S&P downgrades 11 Spanish banks not too surprising since the sovereign was downgraded last week. An FT article hints that Spain wants to apply for a line of credit as a means of avoiding the stain that would be created with requesting a bailout. The ECB would institute the bond-buying under this scenario which makes markets happy this morning. German sentiment was up, not surprising since sentiment is up in the States as well, now that Europe at least has the apperance of calm over the last couple months. Germany cuts the 2013 GDP forecast. Europe is an ongoing mess overall. Equity markets go up an down over the last month purely based on whether or not Spain requests the bailout. Protestors riot in Portugal against austerity measures. European auto sales take a large move down. This after the Retail Sales numbers in the States yesterday painted a rosie auto sales picture. The auto loan industry is the next subprime fiasco in the making. Get rid of that old jalopy, if you have a heartbeat and can fog a mirror, you will be able to get a car loan no problemmo, so run down to the dealer today and help yourself to a new Cadillac Escalade. Drive around like a big shot for a few months then simply hand it back in when the repo man knocks on the door. Isn't America great?
Yesterday's action was quite dramatic into the close with the bulls driving the utilities sector higher. UTIL tagged 478.43 but closed under. Watch this closely today since if UTIL moves above 478.43, Keybot the Quant, Keystone's algo, will likely flip to the long side. Copper was on the verge of collapse yesterday, watch the JJC 46.25-46.30 area, but received a stick-save. The copper recovery, higher financials, and technology, with AAPL recovering all created the market buoyancy as yesterday played out. As AAPL goes, so goes the markets.
The SPX is moving thru the sideways 1424-1441 channel discussed this weekend and in this morning's SPX chart. Today we see if the bulls have the gusto to move price above the top rail of this channel. The bulls only need a single point higher after the open to launch an upside acceleration to 1444 then 1446 and perhaps 1447 to back kiss the 20-day MA at 1447.77. The futures are up one point as this missive is typed. Pay attention to the 8 and 34 MA cross on the SPX 30-minute chart and the 200 EMA on the 60-minute chart. Both flipped bullish yesterday so see if that holds today, or not. The VIX closed exactly in the middle of a bracket formed by the 20 and 50-day MA's so watch which side volatility wants to break out. If VIX moves up, markets move down, if VIX moves down, markets move up. Watch the euro which moved above 130 this morning. Use that as a gauge where market bulls are happy above 130 and bears are happy below 130.
GS reports earnings within the half hour. Look for 2.28 bottom line and 7.2 billion top line. This will drive the futures, and judging by a pop up to +3.50 in the S&P's now, perhaps some traders already received the news? KO, INTC, MAT and JNJ earnings are on tap as well. UNH reported and beat on the bottom line. IBM earnings are after the bell and this will greatly impact the tech sector which will move the broad indexes. CPI data is at 8:30 AM, TIC data is 9 AM which shows foreign investment, Industrial Production is at 9:15 AM and the Housing Index at 10 AM. The main event occurs this evening at 9 PM EST with the second Presidential Debate, Obama versus Romney, in a town hall environment. In a nutshell, if UTIL moves above 478.43 and the SPX is above 1441, Keybot the Quant will likely flip long today.
Note Added 10/16/12 at 8:35 AM: C announces that Pandit is out as CEO. Prince Al-Waleed owns a lot of C stock so he probably got sick of Pandit and told him to pack his bags. C did the reverse 10:1 stock split months ago since it could not stay above five bucks to allow institutional buying. The 36 stock price in essence reflects a $3.60 stock price, a penny stock. C is down 3% pre-market. GS beat on earnings but is soft in early trading, likewise KO. Futures continue to point to a bounce higher at the open. AAPL is up two bucks. The Nasdaq and S&P's are both up 0.5% so tech is not tipping its hand as to which direction it wants to lead today. Watch UTIL 478.43. If the futures remain elevated, the SPX should tag the 20-day MA at 1447-1448 after the open.
UTIL 480, SPX above the 20-day MA, I see Quantbot flipped bullish. MACD above neutral line, stochastics crossed and heading up, all systems go, at least til OEX....
ReplyDeleteI get the feeling Keybot hates to be bullish ;-). Anyway, a good place to get long again would be the bottom of wave 2, maybe tomorrow, maybe ES 1430ish...
ReplyDeleteSorry meant start of wave 2. Markets a bit overcooked right here.
Deleteagreed. Q3 logic, spx 200 ema, all a disease of the tech head bear mind
ReplyDeleteWell, Keybot has no emotion, so it does not care if it is long or short, thats what makes a robot so attractive, emotion is what always kills the human traders. So, Keybot is long now but stay on guard for a jump back to the short side, the markets are shaky. As seen by the TA on this site, however, Keystone is leaning on the bear side.
ReplyDeleteThere are many voices inside Keystone's head competing for attention. Keybot and Ketystone are the yin and the yang. Keybot is the calm, steady-eddy, lower risk model, that cruises thru the year with as little dramatics as possible, not interested in exact tops or bottoms, simply trying to constantly catch the bulk of the moves long or short. Keystone, the trades on this site, are typically the highly dangerous and speculative trading directly attempting to catch the exact tops and bottoms, a very difficult task. So for the short-term work we see the negative divergence on weekly and daily charts, overbot conditions, other metrics such as the CPC chart this morning that are all warning that a strong down move can occur for the broad indexes at anytime.
In fact, yesterday the markets were on the verge of a cascade collapse with copper, JJC, coming down to 46.30-ish, a hair away from failure. If it would have failed, the markets would have taken a strong move lower, resulting in a failure in the retail sector, so lower markets would occur, then the VIX would have ran above 17, more down, you get the idea, potential of a cascading waterfall crash. Alas, an invisible hand saved copper and the markets and started the recovery bounce. A large down move can still happen in the days ahead, that is why do not take the markets for granted right now. Pay close attention expecially over the next couple weeks.
I was just kidding the keybot there ;-)...of course the invisible hand is guiding us, the crooks...errr I mean the Fed is in charge, they are just not going to let the markets fall,...yet.
ReplyDeleteWhy is the VIX almost positive now?
ReplyDeleteThanks for the post. This may be a key factor in the current recovery and growth of the auto industry as there is, thanks to subprime title loan on car, more demand for new cars and more money available to finance them.
ReplyDelete