Thursday, February 28, 2013

HLF Herbalife Daily Chart Cup and Handle

Herbalife is playing out daily drama in the markets since the two billionaires, Ackman and Icahn, continue to fight over the company. Ackman is on the short side and Icahn is on the long side. The C&H says that Icahn will win.  The cup and handle pattern is sporting a funky double handle. Thus, the base is 26, and top breakout line at 47-48 is a difference of 22 so the upside target is 70 if price breaks up through 48. The 70 is where price was at before the large drop started.  The indicators all verify the recent sideways vibe but note the RSI that is breaking out to the upside, also the MACD. Over the last two weeks, price is not even up at that prior high, so the positivity in the RSI and MACD gives the bulls the upper hand. So a test of the 47-48 should be on tap. If price breaks up through 47-48 continuing higher, Ackman will start to feel serious pain. These guys are smart, however, so they surely have hedged trades and other instruments in place to minimize damage if they are wrong. So watch to see if a C&H plays out, or not. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

SPX Monthly Chart Overbot Rising Wedge Negative Divergence QE Money Pumps Create Asset Bubbles Central Banker Actions Result in Reverse Fibonacci Sequence

SPX monthly chart receives a new print today as February ends. The SPX is down only one month in the last nine months. The five major central banker QE money pumps are shown, each resulting in a market top.  "Don't Fight the Fed" is always true--until it isn't. QE1 ran out of gas in the spring of 2010, QE2 petered out in spring 2011, the Operation Twist and ECB's LTRO 1 and 2 all ran out of gas last springtime, about one year ago. This was the first blatantly coordinated central banker action in economic history as the Fed's Bernanke and ECB's Draghi saved the markets after the August 2011 waterfall crash.  Last July 2012, Draghi said he would save the day "by all means necessary" so he pumped with the OMT program and the Fed chimed in with QE3.  That provided the lift into the September-October top.  Then the Fed throws the kitchen sink at the mess with QE4 Infinty and Beyond replacing Operation Twist with stronger fire power, and that creates the December-January-February run higher. Here we sit.

Note the reverse Fibonacci Sequence 13, 8, 5, 3, 2, 1, 1.  The central bankers plan to manipulate markets but perhaps the laws of nature will win out in the end as they always do.  QE1 lasted 13 months, QE2 8 months, etc...   From mid-December last year to now is the 2-month number in the sequence. The bitter end is approaching. The Fib's are at the roots at a one integer number now, so, a top is expected now, then any additional Fed pumps may only have a one month affect and the Piper will likely have to be paid now. Note the textbook rising wedge in red, a bearish pattern.  The red lines show the negative divergence in place that wants a smack down and the collapses out of rising wedges can prove quite dramatic. The green lines for the RSI and MACD line show how the bulls want to squeeze as much life out of this puppy as possible so two potential paths are provided. The brown arrow simply says the downside starts at anytime and we start to explore lower numbers. The teal arrow shows a down March but a recovery to satisfy the green lines for the indicators, and bring price back to the apex of the wedge, which is the 1550-ish that many technicians are looking for, then collapse. Any way you add it up, the Fat Lady is beginning to sing. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

TRIN Arms Index and SPX 5-Minute Charts Using TRIN to Identify Intraday Turns

The broad markets meander sideways all day, same-o stuff.  Keystone often references the TRIN during trading hours so let's review the TRIN today against the SPX. To quickly review, the TRIN 1.00 level is the neutral level, think of it as the bull-bear line in the sand. If the TRIN moves higher from 1.00, to 1.10, and 1.20, etc..., the broad market selling is increasing. If the TRIN starts running obscenely higher to 2, 3, 4, and sometimes much higher to 9, or 10, that signals uber bearishness and the markets will likely rebound the next day. Conversely, if the TRIN drops under 1.00 and heads lower to 0.9 and 0.8, the market bulls are in full control with the buyers taking the broad indexes higher. If the TRIN drops to an obscenely low number like 0.50, 0.40 and even lower, that signals uber bullishness and an overextended market upside that needs a pull back.

The 5-minute chart shows the TRIN running obscenely lower into the Thursday evening close, down to 0.5-ish. This morning the SPX played catch-up and popped out of the gate to satisfy the low TRIN, however, the TRIN rocket-launched at the open to 1.5 showing that the market bears should be in control. Therefore, the SPX fell on its sword and dropped lower to print the lows early in the session in the red circle.  Everything was going good for the bears but then shortly before 11 AM note the TRIN leaking lower, and lower, straight down into lunch time. The green dot at 12:30 PM is interesting since the TRIN has dropped a lot, now at 0.8-ish but the SPX is sitting at 1519-1521.  As a trader, you know the TRIN is telling you that the SPX should be several handles higher to catch up to the TRIN, and, sure enough, by 1:30 PM, the SPX had jumped to 1524.

The second dot in both charts shows how the TRIN placed another low at 1:30 PM which says the SPX needs to keep printing highs, which it did with the 1524, however, the third dot shows the TRIN starting to make its way higher once again. So a few minutes after 2 PM, with the higher TRIN, the SPX should start to pull back, but, lo and behold, the SPX places another high at 1525. The TRIN continues higher so as a professional trader you know that the SPX will come back down, and it does. Seeing that high in the SPX when the TRIN was moving back up would save you from entering a long trade since you know the markets are about to pull back, and 80% of the stocks move with the broad index. The TRIN climbed into the close and ended at 1.08, a hair bearish. The SPX realy gave up the ghost collapsing in the final ten minutes. This likley had more to do with the rebalancing where stocks were dumped but others will likely require purchasing tomorrow morning. Note how the TRIN leads by a hair, so if you are a day trader or trading short term, or timing entries and exits, you can see hte importance of the TRIN. If you are a day trader the TRIN and TICK must be constantly streaming in one of your windows. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Morning Wake-Up 2/28/13

Today ends February, EOM. The monthly charts receive new prints this evening. Keystone's Job Report Friday Market Indicator (Other Signals page) was forecasting an up February based on the up Jobs day, and currently that is on track with six and one-half hours of trading remaining. The SPX started February at 1498 so that will be a level worth watching today to see if February does close up, or not.  The SPX closed at the strong 1516 support yesterday. Watch the strong 1518 and 1520 resistance above like yesterday. The bulls will launch an upside acceleration above 1520. The bears need to see 1495 today to accelerate the downside, a formidable task, retracing yesterday's up move, but not impossible. Bears will be content with simply sending volatility higher today to stop the market upside move. February typically finishes weak the last couple days. Yesterday definitely smacked that seasonality factor silly which happens now and then. Perhaps the expected seasonality will kick in today? March begins tomorrow.

Much of yesterday was a short-covering upside orgy.  Volume was light at only about 70% of a days average expected volume. Copper selling volume far outpaces the buying volume over the last few days. Tech and small caps lagged the broad market over the last two days. For bullish markets, you want tech and small caps to lead the way, not lag. The Dow Industrials ($INDU) and SPX ($SPX) moved above their 20-day MA's at 13954.79 and 1510.97, respectively. The Nasdaq ($COMPQ) and RUT ($RUT) are not above their 20-day MA's so pay close attention to 3166.97 and 911.08, respectively. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours and days ahead so watch to see if the 8 MA curls over and heads down, or not.  The SPX also moved above the 200 EMA on the 1-hour chart at 1500.27 signaling bullish times ahead so pay attention to the psychological 1500 level.

Keystone's Inflation-Deflation Indicator sits at 2.90, now in disinflation, on the verge of falling into deflation. This sounds like craziness in light of the wild upside equity market move yesterday. The many market cross-currents continue. Be very wary and skeptical of these markets, Fed or no Fed.  The 'don't fight the Fed' mantra is always correct, until it isn't. Over the last week, the Dow has printed a new high but the Trannies have not. Thus, to keep Dow Theory on the bullish side, the bulls need to see $TRAN take out 6020 right away this morning. The Dow is within 100 points of its all-time high adding even more drama to today's theatrics. The new all-time high would make for spectacular weekend newspaper headlines.  Sequester, schemester, no one cares. Traders know politicians will kick the can so there is no worries. The CPC put/call ratio, and lower VIX yesterday confirms this ongoing complacency. There is simply no fear or panic in markets and stocks are not attractive on the long side until you see the panic and fear surface. Watch VIX 15.70 today, bulls win if the VIX stays below 15.70, bears win above 15.70. The XLF 17.21, financials, remains important as well.

JCP and GPRN are puking this morning. It is a shame how the JCP brand was destroyed. Dear ole departed Mom would shop at JCP as her fave store for decades. If she was here now, she would be shopping at M, TGT and WMT, not JCP. JCP alienated all their loyal customers. MCP rare earth company had bad news so that may pound all the rare earths today. KSS earnings are weak with weak guidance. Ditto LTD (Victoria's Secret) and BKS (books).  Watch the retail sector, RTH, today.  The GDP number is +0.1% recovering from the initial -0.1% last month.  It is shameful that the huge amount of Fed money pumping since early 2009 results in a flat GDP, absolutely shameful; nothing for the taxpayer's money and the young people are now screwed for their life times being stuck with the bill. The economic data in general a short time ago did not affect the futures which point to a flat start today. Natty Gas Inventories are 10:30 AM and the Kansas City Fed's Manufacturing Index hits at 11 AM. Farm Prices at 3 PM will affect the ag sector and commodities. Fed's Fisher and Evans speak this evening. The 10-year yield jumped from 1.85% back up to 1.90% yesterday and overnight back down to 1.88%. Up yields = up equity markets, down yields = down equity markets. The euro is 1.3118 above the 1.31 level which serves as a bull-bear line for today; bulls win above 1.31, bears win below 1.31. Crude oil is hovering around 93; above 93 and equity bulls are happy, below 93 and bears are happy.

COPPER Weekly Chart Sideways Symmetrical Triangle

Remember the weekly copper chart from a couple weeks ago? We were at the top rail of the triangle looking for a move back inside. That occurs and now price is exploring the lower rail of the sideways symmetrical triangle, bouncing yesterday on paltry volume. JJC is the copper ETF that can be followed during the trading day in real-time. The JJC chart was posted previously and this copper chart is complimentary to provide the actual copper target numbers below.  Every day leads to more drama and mystery. This is truly an epic time for markets. The indicators are not tipping their hand since they all line out sideways just like price itself. The moving averages are even lined out sideways now and everything sits inside the apex of the triangle. There is going to be a winner, and a loser, and the result is going to have a powerful impact on the broad markets.

Wednesday, 2/27/13, was an odd market day with the broad indexes exploding higher but copper and commodities selling off (copper recovered late day); that simply does not occur. Copper and commodities are the fuel to take the markets higher, but the markets are flying down the road without a care in the world, and the copper and commodities are not filling the tank. The markets should run out of gas but there seems to be a Fed gas station at every corner.  Metaphors aside, and back to the technicals, the vertical side of the triangle is one full handle.  If the bulls win, copper moves to 4.75 (3.75+1.00) and obviously the global recovery is full steam ahead and folks return to work by the tens of thousands. If the bears win, falling out the bottom of the triangle at 3.53, which will require defending today, copper moves to 2.53 (3.53-1.00) and obviously the deflation scenario is playing out in full force with difficult lives ahead for everyone for a couple years. Thus, if bullish, you want to see 3.75-ish and higher, if bearish, you want to see 3.53-ish and lower. At 6:45 AM EST, 2/28/13, copper is 3.5680. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 2/28/13 at 8:44 AM: Copper is currently printing 3.5400.

Note Added 2/28/13 at 10:27 AM: Copper is currently printing 3.5330.

Note Added 2/28/13 at 11:00 AM:  Copper is currently printing 3.5280, losing the 3.53-ish bottom rail of the sideways symmetrical triangle. Bulls must bounce copper immediately to ignite a futher upside rally and create new all-time highs for the Dow Industrials. Bears must push lower now forcing copper to collapse under the triangle which will lead to a strong market selloff and technical damage. Watch copper closely today.

Note Added 3/1/13 at 6:00 AM EST:  Copper is collapsing 2% this morning to 3.467. Dr. Copper is in serious trouble. West Texas Crude Oil is down to 91.13. Commodities are very weak. Baltic Dry Index is sick and ocean shippers are weak. China PMI last evening is much weaker than expected. The global recovery does not appear healthy.

Wednesday, February 27, 2013

JJC Copper ETF Weekly Chart Sideways Symmetrical Triangle

Remember the weekly copper chart from a couple weeks ago? We were at the top rail of the triangle looking for a move back inside. That occurs and now price is exploring the lower rail of the sideways symmetrical triangle. JJC is the copper ETF and the chart has the same characteristics. Every day leads to more drama and mystery. This is truly an epic time for markets. The indicators are not tipping their hand since they all line out sideways just like price itself. The moving averages are even lined out sideways now and everything sits inside the apex of the triangle. There is going to be a winner, and a loser, and the result is going to have a powerful impact on the broad markets.

Today is an odd market day with the broad indexes exploding higher but copper and commodities selling off; that simply does not occur. Copper and commodities are the fuel to take the markets higher, but the markets are flying down the road without a care in the world, and the copper and commodities are not filling the tank. The markets should run out of gas but there seems to be a Fed gas station at every corner.  Metaphors aside, and back to the technicals, the vertical side of the triangle is 14 handles.  If the bulls win, JJC moves to 60 (46+14) and obviously the global recovery is full steam ahead and folks return to work by the tens of thousands. If the bears win, falling out the bottom at 44.50, JJC moves to 30 (44.5-14.0) and obviously the deflation scenario is playing out in full force with difficult lives ahead for everyone for a couple years. Thus, if bullish, you want to see 46-ish and higher, if bearish, you want to see 44.50-ish and lower. JJC closed this evening at 44.85. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

SPX 30-Minute Chart 8 and 34 MA Cross Expansion Channel

The 8 MA crossed above the 34 MA to signal bullish markets for the hours and days ahead. The flip flops for this 8/34 MA are ridiculous at this point, and they are getting old.  The 8 and 34 MA cross should occur about once every few days time.  In the last nine days, the 8/34 cross has occurred nine times. This behavior is testimony to the special nature of markets currently. These are not your Grandfather's markets. Negative divergence cannot exist as yet since the SPX did not print a higher high as compared to three days ago but the indicators show a lack of interest as the final hour or two played out today (red lines).

The 1520 and 1524 are key resistance levels, the 1520 held today.  If price moves down from here the blue expansion pattern would remain in play with price potentially heading for the lower blue rail in the 1460's or 1470's. For these markets, you never know what you will get one day to the next now. The projection would be a roll over from 1520 or 1524. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

SPX Weekly Chart Overbot Rising Wedge Negative Divergence

The last four candlesticks are three doji's and a hanging man all indicating a trend change on tap, but the markets are not allowed to go down. The market action is fascinating; markets supported by the Fed's easy money and nothing else. The red lines show universal negative divergence across all indicators, a red rising wedge, and overbot conditions. This says down moving forward but the broad markets continue to hang on. Projection is lower prices moving forward. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

TRAN Transportation Index Trannies Daily Chart H&S

The Trannies ran higher today jumping 3% but it was not enough to place a closing high above last week's high. Nonetheless the move in the Transportation Index is phenomenal since Christmas.  The teal lines show the overbot conditions, rising wedge and negative divergence causing the spank down. The red lines show that more weakness is desired but Chairman Bernanke's printing press is a powerful force. But, is is all the chicken and egg argument?  Did the Trannies move wildly higher the last two months due to the Fed's easy money causing a joyous wide-based economic recovery, thereby increasing the attractiveness of the transportation stocks, or, did the Trannies simply move up since the easy money needs to go somewhere and traders figure if the economy was to recover, the Trannies would provide leadership, thereby the move higher for two months is simply free and easy money being stuffed into an overstuffed pig? That is a good one to ponder.

The move today provides a right shoulder for the brown H&S; head at 6020, neck line at the 5780 support, targets 5540 support if the 5780 fails. Projection is sideways to sideways down moving forward. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

INDU Dow Industrials Daily Chart Negative Divergence

The Dow closed at Monday's high print. The red lines show firm negative divergence in place across the board not what you expect for a market perceived to be healthy and bullish. Projection is for a move back down in the days ahead. Price may try to stumble sideways to sideways up to print the coveted 14200 print that would satisfy the goal from 13800, but it would also not be surprising for the Dow to simply roll over. The dark lines show a potential H&S, that will need a right shoulder, with head at 14100, neck at 13850 which targets the important 13600 support if the 13850 fails. Watch the 20-day MA at 13955This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

VIX Volatility Daily Chart

The falling wedge, oversold conditions and positive divergence were used seven days ago to identify the launch pad bottom for the VIX. Volatility rocket launched last week and then on Monday hit the afterburners pushing above 19. Alas, then VIX tumbles two days in a row to close tonight at 14.73.  Looking at the four major indexes today, the SPX and INDU (Dow) led the Nasdaq, COMPQ, (tech) and RUT (small caps) higher, which is not what you want if you are bullish, you want tech and small caps to lead. The Dow and SPX regained their 20-day MA's but the COMPQ and RUT did not. The Dow is making new highs for the week but the SPX is only flat on the week. The Nasdaq is flat on the week as well and the RUT is actually down 0.7% this week so far. This background information is important as you see the VIX did not make it down to the starting number this week (pink line). Can the VIX come down to the 13.5 tomorrow. Sure it can.  Watch to see if the VIX can at least return to where it started the week, or not.

The 50-day MA is 14.70 and where the VIX parked for the evening. Thus, the move up or down from here when the bell rings will provide an immediate read on the broad indexes, down VIX is up markets and up VIX is down markets. The green lines over the last few days show all long and strong profiles except for the negative divergence with the stochastics that has to be credited for causing the VIX pull back. The other indicators want to see a higher high than 19. The 23 is a logical target for the days ahead but this seems unreasonable in light of the wild bullishness today.

The VIX is favoring the sideways range through 13.5-19.0 so if the VIX drops tomorrow, the 13.5-ish level is very important. Projection is for the VIX to continue higher with an eventual test of 23 in the days, or couple-few weeks ahead. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Midday Market Action 2/27/13

The bulls came to play today keeping the financials, XLF, well elevated above 17.21. Volatility leaks lower all day thus far with the VIX losing the 15 level well under the bull-bear line at 15.70, so the broad indexes run higher.  JOY earnings beat and is up 5% so this global bellwether adds bullishness as well. The SPX popped above 1499 so 1503 was tested, then the strong 1505 resistance, which gave way. Next is 1509 R, then the 20-day MA at 1510.58, and 1511. The bulls will keep pushing higher unless the VIX moves higher and regains 15.70. Interestingly, copper and commodities continue to weaken as equity markets move higher. The euro sits at 1.31. The Dow Industrials hit 14K but pulled back. Trannies are strong today. The economic data yesterday and today along with Chairman Bernanke's money-pumping talk provides market lift. Crude oil regains 93 after the inventories show a lower build than consensus.

Note Added 2/27/13 at 12:10 PM:  Here's the test of the 20-day MA at 1510.68. The SPX crossed above the 200 EMA at 1500 on the 1-hour chart and the 8 MA just crossed above the 34 MA on the 30-minute chart signaling market bullishness for the hours and days ahead. Bears need the 1511 resistance to hold, and for a sharp reversal to occur to curl the 8 MA back to the downside again. The bulls are motoring along today. XLF is 16.50.  VIX 14.89.

Note Added 2/27/13 at 12:41 PM:  The SPX overtakes the 20-day, which is also the middle BB on the daily chart. So the touch of the lower Bollinger Band did result in an upside move back to the middle BB, at a minimum. The upper BB is at 1531 where the recent top occurred. The SPX is now at 1513 creating two right shoulders for potential H&S patterns. Support below is the 20-day MA and 1510.78, resistance above is 1514, and stronger R at 1516 and 1518.

Note Added 2/27/13 at 2:18 PM:  It is fascinating to see JJC (copper) down and GTX (commodities) both down 0.5% today as the equities markets keep punching out new highs, up over one percent on the day. SPX is above 1515 with a HOD at 1515.55.  See if the strong 1516 resistance holds, or not. TRIN is in the cellar at 0.63 providing bull fuel. VIX is 14.85 after sneaking a hair above 15 but then falling back. The strong resistance above is 1518, then 1520. With all the free money rushing into equities, like heroin into an addicts veins, the bulls may have mojo to simply run up and test the 1520 R.

Note Added 2/27/13 at 3:02 PM:  The SPX HOD is 1517.89 so the 1518 R holds, for now. JOY is up 6% and has a lot to do with today's euphoria. Bernanke says the housing recovery is well underway as well. TRIN is 0.59 uber bullishness. NYAD only at +1670 for a high today. NYHL is muted at 164. The 10-year yield jumps to 1.90% today.

Note Added 2/27/13 at 3:39 PM:  The SPX came up for a HOD at 1520.08 so the bulls tagged the 1520 R.  The Dow Industrials are up 200 points. VIX is 14.48 near the lows for today. TRIN 0.50. Keystone took profits on NEM exiting this long trade but will likely reenter tomorrow.

Note Added 2/27/13 at 4:02 PM:  A wild up day, the mirror image of Monday's down day. The SPX closed exactly on top of the strong S/R at 1516. Tech and small caps lagged the broad market today which is not encouraging for the upside, ditto the low volume only running at about 70% of a day's average expected volume. Short-covering pumped the markets higher as the short traders lost any conviction for the downside. At the same time retail investors are likely chasing the upside afraid of missing the upside. Very poor performance by copper and commodities today. GTX drops over one-half percent and loses 4900. VIX closes at 14.70.  Financials jumped to XLF 17.63 today which means no one is worried about Europe.  The 10-year yield is 1.90%. TRIN closed at an obscene low at 0.48. JOY provided a big push for the bulls today. These markets are a head-scratcher and are not to be trusted. There is something special going on. Be very wary. Time to let the smoke clear, enjoy a slice of apple pie and perhaps check some charts this evening.

Keystone's CRB Rind Indicator Turns Bearish (Tentatively)

Since the Rind is only under the 13-week MA by a smidge, a few days are required to see how it shakes out. For now, the Rind has lost the 13-week MA at 533.47 which is a bearish signal for markets moving forward. CRB Rind Index is important since it is hard to manipulate and it directly indicates the use of everyday manufacturing needs such as tallow, cocoa, rubber, zinc, copper and lead scraps, print cloth, leather, and many other overlooked commodities. 

2/26/13:  Market Sell Signal; 533.47 (VOIDED, by 3/1/13 it remains on a buy signal)
11/26/12:  Market Buy Signal; 514.92.
10/15/12:  Market Sell Signal; 516.37.
8/6/12:  Market Buy Signal; 508.48.
3/26/12:  Market Sell Signal; 540.37.
1/9/12:  Market Buy Signal; 527.46.

Further information on commodities is found at the website. The chart is from this site with annotation by Keystone. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 3/2/13: The bulls pull out a big save goosing the markets higher and the Rind recovered to close at 535 above the 123-week MA at 533 and remain on a 'Buy' signal. Keep an eye on it next week.

Keystone's Morning Wake-Up 2/27/13; Durable Goods; Chairman Bernanke

TGT earnings beat on EPS but top line was only in line with estimates. The guidance is strong so TGT jumps higher pre-market and the futures become buoyant. JOY earnings, the global bellwether, are key today. Chairman Bernanke will continue speaking at 10 AM on Capital Hill, promising a chicken in every pot. Mortgage Applications are down this morning for three down weeks in a row, surprising, since everyone says the housing recovery is running full steam ahead. Durable Goods are released in one-half hour. Pending Home Sales data at 10 AM may create a market stutter step. Oil Inventories are 10:30 AM and the 7-Year Note Auction at 1 PM.  The month of February typically finishes with a couple days of weakness. It is interesting how the Monday low led to a Tuesday high with the full moon providing the edge to the bulls.

The retail earnings are key today and will affect RTH.  DRYS is an important indicator for shipping. The shippers have fallen off the cliff over the last few days and no one is commenting on this important barometer. The continued weak Baltic Dry Index and shippers does not verify a strong global economy. The financials are struggling the last few days and are expected to be the leadership sector moving forward. Watch XLF 17.21 which failed yesterday, but recovered.  The markets will take another leg lower if XLF 17.21 fails. Bulls are fine if they keep XLF above 17.21. Watch volatility as well. The market bears are fine as long as the VIX stays above 15.70. The bulls will have a recovery rally in place if the VIX drops through 15.70. The volume yesterday was the same as the day before as the markets churn sideways. The Nasdaq and RUT noticeably unperformed the broad indexes yesterday which is a feather in the bears cap.

The SPX starts at 1497.  The bulls only need two points, to punch up through 1499, and hold it for several minutes, and the upside will accelerate to 1503 and 1505. The bears need to retrace yesterday's move and push under 1485 to regain mojo. A move through 1486-1498 is sideways action today. The 20-day MA is 1510.56 and the 50-day MA is 1478.09 which may serve as boundaries for a sideways range. The euro is 1.3106. Very simply, the market bulls win if the euro is above 1.31 and heading higher. The market bears win if the euro drops under 1.31 and heads lower.

Note Added 2/27/13 at 8:35 AM:  Durable Goods weaker than expected on headline number. The euro falls under 1.31 now at 1.3075.  Crude oil turns negative. TGT does an about face and falls on its sword, now down 3% pre-market. Futures flat. Strike up the calliope, another day at the circus begins.

Tuesday, February 26, 2013

Keystone's Midday Market Action 2/26/13

New Home Sales data was far better than expected, ditto Consumer Confidence. The SPX popped but then collapsed at the 10 AM pivot.  RTH moved above 45.54 at the opening bell as anticipated so the bulls were happy.  The financials are hurting today. Pay close attention since financials are what everyone expects to lead the continued rally.  XLF lost the critical 17.21 bull-bear line in the sand this morning which should  lead to strong market selling.  However, the bulls are fighting back and the XLF bumps along 15.18-15.23. Look for the potential flush lower with the XLF from here which would immediately drag the broad markets lower. TRIN is 1.33 verifying that the bears are in control today. The 10-year yield is 1.85% stepping lower into further disinflation and deflation. WTIC oil popped above 93 but is now well below again. The euro is 1.3055. The SPX is moving sideways today. The LOD is 1485.01 after the 1488 level failed. Keystone took profits on the EWG short trade exiting the position. Germany should continue to trend lower, will consider reentering short.

Note Added 2/26/13 at 11:56 AM:  Note the XLF printing 17.23; market bulls are mounting a come-back, now 17.24. Time will tell. The SPX LOD at 1485.01 holding the sturdy 1485 support level, for now. Market direction depends on XLF 17.21 right now, bulls win above, bears win below. VIX is 18.01.  The SPX:VIX ratio is 82 starting to move down towards the critical 68 level which will require watching in the coming days.

Note Added 2/26/13 at 12:38 PM: The XLF is printing 17.32 firmly back in the bull camp; the bulls knew what to pump. The SPX now recovers printing 1493. VIX is 17.28 maintaining elevation above 15.70.

Note Added 2/26/13 at 1:28 PM:  XLF is 17.27 so the bulls are hanging in there. VIX is 17.28.  TRIN is 0.99 not favoring bulls or bears today. Whichever way the TRIN moves off of 1.00, the broad indexes will move opposite (TRIN down = markets up and TRIN up = markets down).

Note Added 2/26/13 at 2:47 PM:  TRIN down to 0.86 so SPX up to 1496. XLF 17.31. VIX 16.98. AAPL punched under the 440 that Keystone has been harpin' about for the last three weeks or so. A tradeable Apple bottom, for a long, should appear at 420-440. Keystone bot IAG, a gold miner, opening a new long position. IAG displays attractive positive divergence on the weekly and daily charts.

Note Added 2/26/13 at 3:42 PM:  The SPX near the highs of the day at 1498. TRIN 0.84.  VIX 17.02. XLF 17.36.  Keystone bot REE, a highly speculative and dangerous rare earth play, opening a new long position. REE is somewhat thinly traded with about 300K shares traded today thus far. REE, and other rare earths, such as MCP, are set up or are setting up with attractive positive divergence.

SPX Daily Chart Lower BB Violation Head and Shoulders

The red rising wedge, overbot conditions and negative divergence spanked the SPX down four days ago. Two key outside reversal days have occurred in the last five days. See how the red candles printed higher highs intraday, then lower lows and closed below the prior days low. The pink lines show an H&S in play with head at 1531 and neckline at 1495, so target at 1459. The 1459-1465 zone is an interesting potential landing area. The lower Bollinger Band was violated at 1490. Interestingly, note how both the upper BB and lower BB are expanding after the tight squeeze. The tight squeeze creates the down move and lower prices can continue with the lower BB dropping sharply lower to allow price to explore some slightly lower numbers. However, since the lower BB is violated, a move back to the center BB, the 20-day MA, at 1510.72 is now on the table.

The indicators are weak and bleak indicating a preference for lower numbers to print moving forward. The RSI and stocastics fell under the 50% levels which is bearish.  Watch to see if the money flow loses the 50% level. The 50-day MA is 1476.72 and will likely see lots of action in the days ahead.  Looks like a dead-cat bounce is on tap today, then more downside. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

CPC Put/Call Ratio Daily Chart

With the large drop yesterday, the Dow Industrials losing over 150 points during the last hour of trading, nearly three points per minute for an hour straight, it is amazing to see a continued lack of fear. Complacency rules since traders are addicted to the Fed's crack cocaine easy money and the drug dealer said there is an unlimited supply coming. Even over the last year the moves above 1.20 (signaling a return of fear and panic) are rare. The November market bottom was identified by the 1.2+ print but this was only a tiny smidge of panic and fear, nothing to write home about.  So the market rally continued resulting in the roll over. The lack of fear suggests that the selling can continue for a while. Today likely wants to see a dead-cat bounce but the weakness should resume.

It is not attractive to bring on long plays until the panic and fear occurs. Buy when others are fearful and sell when others are greedy. We are waiting for the panic and fear to show up. But with a print of 1.15, no one is jumping from windows, and perhaps only a first floor window was opened during yesterdays tumble.  The day will come with traders running around like chickens with their heads cut off proclaiming to sell everything, the end is coming. That will correspond to a CPC spike or spikes above 1.2, 1.3, perhaps 1.4 or higher. A severe market sell off would print a CPC at 1.5-ish. Thus, the idea is to wait for the 1.2+ prints to begin occurring and that will be time to nibble on the longs from your long shopping list that you have put together over the last month. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Morning Wake-Up 2/26/13; Consumer Confidence

The smoke and dust continues to clear from yesterday. The Italy elections throw global markets into a tizzy. The drop in the euro brings the equity markets lower. The euro is at 1.3078, under 1.31, after printing above 1.33 yesterday. Italy banks are beaten today down 5 to 8%. The drop in the U.S. Treasury note 10-year yield is remarkable, from over 2.00% to 1.87% right now. This is disinflationary and deflationary behavior far removed from the inflation concerns that over 90% of the analysts say is supposed to happen, already. The 18-year stock cycle runs to 2018, so the up in yields may not occur until 2016-2019. The 10-year Treasury price is 101.172. The CRB is 293.81. Thus, 293.81/101.172 = 2.90. This is Keystone's Inflation-Deflation Indicator. The 2.90 is firmly down through disinflation with the economy on the brink of falling into deflation if the 2.90 level is lost. What perfect timing is Chairman Bernanke showing up today to pump the easy money talk?

The VIX jumped 34% yesterday. Type 'VIX' into the search box and go back to study the charts from a few days ago where the positive divergence on the weekly and daily charts foretold of the rocket launch. This positive divergence technique creates the leap off the bottom for any stock or ticker and is the very nature of speculation. Interestingly, the CPC put/call ratio is 1.15 and did not print above 1.20. There is no fear or panic in the markets, even after yesterday's dramatic drop. The Dow Industrials dumped over 150 points in only the last hour of trading. But, no fear or worry. Bernanke will provide a fresh batch of crack cocaine today, so, why worry? Buy stocks and be happy like the majority of traders are doing (said cynically).

The financials broke down yesterday so the XLF must be studied today.  MS was hit especially hard dropping 7% due to large exposure to European banks. In recent months MS says that they moved away from this exposure but obviously traders believe that MS is knee-deep in Europe. Watch XLF 17.21, now bullish by a nickel. Bulls need to stay above 17.21, bears need to push under 17.21. The retail sector collapsed into the close yesterday as well. Watch RTH 45.54, now bearish by a few pennies. Bears need to stay below 45.54, bulls need to push above 45.54. The XLF 17.21 and RTH 45.54 will dictate market direction at the opening bell.  The key metric is volatility, however. VIX 15.70 carries a lot of clout. As long as the VIX stays above 15.70, the bears have no worries. A bull recovery rally will be in place if the VIX drops under 15.70. Oil is under 93 to 92.48. A drop through 92 would lead the way to 88. Watch Keystone's SPX:VIX ratio now at 78. The 68 level signals trouble. Keystone's SPXA150R Indicator dropped under 80 to show that the market bears are in control. Watch the CRB Rind Index (on the Other Signal page on this site) since it appears ready to signal bearishness ahead.

HD earnings a short time ago are in line with estimates and gains 1.5% pre-market. The HD, M, RSH and SKS earnings today will all affect the retail sector (RTH). Housing data hits at 9 AM EST. New Home Sales and Consumer Confidence hits at 10 AM where a market pivot point will occur. Chairman Bernanke will be speaking starting at 10 AM as well so there is lots of drama ahead today. The Richmond Fed provides manufacturing data at 10 AM and the 5-Year Note Auction is 1 PM.  For the SPX starting at 1478, the bears only need a smidge of red in the futures and the downside will accelerate further. The 50-day MA is 1476.72 providing a lower target. The bulls are simply trying to stop the bleeding today, and they can at least start to stabilize markets with XLF 17.31 and RTH 45.54. A move through SPX 1489-1525 is sideways action today. The 8 MA is under the 34 MA on the 30-minute chart and the SPX is under the 200 EMA on the 60-minute chart, both indicating bearish markets ahead.

European Bond Yield Summary 2/26/13

The drama and intensity in Europe is increasing due to the Italy elections. A second Italy vote will likely be required which would continue the theatrics. Poor Monti that stepped in with the austerity and belt-tightening and now has his head handed to him. To no surprise, the Italy vote is against austerity; people want to vote for party-time, not austerity-time. Berlusconi says "the markets are crazy."  The Italian banks are collapsing, down from 5 to 8% this morning. European stocks are down from one to six percent. Europe is back on the front burner so it is time to watch the bond yields once again.

10-Year Bond Yields:
Greece 11.05%
Portugal 6.47%
Spain 5.32%
Italy 4.81%
France 2.19%
U.S. 2.01%
U.K. 1.87%
Austria 1.85%
Netherlands 1.72%
Finland 1.66%
Germany 1.47%

Italy 2-Year Yield 2.12%
Italy 5-Year Yield 3.55%
Italy 10-Year Yield 4.81%
Italy 30-Year Yield 5.34%

The Italy 10-year yield jumps about 40 basis points in the last couple weeks. Watch to see if Italy hits 5% which will create further concern. The Italy yield curve shows a healthy bump across all time frames of about 30 basis points over the last few days; the Italy 2-year is increasing the fastest now above 2%. Spain is well-behaved through the drama, staying in the 5.3-5.4% range. Watch to see if Spain hits 5.5% which would create further concern. France and other perceived safe havens are about 2% and lower. The money that moves out of Italy moves into Germany, Finland, the Netherlands and Austria. Greece continues to hover at 11%.

The Italy-Germany spread is 334 (481-147). Keystone uses an Italy-Germany spread of 470 to indicate major turmoil and concern, where Italy will need help. Thus, this equates to the Italy 10-year yield moving above 6%, a red line alert number where the European situation will become dire.

Monday, February 25, 2013

Keystone's SPX 1-Hour Chart with 200 EMA Cross

The SPX fell through the 200 EMA at 1500 today, a very bearish signal. The 60-minute chart on the weekend highlights this in more detail. Price came up to test the 1524 resistance and died.  The closing print is at the lower rail of the blue channel. Note the positive divergence in place for all indicators pointing to a bounce back up coming.  The small red lines show some downside momo may be in place for a couple or few candles so tomorrow may see a flat start and then perhaps a recovery, timed with Chairman Bernanke's talk.  He will be speaking and pumping the QE easy money so markets may become buoyant off his happy talk. It would be interesting if markets do not rally off of Bernanke tomorrow.  The 200 EMA is very important so a back kiss would be prudent. If the SPX comes up to back test the 1500, and then collapses, markets will have big trouble ahead.  As long as the SPX stays under the 200 EMA, the bears rule the markets. Important S/R is 1524, 1520, 1518, 1516, 1505, 1500 (200 EMA), 1498, 1495, 1485, 1481 and 1476. The 50-day MA is 1476.72. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keybot the Quant Turns Bearish

Sure enough, Keybot jumped from the bull camp back into the bear camp this afternoon at SPX 1502. The SPX has thrown off two key reversal days in the last five days. The spike in volatility caused the bulk of the mayhem. Bears are fine if the VIX stays above 15.60.  As always a whipsaw is possible but the VIX appears to want to remain elevated and, if so, the markets will meander lower. More information is at Keybot's site:

Keybot the Quant

Keystone's Midday Market Action 2/25/13

The markets are off to a circus of a start today.  The SPX is churning through the 1497-1531 range. A large gap up move occurs this morning but the market is falling on its sword after word that Berlusconi may have done far better in the Italy elections than anyone thought. The euro is 1.3245 well off the 1.33 only one-half hour ago. You know the refrain, down euro = down markets, so the SPX is retracing right now at 1518. WTIC oil is dropping back down towards 93. Lower oil means lower markets.  The 10-year yield hit 2.00% a short time ago but now back to 1.97%. Keybot flipped back to the long side but do not be surprised for another whipsaw to the short side again.  The 8 MA is above the 34 MA on the 30-minute chart signaling bullish markets for the hours ahead and the 8 MA has not yet curled over, so the bulls are feeling comfortable today. The TRIN is 1.16 favoring the sellers and the move lower in the SPX. SPX S/R is 1531, 1528, 1525, 1524, 1521, 1520, 1518, 1516, 1514, 1512.10 (20-day MA), 1511, 1509 and 1505. The HOD is 1525.84 with the 1525 R holding. Copper is flat. Financials are negative. Retail sector is positive with LOW helping. Voaltility is moving up with VIX above 14 but bears cannot be happy until they see VIX 15.60+.

Note Added 2/25/13 at 11:25 AM:  The action becomes more odd each day. The euro has now plummeted from 1.33 to 1.32 in one-hour's time on the Italy election news. SPX is 1518. TRIN 1.14 bear-friendly. VIX 14.36 bull-friendly. President Obama is now making a speech pumping up the fear over the sequestration that hits on Friday.

Note Added 2/25/13 at 12:33 PM:  The SPX is moving across the 20-day MA at 1511.84. Bears have the upper hand below the 20-day, bulls rule above. The 1509 support held.   VIX HOD is 15.36 twenty-four cents shy of the 15.60+ goal for the bears. TRIN 1.62 firmly bearish for today. The 8 MA curls over to the downside on the 30-minute chart. Euro is 1.3279 under 1.33. The 10-year yield collapses to 1.93%; money is running into bonds for safety today, not the 'great migration' out.

Note Added 2/25/13 at 3:00 PM:  Wild whipsaw action all day.  Keybot is close to flipping short again but needs to see 1502 and lower. The 8 MA just stabbed down through the 34 MA on the 30-minute chart to signal bearish markets for the hours and days ahead.  The VIX exploded higher straight up through 15.60 now printing 16.84, heading to 17. The VIX is up 20% today. The euro is 1.3103 and fell under 1.31 a short time ago. Wild move in the 10-year today jumping over 2% today now under 1.9% at 1.89%, printing 1.86% for a low today. A fifteen-basis point range is a big deal. With the Italy turmoil, traders are seeking safety, this is a spectacular move in notes and bonds. The 30-year yield is at 3.09% heading towards 3.00%. Yields moving down is disinflationary and deflationary behavior. The SPX is at the strong S/R at 1505. Crude oil is 93.10 performing a round trip as well today, from 93 to up over 94 and then back down to 93. Keystone is searching through the junk drawer for the dramamine.

Note Added 2/25/13 at 4:36 PM:  The smoke and dust is still clearing. What a wild whipsaw day, one for the ages. Keybot flipped back to the short side this afternoon at SPX 1502.  The 8 MA is under the 34 MA on the 30-minute signaling bearishness ahead. Importantly, the critical 200 EMA on the 60-minute chart at 1499.91 failed today. The SPX 50-day MA is 1476.72, only ten points lower, so price may want a touch. The bears are driving the bus and unlike the fake-out  move to the downside the other day, where the VIX dropped to signal that the market selling was phoney, today the VIX sky rocketed higher and stayed high as markets fell. Today was another key reversal day as well (today's high moved above the prior days high and the low and close is under the prior days low), the second one in five days, a very bearish indication. As long as the VIX stays above 15.60, now at 18.99, the bears have no worries. The move in the 10-year yield is phenomenal, closing at 1.86%.  The financials were weak today causing market weakness. MS was hit hard so it must continue to maintain exposure to Europe.

Keybot the Quant Flips Bullish

Keybot the Quant is back on the long side at today's opening bell, however, as always with the turns, stay alert for a whipsaw back to the short side. The markets are very unstable and a whipsaw move today or tomorrow back to the bear side would not be out of the question.  Hold on tight. More information can be found at Keybot's site;

Keybot the Quant

GOLD Daily Chart Death Cross Sideways Channels

The Death Cross occurs for gold last Friday. The 50-day MA crossed under the 200-day MA. As mentioned often here, take the Golden Crosses and Death Crosses with a large grain of salt, they are only a bush-league technical indicator. Note the death cross in 2012 where price actually placed a bottom afterwards, and also the golden cross in September 2012 which identified the gold top, both are opposite of what these much-touted indicators proclaim.  The purple descending triangle targets 1500.  The move down experienced a bounce back up to the lower trend line at 1580. The stochastics and histogram favor a further recovery bounce, however, the other indicators are weak and bleak wanting lower numbers. Gold will probably base in the 1480-1550 zone and then establish a sideways move forward. The flat 200-day MA at 1664 may provide a ceiling for a sideways channel. Projection is for gold to move through 1480-1660 for the foreseeable future. Gold is printing 1588 right now.  This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Keystone's Morning Wake-Up 2/25/13

The China PMI was disappointing at 50.4 a couple points under the estimate but a hair above 50 indicating a tiny sliver of expansion. The S&P futures dropped a couple points on the news at 9 PM EST last evening but overnight the markets recovered. YUM, a bellwether for Asia, shows a weakening in Indonesia which reinforces the weak China theme.  Markets simply ignore bad news. The BOJ is assigning dovish members so that weakens the yen with the dollar/yen posting new highs but that has pulled back. The euro is the key today and was under 1.32 on the China PMI news but overnight regained 1.32 and is now running toward 1.33. You know the drill by now, higher euro means higher markets.  WTIC oil is over 94 again.  As shown with the euro chart this morning, the critical trend line from when Draghi pledged support for the euro has failed which is bearish for the euro and the broad indexes.

The Italy elections continue. Results should be available about 9 PM EST.  Bersani is anticipated to win and he may have an acceptable margin of victory, so the markets are maintaining a positive mood. The U.K downgrade has minimal affect today. A couple of Fed manufacturing forecasts hit this morning, the 2-Year Note Auction at 1 PM and Fed's Lockhart speaks this evening. LOW earnings are in-line with estimates and announces a buy-back, creating another two-point pop for S&P futures. Typically, stocks announcing buy-backs are lower in price about three months out. Bullard's comments on Friday helped the markets recover. Keybot the Quant should flip back to the long side this morning. A gap up opening is interesting since the markets may then require the first couple hours of trading to sort out the path forward. If the euro take a couple-day dead-cat bounce, the markets in general will float upwards, but weakness should reenter moving forward.

February typically ends with weakness the last couple days of the month with the broad indexes losing about one-half percent or more on average. Copper is positive all through the China PMI number into this writing which aids the bulls. Watch GTX 4927, VIX 15.70 and RTH 45.50, all three are causing bullishness in the markets, so the bears got nothing unless they attain one of these numbers.  For the SPX today, an upside run appears to continue. The 1520 resistance is very strong, then 1524.  The 20-day MA at 1511.38 serves as downside support. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullishness for the hours and days ahead.

XEU Euro Daily Chart H&S Patterns Euro Loses Lower Trend Line from July 2012 when Draghi Pledged Support

The euro fell through the lower trend line of the upward-sloping channel two days ago. This is significant since the lower trend line extends all the way back to the July 2012 low which was created when Draghi pledged to support the euro by all means necessary. Draghi's promise lasted about seven months. The euro is jumping higher this morning, now at 1.3271, which is sending the S&P futures higher. Higher euro = higher markets.  Lower euro = lower markets. China PMI is far lower than expected but the markets continue to ignore bad news. Looking at the indicators (thin red lines), the chart is very weak so the pop today would be viewed as a dead-cat bounce at this juncture. The euro may want to back test the lower trend line since it is such an important trend line.

There are three head and shoulders patterns on the chart. The pink H&S is head at 1.365, neckline at 1.335, target 1.305.  The green H&S is head at 1.365, neckline at 1.325, target 1.285.  The blue H&S is head at 1.365, neckline at 1.300, target 1.235. Thus, choose your poison. The euro uses the 20-week MA at 1.3121 as support so watch this number moving forward. Projection is for the downward move to continue after the dead-cat bounce plays out early this week. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 2/25/13 at 5:00 PM:  A wild market day occurs with a dramatic bounce in the euro up to over 1.33 then collapse to close at 1.3069. This nails the target for the pink H&S described and highlighted above.

Sunday, February 24, 2013

Keystone's Key Events and Market Moves for Trading the Week of 2/25/13

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week: Happy Flag Day to our Mexico friends. This week is the lollapalooza of retail earnings. The retail sector has supported the markets for many months; this week will decide if that continues, or not.  Fed manufacturing indexes are also important. Consumer Confidence at 10 AM Tuesday is the most important data release this week. Consumer Sentiment and ISM Mfg Index is Friday.  Chairman Bernanke and other Fed speakers are on tap to pump the markets like Bullard last Friday. Of course the Sequester that hits Friday is the 900-pound gorilla in the room. The month ends on Thursday. The next political deadline is the Sequestration on 3/1/13, only 4 days away, followed by the Continuing Resolution on 3/27/13, only 31 days away, then the Debt Ceiling limit comes into play again mid-May, three months out. Traders are no longer concerned of any market downside occurring due to these political deadlines. The politicians solved the Fiscal Cliff and the Debt Ceiling deadlines with can-kicking and this will simply continue on indefinitely, so there is no reason to price in any market downside moving forward.  Of course, if a stumble occurs, it would impact markets more greatly due to this complacency. Congress returns from vacation this week which is a negative for markets. The European debt crisis news directly dictates global market direction.  Spain protests are growing.  As the euro goes, so goes the equity markets.  Italy elections are today and tomorrow and will cause trouble if two or three of the candidates all receive the same number of votes. Italy will take the month of March to form a coalition government. Spain is delaying their bailout request so the ECB’s OMT bond-buying program cannot be unleashed in full force, although simply having the OMT in place has greatly calmed Europe.  Spain is reluctant to give up sovereignty and accept conditionality. European countries are denying that money is moving out of banks but denial is always the first sign of serious trouble ahead.  Italy wants Spain to request a bailout since the ECB bond-buying will immediately improve Italy’s debt situation. Look for a strong market bounce and rally if Spain requests a bailout. European riots and violence continue. Cyprus will need a bailout by April. Merkel wants Greece to stay in the euro until her election in September but will not care afterwards. The next ECB Rate Decision and Press Conference is Thursday, 3/7/13.  Draghi is reluctantly moving dovish as Weidmann plays the hawk role.  Traders will be anticipating a cut by Draghi at some point forward.  Europe is standing by watching their manufacturing and export industries worsen while the U.S. and Japan devalues their currencies. If the European economy continues to falter, and the automobile sales are dropping significantly, and Germany dropping off, Draghi will have to cut to weaken the euro and help the Eurozone grow out of the debt mess. The China hard versus soft landing saga continues. Watch for further China easing measures such as lowering rates or triple R’s, which will bounce copper, commodities and equity markets. As copper and commodities go, so goes the markets.  China Flash PMI this evening is critical and may set the broad market tone into Tuesday. China correctly worries about the new commodities inflation and asset bubbles that will be created by their easy money policies (Chairman Bernanke incorrectly defends QE saying it does not create asset bubbles). New leaders President Xi Jinping and Premier Li Keqiang will supply economic targets in March. China professes a 7.8% growth rate but no one asks how this is possible when their number one customer, Europe, is in recession and depression, the U.S. is flat, and uninhabited cities litter the China countryside, waiting for the urban shift to a domestic-led economy. China demographics are a mess due to the multi-decade one-child policy now causing a lack of workers to fuel economic health and the income figures show that the rural Chinese are making more money than the urban dwellers providing no incentive to move to the cities. China retail sales are also lagging. CAT, YUM, and DE, three key China bellwethers, are unenthusiastic moving forward.  Pay attention to JOY earnings this week. The Australia disinflationary and deflationary scenario must be studied closely moving forward. The equity markets continue to ignore the geopolitical landscape. Syria is out of control with refugee’s now threatening collapse of neighboring nations. Egypt remains in chaos.  The sharp rise in Brent oil verifies the concern over Northern Africa and the Middle East. At the same time, WTIC oil drops on over supply issues remaining as well as a weakening global economy so the crude to Brent spread hits historic highs over 23.  Use Brent oil as a proxy for the Middle East turmoil. If Brent is above 112, now well above, it signals that tensions are rising. Calm is returning under 112.  As oil goes, so goes the markets. The WTIC oil 95.50 support level failed last week which sent oil directly to 93. If oil moves above 93, the equity markets move higher, under 93 signals more disinflationary concerns and markets will sell off.  The earnings season continues. Companies are meeting lowered estimates although the percentage beats are slightly under the typical 70 to 75% expected. Top line revenues continue to be challenged. The retail earnings are key and LOW and HD will provide insight into housing and retail.  Watch DRYS on Wednesday to see if ocean shipping shows any signs of life. The weak Baltic Dry Index signals a sick global economy.  JOY is the most important earnings report all week since it is a key global bellwether. Chinks in the housing sector showed last week, will retail disappoint as well this week?  Housing and retail has held the markets together all these months.  Tech (COMPQ) and small caps (RUT) strongly led the broad markets lower last week, a bearish indication.  The SPX and RUT lost their seven-week winning streaks last week and logged their first down weeks for 2013. Volatility remains at a six-year low but the VIX moved above 16 last week before dropping back down. Further VIX upside is expected. The CPC put/call remains low verifying the market complacency ongoing, consistent with market tops.  Traders never doubted the positive outcome for the fiscal cliff and debt ceiling limit and those beliefs are now reinforcing continued complacency.  The market bears finally flexed their muscles for the first time this year but the Fed’s Bullard ran to the television studio to broadcast a soothing message that the printing presses will run indefinitely. Continued market topping and roll over action is anticipated for the broad indexes as the days and weeks play out. Q1 is anticipated to be a significant market topping area.
·         Sunday, 2/24/13: Italy elections begin. Congress returns from vacation to address the sequestration deadline on Friday. Flag Day. China Flash PMI 8:45 PM EST will push copper and commodity prices immediately, one way or the other, and this will set the tone and direction for U.S. markets tomorrow morning.
·         Monday, 2/25/12: Italy elections continue. Chicago Fed Activity Index 8:30 AM. Dallas Fed Mfg Survey 10:30 AM.  2-Year Note Auction 1 PM. Fed’s Lockhart speaks 7 PM. Darden Analyst Meeting may provide insight into consumer discretionary spending. Markets may experience buoyancy into the full moon. Earnings: ADSK, BIG-retail, CZR, CTB, DDD, DNDN, FE, HALO, HCN, HL, HTZ, IDIX, LOW-retail and housing, MHR, MELI, MR, OKE, OKS, KWK, UNB, URS, VECO, VVUS, WTR.
·         Tuesday, 2/26/13: S&P Case-Shiller House Price Index and FHFA House Price Index at 9 AM. New Home Sales and Consumer Confidence 10 AM. Chairman Bernanke speaks 10 AM.  A market pivot point will occur at 10 AM. Richmond Fed Mfg Index 10 AM. 5-Year Note Auction 1 PM. Earnings: AMT, AWK, AZO, BIO, BZ, CRZO, DWA, EIX, FSLR, GAME, GWRE, HD-retail and housing, JAZZ, LDL, M-retail, MAKO, MSO, PCS, PCLN, RSH-retail, QCOR, RRC-natty, SKS-retail, SRE, THC, TIVO, TSL, SLCA, UTHR, WFT.
·         Wednesday, 2/27/13: Mortgage Applications 7 AM—is the trend up or flat? (2/13/13 down; 2/20/13 down)  Durable Goods Orders 8:30 AM. Chairman Bernanke speaks 10 AM. Pending Home Sales 10 AM-markets may take a stutter step. Oil Inventories 10:30 AM. 7-Note Auction 1 PM.  The month of February typically finishes weak the last couple days. Earnings: BSFT, BWC, CRI, CBI-an LNG gauge, CDXS, CLR, DLTR-low end retail, DRYS-shipping, GRPN, ITT, JCP-retail, JOY-global bellwether, KERX, LTD-retail, MWE, MNST, MYL, NRG, PLL, KWR, SWC, RGR-guns, TJX-retail, PANL, VPHM, WEBM, WES.
·         Thursday, 2/28/13: EOM. Jobless Claims and GDP 8:30 AM. Chicago PMI 9:45 AM. Natty Gas Inventories 10:30 AM. Kansas City Fed Mfg Index 11 AM. Farm Prices 3 PM. Fed’s Fisher speaks 4:30 PM. .Fed’s Evans speaks 8 PM. Earnings: ALSK, AWR, BID, BKS, BBY-retail, CERS, CHS, GTLS-natty, CLNE-natty, CPNO, CRM, DECK-retail, FCN, GPS-retail, GXP, HK, IMMR, ISIS, JOE, KOG, KSS-retail, MTZ, MDR, MCP-rare earths, PANW, RDC, SD, SHLD-retail, TTI, UHS, WEN, WNR, WWE.
·         Friday, 3/1/13: Motor Vehicle Sales. Personal Income and Outlays 8:30 AM. PMI Mfg Index 8:58 AM.  Consumer Sentiment 9:55 AM. Construction Spending and ISM Mfg Index 10 AM-expect a market pivot point at 10 AM. Sequestration hits with one trillion in automatic spending cuts for government. An 85 billion hit takes place quickly as well as a 0.07% hit to GDP. Estimates are that over 600K people may lose their jobs with much of the cuts in defense industries so States such as Virginia are more strongly affected. Earnings: DUF, FWLT, SUP.


·         In March:  New China President Xi Jinping and Premier Li Keqiang take over complete control and the ten-year transition of power is finished. China now sets inflation and budget targets moving forward. China is pushing to a domestic-led economy. The growth projections are important and will be judged against the 7.8% growth rate in 2012.
·         Wednesday, 3/27/13: Continuing Resolution (CR) is required to fund the government.
·         In March and April:  The BOJ head’s will be replaced and strong QE will likely occur. Perhaps a pull-back and low in the Nikkei in February and March may provide a point of entry ahead of the additional money-pumping on tap.
·         Sunday, 5/19/13:  16.4 trillion Debt Ceiling limit is hit.
·         In September:  Merkel (Germany) seeks re-election and will not want Greece to exit the euro before the election, but will not care afterwards.  Perhaps Greece and Germany will both exit the euro in the future.

---------------------------------  2014  ----------------------------------

·         In March 2014: ESM is officially ‘fully operational’. The banking union schedule has been delayed from January 2013 to January 2014 and now to March 2014.