On 10/12/12, Friday, the IMF says leniency should be provided to Greece but Germany says Greece does not deserve more time to meet its austerity goals. The EU wins the Nobel Peace Prize. The IEA says oil supplies will increase while demand will decrease for the years ahead. JPM earnings beat estimates but WFC earnings are lackluster. Both banks turn negative as the opening bell rings. The markets bounce at the open into the upbeat Consumer Sentiment number at 10 AM which marks the top for the day. The broad indexes drift lower into the closing bell. Telecom, tech and semiconductors are weak. The retail sector moves lower. Bob Shiller, of the Case-Shiller Hosing Index, comments that there is no urgency to buy a home currently and that the recent up move for the housing sector may actually roll over and give way to a continued bumpy road for years ahead. The VIX moves above 16. The SPX closes at the 50-day MA at 1429. Ditto the Dow Industrials at 13329. The RUT (small caps) closes at 823 under its 50-day MA. AAPL, the Nasdaq and the QQQ’s are all under their respective 50-day MA’s. Tech and small caps lead the markets. Gold loses 15 bucks to 1755. For the week, the SPX falls -2.2%, the Dow falls -2.1%, the Nasdaq drops -2.9% and the RUT falls -2.4%.
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On 10/14/12, Sunday, Fed Chairman Bernanke speaks in Tokyo defending the Fed’s easy money policies. Bernanke continues to deny that quantitative easing causes commodity and emerging market bubbles. He said the unlimited QE3 should create optimism that the American economy will continue growing. Israel’s central banker Fischer says the world is ‘awfully close’ to recession and backed the Fed’s QE3 program. Fischer is the teacher and mentor of the ECB’s Draghi and the Fed’s Bernanke; it is one big incestuous bankster relationship.
On 10/15/12, Monday, China’s inflation data is in line with forecasts. GS cuts the future copper forecast. Deutsche Bank cuts copper and gold forecasts. Retail Sales beat expectations due to higher oil and gasoline prices as well as auto sales and electronics. The auto sales are the new subprime crisis. If you can fog a mirror you are given a car loan nowadays. The iPhone5 sales helped as well. C earnings beat estimates which elevates the financial sector. Markets jump at the open but quickly peter out with the SPX dropping down to test the lows in the 1420’s. Copper is falling apart and ready to collapse when suddenly copper recovers taking the broad indexes higher. AAPL is very much moving the markets nowadays. As Apple goes, so goes the markets. Banks and tech move together so the tech, banks and copper positivity push markets higher into the closing bell. Keystone’s SPX 30-minute chart shows the 8 MA moving up thru the 34 MA indicating bullish markets for the hours and days ahead. Keystone’s SPX 60-minute chart shows price moving up thru the 200 EMA which signals bullish markets for the hours and days ahead.
On 10/16/12, Tuesday, S&P downgrades 11 banks including Santander. Protestors riot in Portugal setting fires over austerity measures. Germany cuts the 2013 GDP forecast. The markets explode higher at the opening bell. Keystone’s algorithm, Keybot the Quant, flips to the long side at SPX 1446. The utilities sector is very strong. Bombshell news hits when the CEO of C, Pandit, resigns, only a day after the earnings beat yesterday. The SPX moves above the 20-day MA, a bullish indication, and markets finish strongly higher. Merkel backs the Draghi bond-buying plan and snubs the Bundesbank which creates market positivity. After the closing bell, IBM lays an egg and the stock falls 4%. INTC also disappoints. The second of three Presidential Debates Obama v. Romney occurs in the evening. The debate is a draw with a slight advantage to the President who was much more active as compared to his weak first debate performance.
On 10/17/12, Wednesday, Moody’s says they do not plan on downgrading Spain. The euro catapults higher and global markets run higher. A downgrade of Spanish debt was actually anticipated from Moody’s. Thus, either the European leaders wined and dined Moody’s, or, beat them with a rubber hose, either way, Moody’s has softened their negative tone. Obviously, the market insiders knew this was coming and the markets were already moving higher. Moody’s is quick to state that the delay of any potential downgrade is based on Spain asking for and receiving a bailout (call this the fine print). Spain’s 10-year yield plummets lower to 5.54%. The lower yield makes Rajoy less likely to request a bailout and continues the European circle jerk. The IBM and INTC negativity is hurting the Nasdaq. The euro jumps over 1.31 on the happy Moody’s news. Housing Starts blow out expectations at 872K about 150K more than the last half-year’s monthly average of about 700-750K starts; the largest number since right before the 2008 crash. The IBM price drop weighs on the Dow Industrials all day long. Markets finish flat to up on the day. The SPX is at 1457.
On 10/18/12, Thursday, the China GDP is 7.4%, the seventh consecutive quarter of slowing growth, the slowest growth number since the first quarter of 2009. China’s Premier Wen Jiabo says the economy is ‘stabilizing’. The data smells since electricity usage is flat in China; growth is not at that pace if electricity usage is flat. Further, the 7.4% is under China’s targeted rate of 7.5% for 2012. But, thinking in the context of the entire year, Q1 was 8.1%, Q2 was 7.6%, and now Q3 is 7.4%, and applying the 7.5% as a target for the entire year, would allow a print for Q4 at 6.9% which would all average out to the 7.5% target for 2012. Everyone keeps playing games so Keystone predicts the China Q4 GDP, released in mid-January 2013, will be 6.9%, bank on it. Spain’s bad loan percentage is now 10.5% versus less than 10% a month ago, the banking situation is obviously deteriorating as more and more investors pull their money from Spanish banks. The European leaders from 27 nations attend the ECB/Euro Summit likely heading straight for the buffet table. The major U.S. banks provide a letter to Congress and the President stating that the Fiscal Cliff is a huge concern and the uncertainty is hurting the markets and economy. Markets start the session positively into lunch time. The SPX moves higher only three points away from the closing high for this year 1465.77. Then whammo!! The GOOG earnings release surprisingly hits the markets. The printer accidentally releases the earnings early. Traders see that GOOG’s numbers are much worse than expected so GOOG, the Nasdaq and the broad indexes plummet. GOOG drops with a mini-crash profile from 755 to 776, 80 points, 11%, in only eight minutes, dropping $10 per minute. GOOG is halted from trading. At 3:20 PM, GOOG begins trading again moving sideways thru 680-700. GOOG officially releases the earnings after the bell and the numbers match the premature release. Traders are shaken by the debacle which is yet another reason for Ma and Pa to look at the markets as one big casino machine. The broad indexes finish the day well off the highs. Keystone’s SPX 30-minute chart shows the 8 MA moving down thru the 34 MA indicating bearish markets for the hours and days ahead. After the close, CMG takes the oven pipe losing 12% and BBT drops 7% on earnings disappointments. A sour mood on technology continues thru the evening hours.
On 10/19/12, Friday, today is OpEx and the twenty-five year anniversary of the 1987 Black Monday Crash. GE earnings miss on the top line. HON lowers guidance. MCD misses earnings. These three bellwether stocks create weak futures heading into the opening bell. During the conference call, GE lowers their growth projection for the next year from 5% down to 3%. The EU Summit announces that they will set a date certain for the banking union to take affect but they avoid the hard work of actually agreeing to a detailed banking union outline. Rajoy says he feels no pressure to request a bailout. This is due to the lower Spanish yields, the 10-year falling from over 7% to under 6% over the last couple months. The only reason the yields are lower is because of the ECB bond-buying program announcement but the program is based on Spain asking for a bailout; everyone thought that was a given. Spain wants to avoid the negative connotation that comes with a bailout, the Spaniards are proud people. That is why you hear about all these other ideas such as ‘lines of credit’, Spain wants to receive the bailout life preserver since they are drowning but does not want the word bailout, or any stringent conditionality, to be attached. The problem is that the ECB cannot actually institute bond-buying to save Spain without Spain formally asking for the bailout. This is the circular drama playing out each day and it is controlling the U.S. markets. Traders are getting sick of these shenanigans, each day waiting for Rajoy to hint that a bailout request is imminent, or not, watching to see if he coughs or picks his nose. But this is the true nature of global markets in October 2012. Merkel (Germany) and Hollande (France) are clashing over how to structure financial aid. Germany wants austerity and oversight to be put in place first for a troubled nation, then financial aid to follow. France wants the financial aid to happen quickly and the austerity and oversight can be developed over time. This Hollande-Merkel drama, Hokel, and feeling that the European debt crisis is starting to hit snags again, is weakening global markets.
On Friday, the markets drop at the opening bell and head lower all day. The tech sector weakness, especially chips, bludgeons the Nasdaq and this market leader drags everything south. Semiconductors, SOX, are beaten severely. Copper collapses which causes another leg down. Then volatility spikes higher further beating the broad indexes. Keystone’s SPX 60-minute chart shows price stabbing down thru the 200 EMA which signals bearish markets for the hours and days ahead. Keystone’s algorithm, Keybot the Quant, flips to the short side at SPX 1442. By noon, the SPX has lost 20 handles. At 2 PM, the SPX loses the 50-day MA. The SPX drops from 1457 to 1433 losing 1.7%. The Dow Industrials lose 1.5% closing at 13344. The Nasdaq (tech) plummets 2.2% closing at 3006. The RUT (small caps) drops 1.9% to 821. As highlighted over the last month, the tech and small cap weakness is leading the markets lower. For the week, the SPX and Dow are flat as Keystone’s singing is, but the Nasdaq loses 1.3% and RUT is down a smidge, again showing the tech and small cap weakness versus the broad market. Quite a dramatic day with the Nasdaq committing a 2.2% hari-kari on the anniversary of the 1987 Crash. That was Black Monday back then and interestingly the trouble surfaced late in the week the week before. The cascading market crash began in Asia and hit the States with a vengeance as Monday began. This creates drama and theatre for the Sunday evening futures markets. You don’t think history will repeat, do you?
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On 10/21/12, Sunday, watch to see how Asia reacts to the selling in the U.S. markets. Spain regional elections; Spain may now be open to asking for the bailout.
On 10/22/12, Monday, CAT will set the tone. TXN. YHOO. The third and final Presidential Debate Obama v. Romney is in the evening.
On 10/23/12, Tuesday, MMM. DD. UTX. FOMC Meeting begins. 2-Year Note Auction. AAPL iPad Mini announcement. UPS. FB. NFLX.
On 10/24/12, Wednesday, BA. New Home Sales. 5-Year Note Auction. FOMC Rate Decision.
On 10/25/12, Thursday, PG. Durable Goods Orders. Jobless Claims. Pending Home Sales. 7-Year Note Auction. AAPL.
On 10/26/12, Friday, GDP. MRK. Consumer Sentiment.
The moving parts in Europe include the Spain bailout (ECB cannot buy bonds until Spain asks for the bailout relinquishing some of their sovereignty; clarity may be provided after the Spain elections), Greece bailout, Cyprus bailout, perhaps all three countries will be packaged together, and the banking union. The ECB rate decision will move the euro on 11/8/12. Greece will likely stay in the euro until Merkel’s reelection occurs next year.
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On 10/30/12, Tuesday, Consumer Confidence.
On 10/31/12, Wednesday, Halloween. EOM.
On 11/1/12, Thursday, ISM.
On 11/2/12, Friday, Monthly Jobs Report—last report before the election.
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On 11/6/12, Tuesday, U.S. Presidential Election Obama v. Romney, the result will be known in the evening from 9 PM thru 12 PM EST.
On 11/8/12, Thursday, the new China Premier Xi Jinping is officially selected and named the Head of Party, but, where is he? The transition of China leadership begins with China holding the 18th Party Congress. ECB Rate Decision and Press Conference; rate cut means euro down and stocks down, no cut means euro up and stocks up.
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On 1/1/13, Tuesday, ESM is officially up and operating.
On 1/2/13, Wednesday, if Congress does not act, the U.S. hits 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. On 9/13/12, Bernanke says the Fed does not have tools to handle the fiscal cliff.
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In February or March, new China Premier Xi Jinping is named Head of Government and takes over complete control.
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