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:
· Keystone’s Comments on the Upcoming Week: Q3 ends and Q4 (October-November-December) begins. The U.S. Presidential election is now only 36 days away and the fiscal cliff is 92 days away. The ISM Manufacturing Index will jump start markets at 10 AM Monday. The tension will build all week long with presidential debates Wednesday evening, the ECB rate decision and press conference Thursday morning, Fed minutes that afternoon, and then the Jobs Report circus on Friday morning. The main market mover is wishy-washy Spain deciding on whether or not it will seek a bailout. The ECB’s bond-buying program cannot be unleashed unless Spain requests the bailout but Spain does not want to give up sovereignty by accepting conditionality. If Spain requests aid, the euro and markets will bounce higher but that pop will likely not have much oomph. If Spain says the bailout request will be delayed until late October, then the euro will drop and markets will sell off. The ECB meeting on Thursday will either result in no rate change, which will help create euro and broad market buoyancy, or, a rate cut, which will weaken the euro and the broad markets. Europe must move to a weaker euro to help the continent grow out of its mess. Bank runs and European riots remain a concern, which is increasing each day. The Spain and Portugal riots are active this weekend. The Greece talk is heating up again since they need approval of another tranche of aid but cannot agree on austerity plans. The European news flow directly dictates global market direction. Watch for further China easing measures such as lowering rates or triple R’s which will bounce equity markets. China, however, appears hesitant to act and is now enjoying Golden Week. The anti-American protests in the Middle East and Northern Africa continue. Oil price should remain buoyant as the violence remains or escalates but WTIC dropped under 90 last week, closing at 92. This says the global economic slowdown carries more weight than oil-field war worries. A possible SPR (Strategic Petroleum Reserve) release may occur which would help President Obama’s reelection campaign but it is difficult to justify if the global slowdown is actually sending prices lower. The SPX moves in the same direction as oil. U.S. trading volumes are slowly increasing now that summer is over. Pre-announcement confessional season is underway where companies are lowering Q3 estimates at an alarming rate, including notables such as FDX, INTC, NSC, and CAT. Lower earnings lead to lower stock prices. Weaker shipping and semiconductor industries indicate a weak global economy. Volatility, the VIX, typically bottoms in August and now sits at 5-year lows so watch this closely going forward; far higher volatility is expected. Larger intraday price swings will occur as the volatility moves higher. Traders are much too complacent now since they expect the markets to be supported by central banksters forever. The low CPC put/call ratio and low VIX signal uber complacency and that the broad indexes are placing a major market top right now and should experience a significant sell off in the near future. Interestingly, the smart trade may not be by the majority of traders that jumped in long upon the QE3 announcement, which are in fact underwater long trades now, but instead the handful of traders that expect a strong pull back first, in the coming days and weeks, October, where the ideal long buying time may actually occur. Congress goes back on vacation until after the presidential election; markets are typically bullish when Congress is not in session but considering the seriousness of the impending fiscal cliff, Congress is creating market negativity on a continual basis moving forward.
· Sunday, 9/30/12: Bradley turn date-a window is open for a potential market trend change between 9/24/12 and 10/5/12. Golden Week holiday celebration begins for China.
· Monday, 10/1/12: Today begins Q4 when tech and biotech sectors typically outperform, but they have already outperformed. Spain needs to provide clarity on the bailout, if they plan on asking for a bailout in the coming days the markets will bounce on the news, if Spain says they will delay the bailout, the markets will sell off. Watch for a potential downgrade of Spanish debt by Moody’s which would cause equity markets to sell off. Troika Report is due this month after continual delays; it is needed for leaders to make a decision with Greece. Monday’s are typically down days in recent weeks. A Bradley turn window remains open thru this Friday for a market trend change to occur. Interestingly, the next Bradley turn date is close behind at 10/9/12 which opens a window from 10/2/12 thru 10/16/12. Therefore, the Bradley windows overlap from Tuesday thru Friday this week which may create some wild market action. Europe and Germany PMI’s are released overnight into Monday morning. PMI Manufacturing Index 9 AM. Construction Spending and ISM Mfg Index 10 AM-markets will pivot, watch the energy sector. Chairman Bernanke speaks 12:30PM. Earnings: CALM, FGP.
· Tuesday, 10/2/12: Motor Vehicle Slaes. PVH Analyst Day. Earnings: MOS, XRTX.
· Wednesday, 10/3/12: Mortgage Purchase Applications 7 AM. ADP Employment Report 8:15 AM. ISM Non-Mfg Index 10 AM. Oil Inventories 10:30 AM. First of Three Presidential Debates; Obama v. Romney 9 PM EST. If Obama does best, gold will move higher and the coal sector will sell off. If Romney does best, gold will move lower and the coal sector will move higher. Earnings: FDO, MAR, MON.
· Thursday, 10/4/12: ECB Rate Decision 7:45 AM EST and Press Conference 8:30 AM- if the rate is lowered the euro will weaken and weaken markets, if the ECB stays on hold, the euro will elevate and elevate commodities and equities. Challenger Job Report 7:30 AM. Jobless Claims 8:30 AM. Factory Orders 10 AM. Natty Gas Inventories 10:30 AM. FOMC Minutes 2 PM—markets will pivot on the news. Treasury STRIPS 3 PM. Fed Balance Sheet and Money Supply 4:30 PM.
· Friday, 10/5//12: Monthly Jobs Report 8:30 AM-second to last report before the election and perhaps the most important economic data release of the entire year. The Fed’s QE3 program, the presidential election and the markets all hinge on the monthly jobs number. Futures will react wildly. Earnings: STZ.
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· Monday, 10/8/12: Euro zone Finance Ministers meeting-next tranche of aid for Greece is needed. ESM Inaugural Meeting. Columbus Day.
· Tuesday, 10/9/12: Bradley turn date so a turn window opens for a market trend change to occur between 10/2/12 and 10/16/12. Note the overlap with the 9/30/12 window. YUM earnings—an important proxy for China.
· Thursday, 10/11/12: First and Only Vice Presidential Debate; Biden v. Ryan 9 PM EST.
· Monday, 10/15/12: New moon.
· Tuesday, 10/16/12: Second of Three Presidential Debates; Obama v. Romney 9 PM EST.
· Thursday, 10/18/12: ECB/Euro Summit-banking union outline is expected and Merkel may avoid a decision on Greece’s aid until now? Will Greece exit the euro? A Greece decision is needed now or sooner. Will the banking union discussions go smoothly?
· Friday, 10/19/12: Keystone’s Eclipse Indicator targets the time period of 10/19/12 thru 12/20/12 as potential for a large market selloff especially October into early November, 10/19/12 thru 11/9/12, then the period between Thanksgiving and Christmas, 11/26 thru 12/28.
· Monday, 10/22/12: Third and Final Presidential Debate; Obama v. Romney 9 PM EST.
· Tuesday, 10/23/12: FOMC meeting begins. FB earnings and conference call.
· Wednesday, 10/24/12: FOMC Rate Decision 2:15 PM.
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· Thursday, 11/1/12: Bradley turn date so a turn window opens for a market trend change to occur between 10/25/12 and 11/8/12. This period matches up with Keystone’s Eclipse Indicator.
· Friday, 11/2/12: Monthly Jobs Report 8:30 AM-last report before the election, do you magically see a 7.9% or lower unemployment rate (under the 8 handle) perhaps helping President Obama?
· Tuesday, 11/6/12: U.S. Presidential election decides on Obama or Romney.
· Thursday, 11/8/12: New China Premier Xi Jinping is officially selected and named Head of Party, but, where is he? The transition of China leadership begins with China holding the 18th Party Congress.
· Wednesday, 11/14/12: Bradley turn date so a turn window opens for a market trend change to occur between 11/7/12 and 11/21/12. This period matches up with Keystone’s Eclipse Indicator.
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· Tuesday, 12/11/12: FOMC meeting begins. FB earnings and conference call.
· Wednesday, 12/12/12: FOMC Rate Decision, Forecasts and Press Conference at 12:30 PM, 2 PM and 2:15 PM, respectively. Expect market pivot points especially at 12:30 PM and after 2 PM.
· Saturday, 12/22/12: Major Bradley turn date so a turn window opens for a significant market trend change to occur between 12/14/12 and 12/28/12. This period matches up with Keystone’s Eclipse Indicator.
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· Tuesday, 1/1/13: ESM is officially up and operating.
· Wednesday, 1/2/13: If Congress does not act, the U.S. drives off the “massive fiscal cliff” (a phrase coined by Chairman Bernanke in early 2012) that will cut the GDP, increase unemployment and immediately launch the country into recession, but, on the positive side, the nation’s debt will decrease. Chairman Bernanke stated that the Fed does not have the tools to help should the fiscal cliff occur.
· In February or March: New China Premier Xi Jinping is named Head of Government and takes control.
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