM. Federal Reserve Bank Presidents Speak 11 AM.  Fed Balance Sheet and Money Supply 4:30 PM.  Earnings: ACOR, AFFX, ARG, ATK, ALNY, ANR, AIG, AMT, ANTH, APA, AVEO, BEAM, BEBE, CAH, CFN, CBOU, CEC, CF, CKP, CI, DOLE, EP, EPL, FSLR, FLWS, FSYS, GM, GXP, GUID, HCA, HEK, H, IRF, JRCC, KOG, KFT, LXRX, LNKD, LFUS, MTW, MELA, MCHP, NU, NRG, PGN, PWR, SD, SLE, SRE, SQNM, SWN, SFY, SYNM, TRGT, TDC, TRMB, UPL, VIAB, WNR, WTR, XEC, ZAGG.
·         Friday, 5/4/12: Fed’s Williams speaks. Monster Employment Index. Monthly Jobs Report 8:30 AM- after the Good Friday debacle last month the jobs report is extremely important; did last month start a new leg lower for jobs, or, was it a one-month blip in the data? The jobs numbers must exceed 200K for all months forward to show a true recovery in place taking QE3 off the table. Otherwise, QE3 is coming soon, when CRB (commodities) drops under 280. Traders must place their final bets for the Monday open ahead of the weekend Euro election turmoil. Full Moon occurs this evening. Earnings: AEX, AON, ABR, BPL, CCO, DUK, EL, LNT, MHK, NFG, PPL, PGR, SE, TSRX.

·         Sunday, 5/6/12:  France Runoff Election. Greece elections. Futures markets will react to the elections results and set the tone for Monday’s open.
·         Wednesday, 5/9/12: 10-Year Note Auction 1 PM.
·         Friday, 5/11/12: PPI 8:30 AM. Consumer Sentiment 9:55 AM.
·         Tuesday, 5/15/12:  CPI and Retail Sales 8:30 AM.
·         Wednesday, 5/16/12:  Housing Starts 8:30 AM. FOMC Minutes 2 PM.

Saturday, April 28, 2012

SPX S/R Week of 4/30/12

SPX support, resistance and moving averages are highlighted below.  Last week saw a fakeout market downside move on Monday that gave way to higher markets as the week progresse, the Apple Rally.  As price moved upwards thru the week, the moving average levels below were all taken out.  The moving averages are developing a sideways texture which hints that price would also prefer to move more sideways going forward.  The confluence of the moving averages and support levels provides a strong gauntlet of support for the SPX at 1383-1387.

The SPX closed above 1400 for the first time since the first couple days of April.  Monday is the last day of April, EOM, so the monthly charts will provide a new data point.  The SPX started April at 1408.47 and now, at 1403.36, remains about five points under. Thus, the bulls need five or move points in the Monday session to provide a positive month, otherwise, the SPX will close with the first negative month since November 2011, five months ago.

For Monday, starting at 1403, critical sturdy support, the bulls need three or four green points to touch the 1407 handle, if so, the upside will accelerate strongly. The 1408.47 will then likely give way and the month of April will head for a positive close. The strong R at 1413 would become the next target. The wine will flow like water and bulls will be celebrating a market that simply does not want to go down, throwing confetti and dancing drunkenly, completely complacent, and now believing that markets will never go down (therefore, contrarian thinking may be handy moving forward).

For the market bears, the 1406 print must be prevented at all costs to stop the upward market momo.  In addition, stopping the upward momo is key since that would end the month of April as a negative month and allow the bears to beat their chests in victory. The bears need to push the SPX under 1397 during Monday, however, to ignite strong downward pressure. If 1397 fails, a test of 1391 would likely occur in short order. A move thru 1398-1405 on Monday is sideways action.

Copper jumped higher at the end of last week providing more bull fuel. Semiconductors attempted a run higher but petered out.  The bulls need the semi's, SOX, to cooperate otherwise the market upside will not have legs. The bears need to spank copper back down to restart the market negativity.  Therefore, the dollar is important come Monday morning.  A higher dollar means lower copper and commodities favoring market bears; a lower dollar means higher commodities and copper favoring market bulls.

·         1425 (Gap Fill from 2008)
·         1424
·         1422 (4/2/12 Intraday HOD for 2012: 1422.38)
·         1419 (4/2/12 Closing High for 2012: 1419.04)
·         1417
·         1413
·         1410
·         April Starting Number for the Month is 1408.47; Monday is EOM
·         1408
·         Friday HOD 1406.64
·         1406 (5/29/08 HOD)
·         1404
·         Friday Close 1403.36 – Monday Begins Here
·         1403
·         1399
·         Friday LOD 1397.31
·         1397
·         1394
·         1391
·         1389
·         1388
·         1387
·         20-day MA 1386.96
·         1385
·         10-day MA 1383.39
·         50-day MA 1383.35
·         1378
·         1375
·         1372
·         1371(5/2/11 Intraday HOD for 2011: 1370.58)
·         1370
·         1366
·         1364 (4/29/11 Closing High for 2011: 1363.61)
·         1363

Keystone's Trading Week in Review and Path Ahead 4/28/12

On 4/20/12, Friday, GE and Mickey D’s (MCD) earnings are great which helps continue the bullish vibe. The markets start off higher but drift lower as the session continues. AAPL loses critical support at 580 and steadily falls into the close, price is now 10% down off the top. Financials weaken.  The SPX is below the 50-day MA.  Traders are anxious ahead of the weekend with the key France elections and China PMI on tap. The markets finish flat on the week.  The top in the markets occurred on Tuesday afternoon when the IBM and INTC earnings were released and the markets have drifted lower ever since.


On 4/22/12, Sunday, France election Round One results show that Sarkozy loses to Hollande, the socialist, as expected. The Round Two runoff election will occur Sunday, 5/6/12. The futures markets sell off a couple S&P points but the outcome was anticipated since last week.  The more important news overnight is the HSBC China PMI at 49.1 which is the sixth consecutive month showing contraction (under 50 is a contracting economy and over 50 is an expanding economy). In addition, diesel imports are down which would verify the decrease in shipping and construction industries. The futures markets tumble lower overnight with the S&P’s down ten firm handles.

On 4/23/12, Monday, a Bradley turn date ushers in market turmoil with U.S. futures markedly lower, the Dow Industrials down over 100 points pre-market.  Markets awake to the disappointing low HSBC China PMI but more importantly, the negative news out of the Eurozone.  The Dutch are failing to agree on budget cuts sending the Eurozone into a tailspin. The Netherlands is one of the countries helping to prop up the Eurozone so problems with their government and path forward weaken markets.  Germany’s manufacturing data is slowing. The IMF receives 430 billion in additional pledges to help support Europe, but nothing form the U.S. or Canada.  China promises to provide funding but will not commit until they see austerity in Europe. How many pledges will actually become cold hard cash contributions?  Spain’s GDP falls and signals that a recession is occurring. The Italy market is down 3% with Spain close behind.  The France-Germany 10-Year Yield Spread blows out to 143 and growing; the Netherlands-Germany Spread grows to 73 the highest since 2009. Spain 10-year yield is 6% with Italy printing over 5.8%. France 10-year yield is at 3.10% ten basis points higher than last week. As if all this dire news is not enough, WMT is now mired in a bribery scandal concerning their Mexico units, which were the highest drivers of growth the last few years.  On the earnings front, 85% of the companies have beat on earnings thus far, but the expectations bar was lowered to the point that it is now sitting on the floor and even Grandma Edna has no trouble stepping over that bar. Earnings expectations are becoming irrelevant. The Dutch government will resign en masse after the austerity fiasco today. Jittery markets grow weaker.

On 4/23/12, the opening bell rings.  Markets tumble lower with financials and retail sectors weaker and volatility, VIX, spiking above 20.  Keystone’s SPX:VIX Ratio Indicator drops under 68 which verifies the large down day on tap but after the first couple hours of trading moves back above 68 showing that the bulls are fighting back and the downside may not be sustainable. The day ends with the SPX down 12 points or -0.8%.  The Dow Industrials are down 102 points or -0.8%.  The Nasdaq is down 30 points or one percent back under the 3000 level. NFLX misses earnings after the bell and takes the pipe. Texan (TXN) earnings are in line. Facebook announces lower profits while expenses are increasing.  Users are now at 900 million.

On 4/23/12, Keystone’s proprietary trading algorithm, Keybot the Quant, turns bearish flipping to the short side at 9:57 AM EST at SPX 1362. A weak financial sector and volatility spiking higher helped trigger the move.

On 4/24/12, Tuesday, Moody’s reaffirm’s the Netherlands triple A rating and this helps calm the European bond markets.  Futures are up until weak housing market pushes the broad indexes into the red.   FOMC Two-Day Meeting begins. Markets are in a holding pattern ahead of AAPL earnings after the bell. Apple is the markets. After the close, Apple produces strong numbers although the top line and iPad sales were light in comparison to the highest estimates. In previous quarters AAPL always beat all estimates but not this time.  The earnings, however, are received extremely positively. 35 million iPhones is an impressive number matching the highest estimates.  Futures explode higher especially the Nasdaq, er Nasdapple, setting up Wednesday to be a strongly bullish day for markets.

On 4/25/12, Wednesday, AAPL earnings create a gap up open and strong day ahead.  FOMC Rate Decision and Press Conference occurs and Chairman Bernanke mentions the word ‘accommodation’ (more quantitative easing coming) so markets finish the day printing at the highs. The day ends with the SPX up 19 points or 1.4% to 1391.  The Dow Industrials are up 89 points or 0.7%, over the 13K level.  The Nasdaq was the big winner up 68 points or 2.3%, back over the 3000 level.

On 4/25/12, Keystone’s proprietary trading algorithm, Keybot the Quant, turns bullish flipping to the long side at 11:59 AM EST at SPX 1387. The financial sector recovers and volatility tumbles lower reversing the bearish move from Monday.  All the major sectors are in the bull camp except for copper, commodities and semiconductors which require close watching moving forward. Further market upside will occur if any of these three sectors move higher and rejoin the bulls. The upside will be limited if these three sectors remain bearish.

On 4/26/12, Thursday, Eurozone confidence drops which sends the futures markets lower.  An Italy debt auction does not go well and Italy and Spain yields jump higher.  Jobless Claims move higher continuing this recent trend higher. The dollar is weak, however, so commodities and especially copper move higher taking the broad indexes higher with the SPX closing the day two pennies away from 1400.  After the close, S&P rating agency downgrades Spain debt two notches with a negative outlook moving forward.  S&P futures move four points lower and are weak into the overnight session.

On 4/27/12, Friday, the European bond market reaction to the Spain downgrade is muted since it was not a surprise.  Spain unemployment is over 24%, one in four people do not have a job. The Spanish banks are weak. Samsung Galaxy smartphone outsells Apple’s iPhone in Q1.  Samsung is the leader in Smartphone sales.  Foxconn, Apple’s production arm, plummets 16% this morning stating that demand is weakening.   GDP comes in light at 2.2%. After all the Fed easing, Operation Twist, and the LTRO’s from the ECB, a world awash in liquidity and easy money, the GDP could only muster up a paltry 2.2% is a sad commentary on economic health.  Markets remain on a sugar high from AAPL earnings, as well as blowout AMZN earnings, however, ignoring any bad news, and punch higher to finish out the week. Besides, bad news is good news in these bizarre markets since traders are now trained to expect more quantitative easing if the news is bad thereby sending markets higher. The party atmosphere, with euphoric bulls very complacent, continues into the weekend. The SPX closes above 1400 for the first time since early April.  The broad indexes are up about 2% on the week with the tech sector moving much higher. This week is dubbed the Apple Rally week. Semiconductors and copper are the two most important sectors to watch right now.


On 4/30/12, Monday, EOM. Lots of Fed speakers on tap every day this week. Earnings continue.

On 5/1/12, Tuesday, ISM-watch energy markets.

On 5/2/12, Wednesday, …. Challenger and ADP provide early reads on employment numbers ahead of Friday.

On 5/3/12, Thursday, …. ECB Rate Decision 7:45 AM and Press Conference 8:30 AMJobless Claims. Federal Reserve Presidents speak 11 AM.

On 5/4/12, Friday, Jobs Report. Traders must finalize positions Friday afternoon ahead of the weekend European election turmoil.  The futures markets will react overnight Sunday and the U.S. markets will immediately move as the opening bell rings on Monday.


On 5/6/12, Sunday, the France runoff election occurs and……  The Greece elections also occur and are important since the government has to pass spending cuts as per loan agreements and austerity promises.

Friday, April 27, 2012

Keystone's Midday Market Action 4/27/12

GDP lays an egg at 2.2% but the uber euphoria and complacency in the markets carries the broad indexes higher anyways. Traders are sniffing out further QE on the way and trading on that thought while ignoring the fact that prior QE only provided a GDP of 2.2%.  The SPX received the two points of upside after the open to print above 1402 so a few more handles of upside should be explored today. SPX now printing 1403.  Overhead resistance is 1406, 1404 and 1403.

The dollar is weaker so commodities, copper and equities are higher.  JJC is well above 48.10 and other sectors of interest such as RTH and XLF are moving to lofty levels.  The semi's, SOX, is printing 413.28, actually down today.  This is the status quo outcome for markets mentioned in last evening's missive since copper remains elevated helping bulls but since the semi's are not moving higher, the market upside should be limited.  AMZN explodes 16% higher which boosts the tech sector but surprisingly, tech is not leading the broad markets higher, the indexes are coincidental today, now actually the broad markets are leading tech upwards, thus this hints that the market upside may be limited today. The Apple is red. 

Consumer Confidence at 9:55 AM, only minutes away that should create a market pivot point. Watch the semiconductors.

Note Added 4/27/12 at 10:25 AM:  The Consumer Confidence number was better than expected but the markets pivoted downwards. The markets are trading erratically and are highly unstable currently.  The GDP number should have spanked markets lower, instead the markets rally, the sentiment number should have bounced markets, instead they sold off. Combine this with the uber bullishness in the markets, with complacency very high, and you have very unstable markets.  Semiconductors remain weak, copper remains elevated, so the market move is sideways.  Note that the VIX, volatilty is moving up today, even before the markets started to leak lower. Utilities moving up this week has helped support the bullish case. The Nasdaq and SPX are moving in the same percentage moves today so this promotes a sideways move for markets. SPX 1399 is key S/R. As the markets stumble along sideways on what may be a lazy Friday trade, perhaps the vegetable garden now requires more attention than the markets. JJC and SOX remain key.

Note Added 4/27/12 at 12:19 PM:  JJC is at 48.80 well above 48.10, bull-friendlySOX is 415.32 well below 418.50, bear-friendly. Markets stumble sideways, SPX testing 1403 R right now.  HOD is 1404.64, which is also the high for the week so watch this number the remainder of the day. SPX 1406 is strong resistance. Either copper or semi's should decide who wins going forward. For now, the lazy Friday action idles along. The SPX has moved thru the tight two-point range of 1401-1403 for an hour and one-half.

Note Added 4/27/12 at 2:19 PM:  SPX came up to test the 1406 R and received a spank down with negative divergence showing on the minute charts; see if the 1406 reisistance holds, or not.  That would be a big feather in the bull's cap.  If not, price will move back down to test 1403 support. SOX moved up to the high 416's but then pulled back printing 415.96 now.  JJC is at 49.  Probably more sideways perhaps thru 1401-1406 into the weekend. VIX is under 16 helping pump markets higher.

Note Added 4/27/12 at 4:04 PM:  Markets stumbled out sideways into the weekend. Copper closed at the high for the day and week.  Dr. Copper enjoyed a quick recovery this past week taking markets higher.  The AAPL and AMZN strength, along with the doctor, accounts for the bull fuel. Tech led the broad markets today but semi's ended flat. Thus, copper and semi's will face off again on Monday. Utilities are up 2% this week and are another force lifting the indexes. VIX ended the day on the plus side.

European Bond Yields 4/27/12

10-Year Yields:
Greece 21.03%
Portugal 10.87%
Hungary 7.97%
Spain 5.94%
Italy 5.74%
Belgium 3.37%
France 2.99%

Netherlands 2.25%
Finland 2.10%
U.K. 2.08%
U.S. 1.92%
Germany 1.67%

Yields are relatively well-behaved after the S&P downgrade of Spain last evening with negative outlook. Portugal is down 180 basis points over the last week, a large move lower, placing Portugal on the back burner for now.  Spain printed 6% a short while ago but remains under for now, ditto Italy. Netherlands has dropped 15 basis points since Monday now down to 2.25% moving into the safer-haven grouping.  Germany yields remain low as money seeks safety there. The downgrade of Spain was expected and the reaction is muted in the markets. The troubles in Europe will continue to keep yields on U.S. Treasuries low as money seeks perceived safety.

U.S. futures, that were weaker on the Spain downgrade news last evening, have now recovered to the flat line ahead of the GDP number that is released at 8:30 AM EST, less than three hours away. For GDP, average consensus is expecting about 2.6% but traders are really focusing on a number 3% or better considering all the stimulus that has been thrown at the markets. Thus, an equities rally should occur if GDP is above 3%, probably sideways action if the number is between 2.6% and 3.0%, and an equities market sell off is likely if the GDP comes in sub 2.6%. The dollar is weak this morning which will help boost commodities, copper and equities. The GDP number will impact the dollar.

Thursday, April 26, 2012

Keystone's Evening Nightcap 4/26/12

Copper stole the show today, it will be important again tomorrow.  Copper moves up if the dollar is down and visa versa so you can watch the dollar and know what is happening to copper.  AMZN catapults upwards after the close this evening on stellar earnings while SBUX drinks away its troubles with a double latte mocha cappuccino. Amazon eats Best Buy's lunch since folks use BBY as the showroom and idea center, then the consumer returns home to buy the product on the Internet from AMZN. S&P downgrades Spain debt with a negative outlook moving forward. The news was not unexpected but the S&P future's dropped about four handles on the announcement a couple hours ago and are moving into the overnight period weak.

The Friday technicals can be simplified to a bull-bear battle between copper and semiconductors. Copper, JJC, is now bullish above 48.10 and this affects the markets positively. Semi's, SOX, are bearish below 418.50 affecting the markets negatively. Markets will move sideways if there is no change.  If the SOX move above 418.50, the market bulls will move forward on a sustained path higher that has some staying power. If the bears push JJC back under 48.10, however, the upside rally is over and the bears will send markets south. The CPC Put/Call printing in the 0.7's and low 0.8's, as well as the VIX printing 14 and 15 handles (today LOD 15.75), are consistent with where significant market tops occur. 

The SPX closed above the critical 1399 resistance, now support, but two pennies shy of 1400. The bulls will accelerate markets higher if the 1402 handle is touched.  The market bears need to push about twelve points lower to 1387.25 to accelerate the downside.  A move thru 1389-1401 is sideways action.  SPX S/R is 1406, 1404, 1403, 1402 (for Friday only), 1401, 1399, 1394, 1391, 1389, 1388, 1387.25 (for Friday only), and 1386.95 (20-day MA).  Note the sturdy confluence of support at 1387-1388 for Friday, if that gives way to the downside look out. Extreme caution is required in these markets. GDP at 8:30 AM will impact futures then the markets will pivot when the Consumer Confidence is released at 9:55 AM. European bond market will be important in the early morning due to the Spain downgrade. Higher Spain and Italy bond yields will create anxiety that will weaken U.S. futures. If a weaker open is projected for Friday after the GDP number hits, after the opening bell, watch JJC, if it drops under 48.10 the downside will have legs, but, if the markets sell off but JJC stays above 48.10, the bears got nothing.

Keystone's Midday Market Action 4/26/12

XOM and UPS earnings lay an egg this morning. UPS is an important barometer for global economic health since the shipping industry impacts every level of business. Keystone uses the UPS weekly chart, the 20-week MA and 50-week MA cross as an indicator for secular bull markets versus secular bear markets.  The 20 MA is currently above the 50 so the markets are in a secular bull but the lackluster UPS earnings will continue to move the 20 MA lower towards the 50 MA.

Reference the tug-o-war description in last evenings missive to determine broad market direction moving forward.  JJC 48.10, CRB 311 and SOX 418 are pulling the rope in the bear direction.  RTH 40.96, XLF 15.10 and VIX 18.50 are pulling the rope in the bull direction.  Any change in these sectors will influence the broad indexes in the same direction.  Remember, these levels continuously change, some more than others, since Keystone's algo is constantly recalculating in real-time.  With this said, let's take a look at the early action.  There is no change to any of the sectors so the markets should remain in a flat holding pattern and sure enough, the broad indexes stumble sideways as the session begins.  Jobless Claims weakened futures before the bell. Pending Home Sales are hitting as this is typed and send the major markets to the green side, albeit slightly.  Natty Inventories are at 10:30 AM. Natty is enjoying some buoyancy so the inventory numbers will allow this continue or slap the price back down in one-half hour.  Keystone took profits in CTRP, an overnight trade, and will look to reenter.

Note Added 4/26/12 at 10:11 AM: The SPX punched out a point higher moving over 1392 so further upside should be on tap with the SPX targeting 1394 and 1399 next. Note how the bulls are trying to push copper, JJC, up and over the 48.10 level, now printing 48 only a dime away which will ensure further market upside over SPX 1400. Also, SOX is moving towards the 418 victory level, now printing 413. Watch the tug-o-war.  Copper is key today.  JJC punching thru 48.10 will be very bullish for markets but by the same token, if JJC fails short at this level today and heads lower, Dr. Copper will be telling you that the market bears are not finished.

Note Added 4/26/12 at 1:39 PM:  Note that copper, JJC, moved up over 48.10 at 10:30 AM and this is adding bull fuel, the tug-o-war rope moves more on the market bulls side. Watch JJC closely today.  The VIX has a 15 handle, becoming more bullish for markets the further it falls.  RTH and XLF remain elevated so the bulls are enjoying a market move upwards, SPX moving towards testing strong resistance at 1399, then the psychological 1400 level. Watch SOX 418.25, now printing 413.81, about three points lower.  Market bulls will lock in sustainable upside if SOX attains the 418 plus level. Market bears do not want SOX to go up any further and in fact want to push JJC back under 48.10. The bulls are winning the tug-o-war today. Keystone took profits on FSLR, an overnight trade.  Also bot more KGC. Also added more BGZ. The uber complacency by traders in these markets is very concerning.

Wednesday, April 25, 2012

Keystone's Evening Nightcap 4/25/12

A wild gap-up day ends in confusion as the closing bell rings twice. Keystone cannot remember that happening in any recent memory.  The bell was mistakenly rang one minute too early, then had to be rang again to officially close the markets.  You just cannot find decent help these days--there's only millions and millions of people unemployed. 

Day One of the Apple Rally ticks by.  AAPL closed at 610 above the 20-day MA at 607.62 which is bullish. The buying volume today was not impressive.  The move up for Apple will provide new opportunities to short.  The power that AAPL wheels is remarkable with the Nasdaq, the Nasdapple, jumping like a puppet on a string, and the broad markets following close behind.  Apple is the markets.  The broad indexes are fueled by two engines; one is Apple and the other is Chairman Bernanke's quantitative easing (QE). Markets were mixed in the 2 PM hour as Bernanke assumed his position behind the mahogany desk for his quarterly Desk Conference. Keystone wonders what is in the drawers of that desk? Perhaps printing plates? The Chairman said the magic word 'accomodation' in the Q&A session and the markets were breathing easy knowing that another fix (QE) was always close at hand.

RTH 40.96, XLF 15.10 and VIX 18.50 were all in the bull camp to start the day and stayed that way, each adding bullish energy to the broad indexes.  Copper, commodities and semiconductors, JJC, CRB and SOX, respectively, all add bear negativity to markets.  For the bulls to make any sustainable progress upwards, they must win back one of these three sectors. Watch JJC 48.10, CRB 311 and SOX 417. If one or more of these give way to the upside, the market bulls got game, if not, the bulls got nothing.  The bears will continue to try and pull retail, financials and/or volatility into their camp; watch the levels shown at the start of this paragraph.

Keystone's algorithm, Keybot the Quant, flipped back to the long side today taking a two percent loss. Do not be surprised if it whipsaws back again this week.  The bulls and bears are in a tug-o-war right now, think of the six sectors above as the two teams with three on one side and three on the other, and the levels shown for the sectors will dictate the winner of the tug-o-war.  The bulls have the advantage currently.

The SPX closed at 1391, above the 20-day MA which is bullish.  SPX 1391 is resistance, then 1394, 1399, 1401 and 1403. The 8 MA is above the 34 MA on the 30-minute chart which is bullish.  For Thursday, the bulls only need to see a smidge of green in the futures and this will launch another upward move with price testing 1399 likely. The bears will try to prevent further upward momo by keeping the futures red overnight and trying to win over RTH, XLF and/or VIX. A move thru SPX 1374-1390 is sideways action.

The NYAD printed over +2000 today hinting that a pull back is needed to relieve the positivity. TRIN is 0.89 consistent with the bullish move today. The BPSPX has been on a bearish sell signal for markets for the last couple weeks but a drop thru 70% kicks in additional bearishness. BPSPX stopped at 71 and curled up today so it was not quite ready to tumble thru 70, yet.  The CPC Put/Call prints 0.75, truly remarkable. This print once again states that traders are very complacent, feet up on the desk, no worries about any market pull back large or small.  Moving forward days and weeks, the market bears should have the last laugh since markets will sell off until the CPC eventually prints 1.2 or higher. Seeing complacency in the markets again, the VIX has a 16 handle as well, indicates that we are at a market top.

Keystone's trades today included taking profits on the MNKD long, exiting that trade but will look to reenter again.  Also made a large add to the ongoing SRS trade.  Also bot CTRP, a new long.  Also bot FSLR, a new long. First Solar is a dangerous knife-catch trade, actually it is a guillotine-catch. The solar business is down the tubes since governments such as Germany and the U.S. do not want to fund the industry anymore so it collapses since solar cannot support itself without government handouts. If markets were actually free the solar industry would never have grown with a paper mache foundation. The chart has nice positive divergence and a falling wedge hinting that a quickie bounce may occur now.  Also bot BGZ which is a triple X short ETF that helps hedge against Keybot.

Jobless Claims occur in the morning at 8:30 AM.  Pending Home Sales 10 AM.   Natty Inventories 10:30 AM. Another earnings lollapalooza is on tap as well.  Never a dull moment.