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: Q4 (October-November-December) is underway. The U.S. Presidential election is now only 30 days away and the fiscal cliff is 85 days away. The veep’s debate on Thursday evening. The markets do not receive any significant economic data until the back half of the week. The Beige Book on Thursday afternoon and Consumer Sentiment on Friday morning are important. The European news flow directly dictates global market direction. The Merkel trip to Greece on Tuesday will be a circus. 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, which appears to be the case, then the euro will drop and markets will sell off. Euro leaders probably want to provide one large bailout package for Spain-Greece-Cyprus and handle all three at one time. Watch for a potential downgrade of Spanish debt by Moody’s which would cause equity markets to sell off. The next ECB meeting is Thursday, 11/8/12, two days after the U.S. presidential elections. Europe must cut rates to weaken the euro and help the continent grow out of its mess. A flight of deposits out of Greece, Spain and Italy is ongoing which may lead to bank runs. The European riots are escalating daily with events occurring in Greece, Portugal, Spain and France. Another tranche of aid is needed for Greece-will it be delayed until 10/18? . The Troika report is needed to make a decision. 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 since they worry about the commodities inflation and asset bubbles that will be created. YUM earnings on Tuesday are an important proxy for China. The anti-American protests in the Middle East and Northern Africa continue. Oil price should remain buoyant as the violence remains or escalates but overall, the weak global economy is driving the oil price lower. California is getting hit with high gasoline cost due to refinery issues, pipeline problems and other issues. A possible SPR (Strategic Petroleum Reserve) release appears unlikely with WTIC at 90-ish. Lower oil price will help President Obama’s reelection campaign but it is difficult to justify. Most importantly, the SPR not be released because if the Iran sanctions continue to bite hard, Iran may do something stupid like block the Strait of Hormuz, which would violently spike oil price skyward, and then the SPR would be needed. The SPX moves in the same direction as oil. U.S. trading volumes are 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. Lagging tech, a weak Apple, and lagging small caps also indicate weak markets. Further, the long players that are holding their noses to buy are choosing the safer and divvy plays such as utilities and consumer staples, not a ringing endorsement of a strong rally, quite the contrary. Volatility, the VIX, typically bottoms in late summer early Fall but this is starting to be a wait for Godot. The VIX sits at 5-year lows so watch this closely going forward; far higher volatility is expected at anytime which will result in much larger intraday price swings. 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. The markets are likely not worth buying long until the CPC prints above 1.20. Interestingly, the smart trade may be entering long after an October sell off. Congress is 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. On the esoteric side, we are in a Bradley window all this week for a market trend change to occur. The actual Bradley date is Tuesday so look for a trend change especially in the first half of the week. At the end of the week, Friday, and next Monday, the expectation would be for market weakness in front of the new moon. The new moon also marks the darkest time of the month so look for potential global military actions to occur, which will obviously impact markets, perhaps the oil market, between Thursday, 10/11 and Tuesday 10/16. Last month, the Afghan extremists attacked under the cover of the new moon so watch for potential trouble in Afghanistan again this month. Also, note that Keystone’s Eclipse Indicator is now opening a window from here thru early November as a period where an extremely large market selloff may occur.
· Sunday, 10/7/12: Venezuela elections. Golden Week holiday celebration ends for China.
· Monday, 10/8/12: Euro zone Finance Ministers meeting. ESM Inaugural Meeting. Germany Industrial production numbers. Columbus Day. U.S. banks and bond markets are closed but the stock market is open. Monday’s are typically down days in recent weeks. After such a strong start to the month, two down days in a row would be expected so this hints at today being weak. A Bradley turn window remains open for a market trend change to occur.
· Tuesday, 10/9/12: IMF/World Bank annual meetings. Greece bill auctions. Merkel travels to Greece, considering the ongoing riots and violence, good luck to her. NFIB Small Business Optimism Index 7:30 AM. 3-Year Note Auction 1 PM. FDX investor Day so watch for pertinent news on shipping that will affect FDX, UPS and the markets. Today is a Bradley turn date-a market trend change may occur at any time, within the coming days. .Earnings: AA, YUM earnings—an important proxy for China.
· Wednesday, 10/10/12: Italy bill auctions. Hollande (France) and Rajoy (Spain) meeting in Paris. Mortgage Purchase Applications 7 AM. Wholesale Trade 10 AM. 10-Year Note Auction 1 PM. Treasury Budget and Beige Book 2 PM. Earnings: COST, OCZ, RT, VOXX.
· Thursday, 10/11/12: Italy bond auctions. International Trade, Import and Export Prices and Jobless Claims 8:30 AM. Natty Gas Inventories 10:30 AM. Oil Inventories 11 AM. 30-Year Bond Auction 1 PM. Fed Balance Sheet and Money Supply 4:30 PM. First and Only Vice Presidential Debate; Biden v. Ryan 9 PM EST. Earnings: FAST, JBHT, NG, SWY, WGO.
· Friday, 10/12//12: PPI 8:30 AM. Consumer Sentiment 9:55 AM. Earnings: IGTE, INFY, JPM, WFC. The bank earnings will set the tone for Friday.
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· Monday, 10/15/12: Retail Sales. New moon.
· Tuesday, 10/16/12: Spain and Greece bill auctions. CPI. Industrial Production. Second of Three Presidential Debates; Obama v. Romney 9 PM EST.
· Wednesday, 10/17/12: Housing Starts.
· Thursday, 10/18/12: Spain bond auctions. 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: OpEx. 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.
· Sunday, 10/21/12: Spain regional elections.
· Monday, 10/22/12: Third and Final Presidential Debate; Obama v. Romney 9 PM EST.
· Tuesday, 10/23/12: Spain bill auction. FOMC meeting begins. FB earnings and conference call.
· Wednesday, 10/24/12: FOMC Rate Decision 2:15 PM.
· Friday, 10/26/12: Italy bond auction. FOMC meeting begins. FB earnings and conference call.
· Sunday, 10/28/12: Finnish municipal elections.
· Monday, 10/29/12: Italy bill auctions.
· Tuesday, 10/30/12: Italy bond auctions. Troika review of Cyprus should occur before month-end.
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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?
· Sunday, 11/4/12: G20 Finance Ministers meet in Mexico.
· Tuesday, 11/6/12: U.S. Presidential election decides on Obama or Romney.
· Wednesday, 11/7/12: European Commission provides economic forecasts.
· Thursday, 11/8/12: Spain bond auctions. 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. 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.
· Monday, 11/12/12: Ecofin Finance Ministers meet.
· Tuesday, 11/13/12: Italy and Greece bill auctions.
· Wednesday, 11/14/12: Italy bond auctions. 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.
· Thursday, 11/15/12: European GDP reports.
· Tuesday, 11/20/12: Spain bill auction.
· Wednesday, 11/21/12: Spain bond auction.
· Thursday, 11/22/12: EU Leaders Summit.
· Sunday, 11/25/12: Catalonia regional elections.
· Tuesday, 11/27/12: Spain bill auction and Italy bond auction.
· Wednesday, 11/28/12: Italy bill auction.
· Thursday, 11/29/12: Italy bond auction.
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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.
Been away, but marvelous analysis. any thanks!
ReplyDeleteSean