Keystone's Morning Wake-Up 10/23/12; Moody's Lowers Spain Ratings; Presidential Debate Spin Day; UPS; iPad Mini

Moody's lowers the credit ratings on five Spanish regions.  Global markets fall.  Last week Moody's balked at downgrading Spain's sovereign overall which caused a market rally. Today appears to be payback, Moody's likely trying to show they are no one's lackey in light of the euro-friendly move last week. The euro is 1.3030, watch to see if it falls under 1.30 which will further encourage the market bears. Bulls need to send the euro higher immediately. Luxury goods providers in the U.K see lower sales ahead, the wealthy are no longer spending.

The Presidential Debate ends with another draw, perhaps a slight advantage to President Obama, but this slight win is downgraded since he is currently intimate with all the ongoing foreign intelligence data and would be expected to do better.  Governor Romney met his goal of simply providing himself as an alternate and showing that he can remain calm, cool and collected and can perform the duties of Commander-in-Chief.  It is a shame other parties such as the Libertarian and Green Party's are not allowed to participate in the debates.  The two-party system is what is destroying the country.  The debates are over; the election is only fourteen days away. The dyed-in-the-wool democrats will vote for Obama no matter what happens.  Likewise the right-wing Reagan republicans will vote for Romney no matter what.  The independents in the middle will pick the winner.  Type 'Presidential' into the search box above to bring up the projected winning and losing stock plays depending on which candidate wins.

The futures are lower, S&P's are down 10 at this writing. Watch RTH 44.45 (now 44.85 causing market bullishness), VIX 16.10 (now 16.62 causing market bearishness) and GTX 4898 (now at 4931 causing market bullishness). $GTX is the GS Commodities Index that provides day-time data.  The bulls need to push the VIX under 16.10 to create a market rally.  The bears need to push the RTH under 44.45 and/or the GTX under 4898 to cause increased market selling pressure which will take the SPX into the strong 1403-1419 support zone. Continue watching UTIL 485.67 all this week as well; as long as the utes stay under this level the markets will remain bearish. Copper continues its collapse.

For the SPX today, starting at the 50-day MA at 1434, the bulls only need a couple points higher to launch an upside acceleration. The futures are currently not agreeable to this outcome.  The bears need to push the SPX down thru 1422 to accelerate the downside and a drop of ten points would not get there either. Losing 1422 today is a big deal if it occurs. A move thru 1423-1434 is sideways action.

AAPL supported the markets yesterday recovering twenty-five dollars and more importantly keeping the Nasdaq elevated.  Tech leads the markets all year long so if the COMPQ is moving higher than the SPX on any given day (like yesterday), the markets are prevented from falling and prefer to move higher. If the SPX leads the COMPQ this means tech is leading the broad markets to the downside so the broad indexes will not move much higher for that day of trading and in fact prefer to move lower. The iPad Mini announcement is today at 1 PM EST and the price point is more important than the device itself, it is a smaller screen, no mystery there.  Competitive mini tablets are already priced at $200 U.S. dollars. Thus, if AAPL sets the iPad Mini price too high, say $275, or $300 and higher, AAPL stock will probably sell off and the release will likely be panned.  If, however, Apple can hit a sweet spot, and supply the Mini at a price point in the $200 to $250 range, this will encourage AAPL traders on the bullish side.

Type 'Key Events 10/22/12' into the search box above to bring up the current schedule of data releases, import dates and projected market pivot points for this week, or simply scroll backwards thru the posts, or find the Key Events listing in the right margin archives listed below. For today, as mentioned above, the iPad Mini announcement will move markets.  The FOMC meeting begins today but the announcement at 2:15 PM EST tomorrow is more important.  Richmond Fed Manufacturing data is released at 10 AM. The 2-Year Note Auction is 1 PM.  An immensely important earnings day is occurring.  Watch UPS, a major global bellwether. The results will directly dictate whether or not Keystone's UPS 20 and 50-Week MA Cross Indicator signals a Cyclical Bear Market ahead, or not.  DD is important since chemicals, resins, plastics and polymers are the building blocks of all economic activity.  ITW is another huge economic barometer that tells you the strength of the manufacturing and engineering and construction (E&C) industries.  There are many others that will move markets as well such as MMM, NSC (railroad), FB, COH (retail), CBI (a gauge for the LNG indistry), NFLX , PNRA, VMW and WHR (a gauge of the housing industry since if folks are not buying appliances the housing recovery is in question). YHOO earnings beat last night, also TXN, but the lowered guidance by TXN will sour the tech mood.

In a nutshell for Tuesday, watch RTH 44.45, VIX 16.10 and GTX 4898, as well as SPX 1435 and 1422, to determine market direction. UPS is uber important today as well as AAPL's iPad Mini announcement.

Note Added 10/22/12 at 6:57 AM: DD took the oven pipe missing their earnings by over 30%, they should have pre-warned about this huge miss. So much for the building blocks of a strong recovery. DD is puking over 5% pre-market.  UTX was next to step up to the plate and promptly struck out lowering guidance moving forward.  The same general theme is occurring with earnings, companies beating on the bottom line but missing on the top line and lowering forward guidance.  The S&P futures are now down 17 which would move the SPX under the 1422 level at the opening bell.  The Dow Industrials are down 115. Nasdaq is off 27. The 10-year yield is a touch lower at 1.78% versus 1.80% yesterday.  As seen on the $TNX daily chart, the yield is testing the 200-day MA at 1.80-1.81% from the underside. The 10-year yield was spanked down from the 200-day MA in mid August, and mid-September, and ....now? Lower yields occur in concert with lower equities markets since money typically moves from stocks into Treasuries (higher note and bond prices mean lower yields). This correlation moves in reverse as well, higher yields typically correspond to higher equity markets.

Note Added 10/22/12 at 7:34 AM:  MMM plays the earnings season tune, meeting on the bottom line but missing on the top line and lowering guidance. Do you notice a trend? First reaction is to start beating the stock, down 3%. DD, MMM and UTX are alll Dow components.

Note Added 10/22/12 at 7:57 AM:  The big boy, UPS, shows up today wearing brown short pants. It is a good thing they are brown.  UPS falls on its sword, another company meeting on the bottom line but not the top line. The gut reaction was a one percent drop but UPS quickly boucned back to the flat line and is now up one percent pre-market. UPS has been beaten down recently so traders may be cutting it a break in the early going. Watch Keystone's UPS Cyclical Market Indicator that may signal bearishness for the weeks and months ahead.  Watch the euro perched atop 1.3000, if this psychological level breaks, things could get ugly. Futures remain weak. Note, however, the Nasdaq futures are not leading the S&P futures lower so this hints that any drop at the opening bell may not have oomph and the markets may be bot. AAPL is down four bucks right now. On the bull side, COH and WHR are two brighter earnings releases. UTX is now up a couple percent pre-market.

Note Added 10/22/12 at 8:36 AM:  ITW meets bottom line misses top line. The futures are at the lows. The euro is 1.2978.