Tuesday, April 30, 2013

NYMO McClellan Oscillator Daily Chart Signals Significant Market Top

We watched this chart late last week as the 36-ish printed signlaing a market top but the bulls have managed to jog the NYMO for a higher high print.  All this does is more firmly place a top. The red circles show the market tops and green circles show market bottoms. The double circles are key reversals.  What do you think will happen?  Market bottoms occur when the NYMO drops under -40. The important mid-November bottom occurred at -90, once that hit it was a key indicator to use to feel comfortable buying the market long. Likewise the other green circles.  Market tops are signaled when NYMO moves above the +30 or +40 level, however, the tops have gotten sloppy over the last months.  Note that tops are now occurring from about +10 and higher. The central banker intervention creates distortions in all markets these days and may be the cause of tops occurring at lower NYMO levels.

Nonetheless, at +43, a significant market top is occurring right now.  A spurt higher occurred as compared to three days ago, and now there is very little ceiling height remaining for the NYMO. Projection is a market top is forming now and a reversal in the broad indexes should occur moving forward perhaps beginning tomorrow. Type 'NYMO' into the search box at the right to bring up the prior NYMO chart for additional study. 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 4/30/13; EOM

Markets start out weak today and the bears push the VIX above 14 but they quickly fall on their sword and run out of gas. The VIX is back below 14 and the SPX recovers now printing near all-time highs again.  The all-time closing high, from yesterday, is 1593.61, and the all-time high is 1597.35. The HOD is 1595.61.  TRIN is 1.42 firmly in the bear camp today despite the buoyancy in the major indexes. The 10-year yield dropped down to 1.63%-1.64% and now recovered to 1.68%; yields moving back up as the SPX recovered over the last hour.

VIX is at 13.77 right now and the 14.00 remains key moving forward. The 8 MA remains above the 34 MA on the SPX 30-minute chart signaling bullishness ahead but the 8 MA is sloping down currently with the 34 MA sloping upwards. As the SPX plays around at the all-time highs right now, the 2-hour, 1-hour and 30-minute charts remain agreeable to seeing price move sideways to sideways lower. The bulls remain in control and the markets are idling along ahead of the important Fed announcement tomorrow afternoon and the ECB Thursday morning.

Note Added 3:10 PM:  VIX is 13.76 under the 14 bull-bear line crating market bullishness.  The 8 MA remains above the 34 MA on the 30-minute charts so the bulls cruise along.  With the high prints in the SPX over the last couple hours, the 2-hour, 1-hour and 30-minute charts continue to show negative divergence and would prefer to see the SPX move sideways to sideways lower. TRIN is 1.22 remaining bearish as it has all day long, staying above one, despite the buoyancy in the broad indexes. Tech and small caps are leading higher today which is a plus for bulls although tech is likely boosted by the joyousness over the AAPL bond offering. Volume remains light today only a smidge above yesterday's vapor volume, at about two-thirds of a day's average expected volume. The SPX is watched to see if new all-time highs print.

Note Added 3:27 PM:  NYHL shows that as the broad indexes make new highs day after day, the number of new highs decrease and the number of new lows increase, which is a negative divergence. SPX fights across the 1595 which would be a new all-time closing high. Interestingly, the HOD is 1596.78 which is only 57 pennies away from printing a new all-time high.

Note Added 3:47 PM:  SPX is coming up to look at the HOD and the all-time high. 

Note Added 3:49 PM:  SPX is up through the HOD and short of the all-time high at 1597.35. SPX is printing a HOD 1596.93, pennies away..... 1597.11 .... 1597.09...

Note Added 3:53 PM:  HOD 1597.17.

Note Added 3:59 PM: SPX prints a new all-time high 1597.57, also a new all-time closing high at 1597.57. April prints as a positive month but Trannies, cyclicals and the RUT small caps had a down month. The Dow, SPX and Nasdaq are all closing at lofty highs. The bulls appear unstoppable. Sick earnings and economic data and new highs day after day in equities.

Keystone's Inflation-Deflation Indicator Signals DEFLATION

In January and February, the U.S. slipped into disinflation and in March the U.S. slipped into deflation. The equity markets manage to pump out new highs on the Fed's QE 4 Infinity and Beyond, money that had been fleeing Europe and moving into U.S. blue chips, and the BOJ's easy money as they began their intervention to weaken the yen.  Despite all the central banker pumping, the U.S. is firmly in deflation, what Chairman Bernanke fears most. The 10-year yield (now 1.65%) moves in the same direction as the equity markets since money moves from stocks into bonds and from bonds to stocks depending on risk-off, or risk-on, respectively. Lately, however, bonds and stocks both are moving higher but typically; higher yields = higher stocks = a move towards inflationLower yields = lower stocks = a move towards deflation.

The note price is used for the denominator of Keystone's equation. The 10-year Treasury price is 103.125. The CRB (Commodities Index) is under 290 at 289.44. Taking a look at the numbers;

CRB/10-Year Price = 289.44/103.125 = 2.81

Over 4 = Inflation
Between 3 and 4 = Neutral; Inflationists and Deflationists fight it out
Between 2.9 and 3.0 = Disinflation
Under 2.9 = Deflation

Chairman Bernanke announced QE1, QE2 and Operation Twist to stop the free-fall into deflation.  Last year, however, the Fed threw the kitchen sink at the markets with the promise of QE3 Infinity, timed with the ECB's OMT Bond-Buying program, and also QE4 Infinity and Beyond, which replaced Operation Twist with outright purchases, when the markets were already somewhat elevated. This orgy of Fed quantitative easing, along with the BOJ, creates the bullish equity markets.  The rotation from bonds to stocks is not occurring as would be expected for any other economic recovery.  The bond market is usually correct.  The Fed changed the game last year since they goosed the equity markets without waiting for deflation to occur.  They tried to get the maximum bang for the buck pumping markets without waiting for a pull back.

The plot thickens, however, since the weak commodities, as well as weak Baltic Dry Index (BDI) and shippers, indicate a global slowdown in play, and clearly Keystone's indicator signals deflation.  So the Fed is throwing the kitchen sink at the markets and it appears that is not enough.  What happens next?  The Fed can admit that their programs are ineffective only resulting in a bloated equity market but not helping the overall economy, but, this will not happen. The idea behind QE is to create a wealth effect. If people see their investments growing, they feel better about the economy, and they buy houses, cars and other goods to fuel the recovery. The bloated market part is working but the rest of the plan is missing in action. The Fed will likely keep pumping since they have no choice at this point.

The obscene 85 billion per month in purchases will have to increase, as insane as it sounds, since the economy has slipped into deflation.  This hints at the end game nearing since an increase of the current obscene QE borders on recklessness.  The BOJ easing supplied the fuel for the SPX to print new highs.  The ECB rate decision is key this week. European indexes have rallied already anticipating a rate cut. If the euro weakens on the rate cut, the dollar should rise, and commodities and the U.S. equities should weaken, however, using the BOJ as a guide, any easy money policy by the ECB may actually create some further equity buoyancy. No one knows how this is going to resolve this week. The ECB rate decision is 7:45 AM EST Thursday morning, less than 48 hours away.

Keystone's indicator is now signaling Deflation. The pundits and analysts that say Inflation and even Hyperinflation are at the doorstep are likely premature.  Inflation will likely not appear until two, three, or even more years down the road to line up with the 18-year stock cycle of 1964 (bear), 1982 (bull), 2000 (bear), and 2018 (bull). That will be a new and intense problem, especially hyperinflation, but for now, the disinflationary and deflationary scenario's remain more important despite the new daily highs in equities. Look at Japan's funk for the last twenty years; deflation can be nasty and will surely affect everyone's lives.  Layoffs continue in the U.S. and globally with tens of thousands of financial and insurance sector jobs cut over the last couple months.  The current stagnant wage growth (wage deflation) screams of deflation.  Technology, computers and the Internet are huge deflationary machines.  Robots continue to replace human's on the job. More tech and less human's continues to challenge the unemployment picture and will foster the structural employment problem for many years. Companies are meeting EPS by laying off workers and squeezing more production out of existing workers (as evidenced by flat to lower top line revenue).

Watch Keystone's formula above, you can crunch the numbers to check on the indicator every few days. Markets are in trouble when the indicator drops under 3.00 into Disinflation.  Equity markets should be going over the falls if 2.90 fails since it indicates a deflationary spiral is occurring and the U.S. is headed straight for a Japan scenario. The equity markets, however, are at all-time highs, due to the central banker intervention, that is affecting inter-market asset relationships, and negating the expected market relationship of lower commodities = lower yields = lower equities, at least for now.  As long as the indicator stays above 3.0, in the Neutral territory and higher, the equity market bulls are happy. The ECB decision is the last piece of the puzzle needed this week. Within 48 hours, we will know where the Fed, BOJ and ECB all stand. Deflation says lower equity markets ahead but obviously, this is not the current case as yet. Perhaps epic economic history may occur over the coming days and week or two.

SPX 30-Minute Chart 8 MA and 34 MA Cross H&S Pattern

The bears were short-changed once again. On Friday, the 8 MA stabbed down through the 34 MA signaling bearish times ahead but the bulls reversed this cross yesterday with the 8 MA above the 34 MA signaling bullish markets for the hours and days ahead. If price stays under the 8 MA at 1595 it will pull the 8 MA lower. The bears got nothing unless they move the 8 back below the 34 MA.  The red and purple lines show the rising wedges, overbot conditions and negative divergences that created the spank down last Thursday, and yesterday afternoon into the closing bell. Further weakness would be expected but in this central banker age, you never know. An H&S is in play with head at 1597 and neck line at 1576 which targets 1555. April began at 1569 so keep that in mind as the last day of the month plays out. 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 4/30/13; EOM; Consumer Confidence

The two-day FOMC meeting begins today so the attendees are already at the morning buffet enjoying the free bacon.  Today is the EOM.  April began at SPX 1569 so this number is important today. At this juncture, it looks like another up month will be logged, but the day will have to play out. The monthly charts receive new prints today.  The Case-Shiller House Price Index is at 9 AM. MAS, a key housing sector barometer, missed earnings on both EPS and the top line last evening. Chicago PMI is at 9:45 AM and will create a market stutter step.  Consumer Confidence is released at 10 AM and will create a market pivot point. Farm Prices are at 3 PM which will affect the commodities sector. China Mfg data is released this evening at 9 PM. PFE earnings missed this morning.

The SPX printed a new all-time closing high yesterday at 1593.61.  The all-time high remains at 1597.35.  For the SPX today, starting at the 1594, the bulls need to touch the 1597 handle to create an upside acceleration; the 1600 plus numbers will appear in quick order. The bears need to push lower to 1582 to create a downside acceleration towards 1576. A move through 1583-1596 is sideways action today.

Volatility remains the key influence on markets right now. VIX is at 13.71 under the critical bull-bear line in the sand at 14.00 so the bulls have no worries.  If the VIX moves above 14, the markets will sell off and Keybot the Quant, Keystone's trading algo, will likely flip short.  Euro-area unemployment hits another record high and inflation is low ahead of the ECB's rate decision now two days away. European markets are already rallying in recent days as they anticipate the easy money from the ECB. The 10-year Treasury yield is at 1.65% representative of disinflationary and deflationary pressures. In a nutshell, VIX 14 and SPX 1597 tells the tale today.

Note Added 9:15 AM:  Jeremy Siegel is a guest on CNBC business channel this morning and says that Dow 16K may be on tap this year; that would be a 150-point per month increase for the next 8 months straight. Also that the low 1.38%-1.39% yield on the 10-year Treasury would hold as a permanent low. Of even more interest, when talking about dividend stocks, Siegel says, "..we can see them (dividend stocks) at a permanent high" moving forward. Wow, that really has an Irving Fisher feel to it.  Just before the Great Crash in 1929, Irving Fisher, noted economist, said, "Stocks have reached a permanently high plateau." History often rhymes. Perhaps today, unwittingly, with his 16K Dow call this year, also the call that the 10-year would never fall below 1.38%-1.39% again, and prediction that dividend stocks are at a permanently high plateau, Jeremy Siegel may have just called the top in the equities markets. What do you think? Perhaps the history books may read, Jeremy Siegel, noted economist and professor, in late April 2013, said that dividend stocks are at a "permanent high" level.

USD Dollar XEU Euro FXY Yen SPX Daily Charts Currency Effects

The markets are twisted up in knots from the central banker intervention. The 10-year Treasury yield remains under 1.70% showing a strong interest remaining in notes and bonds despite the higher stock market. There is no rotation from stocks to bonds. The Fed and BOJ, and perhaps this week the ECB, central banker easy money is pumping the equity markets higher.  The dollar started its launch as February began moving from 79 to over 83 in two months time. As expected, copper, oil and commodities in general were hit. In normal markets, the broad indexes should sell off as well, however, the SPX leaked lower in February only to recover and move far higher, as the dollar strengthened. There must be some reason that the regular market relationships are breaking down (commodities should have dragged the SPX lower).

During February-March note the drop in the yen. The BOJ started to pound the table in February that they will run the printing presses non-stop and try to inflate their way out of the two-decade deflationary funk. The weaker yen caused by BOJ intervention is what fueled the SPX to new all-time highs.  Note that the euro to dollar inverse relationship is in tact.  The change is that the stronger dollar and weaker euro should have sent equity markets lower in February and March but did not since the weaker yen trumps all.  In April, note the bottoming and flattening of the yen movement.  The yen is starting to strengthen (not what the BOJ wants), and is strengthening on this morning's tape. This is reflected in a lower dollar/yen currency pair. Weaker yen = higher dollar/yen = higher equities and stronger yen = lower dollar/yen = lower equities, however, this relationship may be running out of gas now and the euro and dollar may reassume leadership status in relation to the equity market direction.

If the yen has ran its course for now, and moves flat or strengthens for a rebound rally, this action will hinder equities.  The focus this week is on the euro with the ECB Rate Decision on tap for Thursday morning, 7:45 AM EST followed by the Draghi press conference at 8:30 AM. The euro is moving sideways right now, just as the dollar prefers a sideways channel right now, but the euro shows a potential bull flag pattern. This pattern would play out if Draghi makes no change; the euro would move higher. But the consensus is that Draghi will do something, it is simply a matter of what. He may cut rates, or announce a stimulus package, or both, it is all a toss-up. ECB easing or stimulus action should weaken the euro. This will help the flailing European manufacturing and automobile companies.

The BOJ intervention (weaker yen) clearly saved the equity markets over the last couple months since the stronger dollar and weaker euro wanted to see the SPX drop.  The yen's effectiveness is likely waning now and the euro and dollar relationship may take the front seat again.  Weaker dollar = higher euro = higher equities and stronger dollar = lower euro = lower equities. The difficult aspect is whether these relationships will hold once Draghi provides his decision. The European markets are bullish in recent days since they already are expecting a rate cut. The weaker euro should be in concert with a stronger dollar and lower U.S. equities, however, the markets may view another central banker easing program, in this case the ECB, as a big positive that will pump all equities higher like the BOJ actions.  The new asset bubbles in dividend stocks and perceived safe havens, created by the central bankers, are already at obscene levels, simply look at the parabolic utilities sector. The projection at this writing is that the yen will move flat to up (strengthening), dollar/yen leaks lower, the euro will leak lower to the 1.29-1.30 area as the week plays out, the dollar will recover moving upwards inside the ongoing sideways channel, and the SPX sells off. The charts above clearly show how the euro to dollar to stocks relationship broke down in February-March due to the BOJ intervention (weaker yen) which caused the continuing rally in equities and new highs in the SPX. 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.

Monday, April 29, 2013

Keystone's Midday Market Action 4/29/13

The bulls run higher to begin the week, up through the strong 1586 resistance, so the test of 1589 occurs and then the push higher to test the all-time closing high at 1593.37 once again. The HOD is 1592.16. The VIX travels higher today to near 14 before falling on its sword moving lower helping the broad indexes move higher. Interestingly, after the opening bell, the markets were higher and so was the VIX. VIX is now at 13.48.  Watch VIX 14.00 as the bull-bear line in the sand (instead of 14.16) moving forward which helps the bears since it is an easier level to achieve. The 8 MA pierces up through the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours and days ahead. The bulls reverse the  bearish 8/34 cross that occurred on Friday. The 2-hour, 1-hour and 30-minute charts are uninspiring from an upside perspective since the matching price highs are now occurring with negative divergences. However, the excitement over more central banker easing this week keeps the markets elevated.

The Dallas Fed manufacturing data was very weak but traders do not care since the Fed will fix the markets. The dollar/yen is back above 98. Weaker yen is higher dollar/yen is higher equities (bulls can thank the BOJ). The 10-year yield stays low at 1.65%. The markets are twisted into mixed relationships currently courtesy of the central banker intervention. Lower yields should correspond to lower equities, not the case. The weak commodities and copper, although higher today, should have hurt equities recently, instead, stocks move higher.  The new asset bubbles in dividend stocks continues higher. Watch to see if the bulls can punch up through the 1593.37 all-time closing high. The minute and hourly charts are not agreeable to this outcome but the central banker joyousness this week is supplying market optimism. April ends tomorrow. The month began at SPX 1569 which may come into play the remainder of today through tomorrow. TRIN is 0.92, close to the neutral one, not exactly a ringing endorsement for the big upside shown today. For such a big jump in the SPX, the TRIN would be expected to be 0.7 or 0.8 or lower.

Note Added 1:38 PM:  The bulls are running higher on the perceived happy central banker talk this week. The SPX punches up through the all-time closing high at 1593.37 so watch to see if the closing print can maintain this level, or not.  The all-time high is 1597.35.   The SPX is now at 1594.60 and the HOD is 1595.41.  VIX is 13.48 stumbling along flat today. TRIN is 0.70 now affirming the upward move in the broad indexes today. The low TRIN will keep markets elevated through the closing bell. Volume is pure vapors today, only at a run rate of about 60% of a day's average expected volume, but, no one can take it away from the bulls who continue to print higher numbers due to the Fed and BOJ pumping. $UTIL is now near 537, simply amazing; folks are buying dividend stocks and perceived safety and ignoring price levels. SDY and DVY (dividend ETF's) are printing new highs, creating M tops, with negative divergence on weekly and daily charts.

Note Added 1:48 PM:  There's a new high for today, the bulls appear unstoppable. HOD is 1596.01 now only one-handle from the all-time high. The SPX 10-minute, 15-min, 30-min, 1-hour and 2-hour charts are all negatively diverged preferring to see price roll over here, but, the central banker's easy money keeps the bulls happy.

Note Added 2:06 PM:  HOD 1596.47.  VIX 13.40. TRIN 0.74. 

Note Added 2:14 PM:  HOD 1596.65 only seventy pennies away from a new all-time print for the SPX. VIX 13.43. TRIN 0.75.

Note Added 3:24 PM:  The HOD at 1596.65 is holding for the last hour.  The SPX is 1593.42 on top of the all-time closing high by a few pennies.  The broad indexes experience some spanking from the neggie d on the minute and hourly charts. Price should want to move sideways to sideways down moving forward. VIX is 13.72 only 28 pennies away from signaling the all-clear for market bears.  The SPX is up and the VIX is up; one of them is wrong. TRIN is 0.79 remaining low today so the bulls are hanging their hat on the TRIN. Believe it or not, volume has actually weakened over the last hour, now at a run rate of only about 56% of a day's average volume. There will be a push at the close but the day will end as vapor volume.

Note Added 3:49 PM:  The drama is if the SPX prints a new all-time closing high above 1593.37, or not. VIX 13.72. The low TRIN at 0.79 is carrying the bulls.

Note Added 3:53 PM:  VIX is 13.73 only 27 cents away from the bull-bear danger line. TRIN now moving up into the 0.8's.  SPX leaks lower to 1292.

Note Added 4:00 PM:  Big drama as things settle out, above 1593.37, then below, now back above........ looks like 1593.61 which is a new all-time closing high. VIX is elevated as well which sets up tomorrow for some drama; the SPX and VIX cannot both be up, this will resolve.  TRIN closes at 0.77 which provided the bull fuel today. One more day of April remains and the month began at SPX 1569, 24 points below.

Keystone's Morning Wake-Up 4/29/13

Only two trading days remaining in the month so it will be interesting to see if the solid upward movement on the monthly chart continues, or not. April started at SPX 1569. Keystone's Monthly Jobs report Market Indicator (on the Other Market Signals page) is looking for a down month for April and only two days remain. This morning, the futures are solidly higher with the SPX set to gain four or more points. Traders anticipate more market-friendly talk from both the Fed and ECB this week and European equities receive a boost today as well. The Italy 10-year yield drops under 4%, a two and one-half year low. The calming and return to normalcy of rates continues in Europe, however, more due to central banker money than economic conditions.

The central banker money continues to pump the dividend bubbles in utilities, staples, healthcare,   REIT's and high-yield instruments. The commodity and copper weakness over the last two months surprisingly does not have a negative effect on markets. Equities should respond lower but the easy money keeps the broad indexes elevated.  The 10-year yield moved through a sideways 1.68%-1.80% range for much of April resulting in a drop under the range to 1.66% and 1.67%. This shows a continual interest in bonds so money is not moving from bonds to stocks but instead, easy central banker money flows into both stocks and bonds. Euro-area sentiment is weaker than expected but trader's do not care since central bankers are at the ready. The currencies are very important this week with the dollar/yen at 98-ish, the dollar basket $USD at 83-ish and the euro/dollar at 1.31-ish. Metals and commodities are higher this morning.

Volatility is key moving forward. The market bears need VIX 14.16 or they got nothing. This level was teased on Friday but the bears ran out of gas.  Bulls will take the broad indexes higher if VIX stays under 14.16. The markets will sell off if VIX moves above 14.16.  For the SPX starting at 1582, the bulls need four points to push through 1586 to create an upside acceleration. The 1589 R would likely give way and another test of the all-time closing high at 1593.37 would be on tap.  The bears need four points lower to push under 1578 to accelerate the downside.  A test of the strong 1576 S would occur where failure is likely leading to the 1560's. A move through 1579-1585 is sideways action. Personal Income and Spending data, a Fed fave, is minutes away. Pending Home Sales are at 10 AM and the Dallas Fed Mfg Survey is 10:30 AM. MAS earnings will impact the housing sector stocks.

Note Added 8:33 AM:  Personal Income and Spending shows income rising at a slower rate; in general wages are stagnant. Folks are likely getting used to not receiving raises. Spending and consumption is up. So the magic plastic (credit cards) is purchasing more of the goods these days. Also, the hidden cash economy is likely growing as folks are starting to work under-the-table more and more to avoid paying taxes. These folks are not counted on the income side but do contribute on the consumption side. The global economy needs rising wages and jobs but they continue to appear on a milk carton. Futures remain higher, S&P's +5, perhaps losing a point or two on the data.

Sunday, April 28, 2013

SPX 30-Minute Chart 8 and 34 MA Cross H&S Patterns

The bears push back on Friday and the 8 MA stabs down through the 34 MA to signal bearish markets for the hours and days ahead, however, the bulls have already curled the 8 MA upwards steering it back to the 34 MA.  Note that price, the 8 MA and 34 MA are all together, at the pink circle, at 1582-1584.  This is a great gauge of market direction for tomorrow. Bulls will be happy moving above 1584, bears will be happy moving under 1582.

There are two H&S's shown; the green H&S has head at 1593, neck line at 1579, target at 1565 if the 1579 fails.  The purple lines show an H&S with head at 1593, neck line at 1573, target at 1553 if the 1573 fails.  The hourly charts show the wider H&S in play with head at 1597, neck line at 1540, target 1480's, and this week we find out if the 1593 high shown on the chart above holds as the right shoulder for that H&S pattern. So there are three H&S's now in play. Watch 1584 and 1582 for a quick read on who's winning tomorrow, bulls or bears, and of course watch the 8 and 34 MA cross since it verifies the path 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 Key Events and Market Movers for Trading the Week of 4/29/13

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week: The BOJ easing weakens the yen which causes U.S. equities to run higher.  Simply watch the direction of the yen to forecast the direction of the broad indexes.  If dollar/yen is moving up, markets move up, dollar/yen down and markets move down. A big week of economic data is on tap; Con Con on Tuesday, ISM and FOMC Meeting Announcement on Wednesday, the ECB on Thursday and Monthly Jobs Report on Friday; a Superbowl week of trading. Earnings season is in full swing with several heavy-hitters on tap and many second tier companies reporting.   The Sequestration is in play as evidenced by the airport delays.  The Debt Ceiling limit is now on track to hit at the end of May, however, Congress is developing a plan to push the Debt Ceiling deadline to August or September. This action would place the deadline in the same time frame as the CR (Continuing Resolution to fund the government) deadline in September.  This scheduling allows the politicians to sort out a fiscal path for America during the spring and summer, reminiscent of summer 2011, which did not have such a happy ending. Traders remain complacent since the politicians will always kick the can down the road, just like they are doing with the debt ceiling limit right now. Of course, if a stumble occurs, it would impact markets severely because of this ongoing complacency. Congress is taking a break which is a positive for markets. The European debt crisis continues with headaches in Cyprus, Greece, Portugal, Slovenia and Italy. Cyprus needs more money. The Italy election saga continues.  Slovenia may need a bailout.  Portugal appears shaky. Greece remains troubled. Spain will not ask for a bailout since bond yields remain tame. The ECB’s OMT bond-buying program is in place and not even fully accessed as yet. Merkel does not want any nation to exit the euro before her re-election in September but will not care afterwards. The next ECB Rate Decision and Press Conference is this Thursday, 5/2/13.  Draghi is walking a tightrope as the European manufacturing, export and automobile sectors weaken in large part due to the U.S. and Japan debasing their currencies. Draghi will have to capitulate by lowering rates to stimulate the economy and help Europe grow out of the debt mess, which will send the euro lower, which would likely pull U.S. equities lower.  The China hard versus soft landing saga continues. Copper and commodities continue to fall as the China economy weakens.  The China PMI data is very important this week. Surprisingly, the bearish copper and commodities sectors are not dragging the broad indexes lower. This verifies the strength of the Fed and BOJ money printing, especially the weaker yen. The BOJ is likely the single most important influence on markets right now; weaker yen = higher dollar/yen = higher equities while stronger yen = weaker dollar/yen = weaker equities. The equity markets continue to ignore the geopolitical landscape. Syria is out of control. Refugee’s flood into Jordan and other neighboring countries unable to handle the influx of people. Egypt is in chaos. The Israel-Iran tensions grow.  North Korea continues saber-rattling. As evidenced by the fake tweet last week (big drop in the major indexes), the markets do not have any geopolitical or other serious risk priced into the markets right now.  Q1 earnings season continues.  The theme of companies coming in light on top line revenue continues, even after the bar is lowered. Bank earnings are lackluster and were expected to be far stronger to lead a recovery.  A strong economy should show ever increasing revenue numbers, not flat to lower sales. Companies are booking profits by squeezing every last drop of blood from existing employees rather than growing sales. There are many heavy-hitters on tap this week including MAS and MHK to gauge the housing recovery, NEM for a read on the gold market, SCCO on copper, X on steel, PFE and MRK on big pharma as they pump drugs into society, MA and V to gauge the strength of the great American consumer, GM for auto sales, IP for paper a key economic indicator, VLO and TSO refiners, ED, DUK and other utes this week to gauge the parabolic move in utilities the last one-half year, and YRCW as a trucking gauge. The tech (COMPQ) and small caps (RUT) were assuming downside leadership but recovered last week to lead the upside.  Traders and investors use the Fed and BOJ easy money to pump the perceived safe haven and dividend stock bubbles in healthcare, staples, utilities, REIT’s, high-yield instruments, home builders and blue chips in general. UTIL is parabolic (behavior expected in commodities not in utilities) now over 532 making the ute earnings reports this week extremely important.  Aunt Betty and Uncle George, that took their whole life savings last week and put it in utility stocks chasing the hype, dividends and perceived safety, are going to be crushed as the weeks play out.  Volatility is the key as the week begins. If the VIX remains under 14.16, the markets will continue higher. If the VIX moves above 14.16, the markets will sell off.   Continued broad market topping and roll over action is anticipated moving forward. Keybot the Quant is long but if the VIX moves above 14.16, it is likely that Keybot will flip short. The month of April ends on Tuesday and Keystone’s Monthly Jobs Report Market Indicator (reference the Other Market Signals page) says April should be a down month. The SPX started the month at 1569 so watch this number closely on Monday and Tuesday.

·         Monday, 4/29/13:  Personal Income and Outlays 8:30 AM. Pending Home Sales 10 AM. Dallas Fed Mfg Survey 10:30 AM. Keystone’s Monthly Jobs Report Market Indicator says April should be a down month; April started at SPX 1569. Earnings: AFAM, ALNY, APL, AVEO, BWLD, CCC, CGNX, ETN, EMKR, FRP, FSLR, GGP, GLRE, HCA, HIG, HLF, HTZ, IDIX, JEC, KWR, MAS-housing, MMR, MPWR, NEM, PRLS, PCL, RGR, RVBD, SOHU, SCCO-copper, SWX, SPPI, SWC, SUP, TRGT, USU, VRTS, WPP.
·         Tuesday, 4/30/13:  EOM. FOMC Meeting Begins. Employment Cost Index 8:30 AM. S&P Case-Shiller HPI 9 AM. Chicago PMI 9:45 AM. Consumer Confidence 10 AM—market pivot point. Farm Prices 3 PM. China Mfg PMI 9 PM. Earnings: AET, APPX, ARNA, AVP, BFLY, BXP, CBT, CERS, COCO, DBD, DDD, DPZ, DWA, EIX, EPD, EZPW, FIRE, FLEX, FMC, FDP, FLWS, GNW, HRS, HW, HCBK, HOT, HUN, JIVE, KLIC, FSTR, LM, LFUS, MTW, MSO, MELA, NCR, ODP, OKE, OSK, PFE, RTI, SIRI, SLCA, STP, THC, TRW, VLO, VSH, WTS, WU,  X, XCO.
·         Wednesday, 5/1/13: Motor Vehicle Sales. Mortgage Applications 7 AM. ADP Employment Report 8:15 AM. PMI Mfg Index 8:58 AM. Construction Spending and ISM Mfg Index 10 AM—market pivot point. Oil Inventories 10:30 AM. FOMC Meeting Announcement 2 PM—market pivot point. Markets are typically bullish the first day or two of the month as new money is put to work. China HSBC Final Mfg PMI 9:45 PM. Earnings: AGN, AMT, ADM, BALT, CAR, CBS, CHK, CNW, CVH, CW, DVN, EE, EXC, FB, GNK-shipping, HUM, H, IPI, JRCC, LVS, MAR, MA, MET, MRK, MUR, NTRI, PSX, PRU, RDN, RLGY, SPW, STX, SNCR, TSO, TWX, V, VG, WLT, WES, YELP.
·         Thursday, 5/2/13: European PMI’s. Challenger Job-Cut Report 7:30 AM. BOE Rate Decision. ECB Rate Decision 7:45 AM and Press Conference 8:30 AM. Jobless Claims, Productivity and Costs and International Trade 8:30 AM.  Natty Gas Inventories 10:30 AM. Earnings: ACOR, AGNC, ATHN, BZH, BDX, BZ, CME, CTRX, CBI, CPK, DNR, DRIV, DYN, ELX, EL, EPAY, FLR, FIG, FWLT, GNRC, GM, HK, HAIN, HPOL, HMA, IMMR, IP-paper, K, KOG, LNKD, MMC, MMP, MASI, MHK-housing, MWW, MYL, NILE, NU, ONNN, PCG, PPL, PWR, RGLD, SRE, SKUL, SFY, THOR, TPX, VMC, WFT, WNR, WTR, WTW, WWE, XEL.
·         Friday, 5/3/13: Monthly Jobs Report 8:30 AM. Factory Orders and ISM Non-Mfg Index 10 AM—market pivot point. Fed’s Tarullo speaks 12:30 PM. Earnings: ADP, AXL, BPL, CBOE, ED, DUK, EXM, KOP, MITK, MCO, MSG, RUTH, SE, SEP, UPL, WCG, YRCW.


·         Monday, 5/6/13:  Earnings:
·         Tuesday, 5/7/13: Earnings:
·         Wednesday, 5/8/13: Mortgage Applications 7 AM. Oil Inventories 10:30 AM. 10-Year Note Auction 1 PM. Earnings:
·         Thursday, 5/9/13: Jobless Claims 8:30 AM.  Natty Gas Inventories 10:30 AM. 30-Year Bond Auction 1 PM. Earnings:
·         Friday, 5/10/13: Treasury Budget. Earnings:


·         Monday, 5/13/13:  Retail Sales 8:30 AM. Business Inventories 10 AM. Earnings:
·         Tuesday, 5/14/13: Earnings:
·         Wednesday, 5/15/13: Mortgage Applications 7 AM. Empire State Mfg Survey and PPI 8:30 AM. Oil Inventories 10:30 AM. Earnings:
·         Thursday, 5/16/13: Jobless Claims, CPI and Housing Starts 8:30 AM.  Philly Fed 10 AM. Natty Gas Inventories 10:30 AM. Earnings:
·         Friday, 5/17/13: Consumer Sentiment 9:55 AM.  Leading Indicators 10 AM. Earnings:


·         Monday, 5/20/13:  Earnings:
·         Tuesday, 5/21/13: Earnings:
·         Wednesday, 5/22/13: Mortgage Applications 7 AM. Existing Home Sales 10 AM. Oil Inventories 10:30 AM. FOMC Minutes 2 PM. Earnings:
·         Thursday, 5/23/13: Jobless Claims 8:30 AM.  New Home Sales 10 AM. Natty Gas Inventories 10:30 AM. Earnings:
·         Friday, 5/24/13: Durable Goods Orders 8:30 AM. Earnings:


·         Monday, 5/27/13: U.S. Markets are Closed in Observance of Memorial Day.
·         Tuesday, 5/28/13: U.S. Markets Reopen for trading. Consumer Confidence 10 AM. 2-Year Note Auction 1 PM.  The 16.4 trillion Debt Ceiling Limit is hit, however, the government is developing a plan to extend the Debt Ceiling deadline to August or September. This action will place the deadline near the CR resolution deadline to fund the government which allows Congress to provide a fiscal path of clarity this spring and summer. Earnings:
·         Wednesday, 5/29/13: Mortgage Applications 7 AM. Oil Inventories 10:30 AM. 5-Year Note Auction 1 PM. Earnings:
·         Thursday, 5/30/13: Jobless Claims and GDP 8:30 AM.  Natty Gas Inventories 10:30 AM. 7-Year Note Auction 1 PM. Earnings:
·         Friday, 5/31/13: EOM. Personal Income and Spending 8:30 AM. Chicago PMI 9:45 AM.  Consumer Sentiment 9:55 AM.  Farm Prices 3 PM.  Earnings:


·         In September:  Merkel (Germany) seeks re-election and will not want Greece or other nations to exit the euro before the election, but will not care afterwards.  Perhaps Greece and Germany will both exit the euro in the future.
·         In Q4 2013:  European bank stress tests will occur.

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

·         On Friday, 1/31/14: Chairman Bernanke’s term ends at the Fed, unless there is news during Q4 2013 that he will stay on. Will Yellen, even more dovish and likely wanting to see QE on steroids, take the reins? Equity bulls will be happy if Yellen receives the nod (money-printing will pump the markets higher) but bears will be happy if Yellen is not selected.
·         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.

SPX Support, Resistance (S/R) and Moving Averages for Trading the Week of 4/29/13

SPX support, resistance, moving averages, and other important levels are provided below for trading the week of 4/29/13, moving into the new month of May on Wednesday. The EOM for April is Tuesday. Last week the SPX ran higher to test the all-time closing high at 1593.37 but could not punch up through.  The 1593 serves as a strong resistance ceiling now with greater importance so if the bulls punch through 1593, 1597 is next, then over the psychological 1600 then on to the 1620's. For Monday, starting at 1582, the bulls need to push through 1586 and price will test 1589 and likely punch up through, then price will perform the test of 1593 R.

The market bears receive a tiny feather in their caps since the 10 MA has crossed down through the 20 MA, the first sign that the moving average ribbon (10, 20, 50, 100, 150, 200 MA's) may be rolling over to the downside from the solidly bullish posture over the last couple months. The strongest support levels below that must be respected and monitored are 1563 and 1552-1553.  Price losing these levels leads to more bearishness in the markets. For Monday, the bears need to push under 1578 to create a downside acceleration to test the strong 1576 support. The 1576 S is key since the SPX will seek 1569, seven handles lower, if 1576 is lost. The 1568-1569 level will likely see action this week. The 20-day MA at 1568.21 is very important; bulls are always happy and in good shape when any stock or index is above its 20-day MA while bears are always happy when price is under the 20-day MA. The 1569 level is where April began and with two days of trading remaining in the month, and price now at 1582, only 13 handles above, a positive, or negative, month hangs in the balance.  Interestingly, Keystone's Monthly Jobs Report Market Indicator (reference the Other Signals page) says April should be a down month, thus, there may be some downside drama around the 1569 level for the first two days of the week finishing out April. The 1548-1550 support is important since it represents last week's low as well as the critical 50-day MA at 1549.97.

As mentioned above, 1563 is very strong support and is significantly negative for markets if lost. The 200 EMA on the 60-minute chart at 1562.21 is a very important level that signals bullish versus bearish markets. Thus, treat 1562-1563 with high respect since bad things will happen to the broad indexes if the SPX loses the 1562-1563 level. In summary, the key S/R levels that will tell the tale this week are 1593, 1586, 1576, 1568-1569, 1562-1563, 1552-1553 and 1548-1550.

·         1597 (4/11/13 All-Time Intraday High: 1597.35) (4/11/13 Intraday HOD for 2013: 1597.35)
·         1593 (4/11/13 All-Time Closing High: 1593.37) (4/11/13 Closing High for 2013: 1593.37) (Previous Week’s High: 1592.64)
·         1589
·         1586
·         1585.78 Friday HOD
·         1582.24 Friday Close – Monday Starts Here
·         1579
·         1577.56 Friday LOD
·         1576 (10/11/07 Intraday High: 1576.09)
·         1569 (April Begins at 1569.18)
·         1568.21 (20-day MA)
·         1566.33 (10-day MA)
·         1565 (10/9/07 Market Top: 1565.15)
·         1564
·         1563
·         1562.21 (200 EMA on 60-Minute Chart a Keystone Turn Signal)
·         1561
·         1556
·         1553 (10/31/07 Top: 1552.76) (3/24/00 Top: 1552.87)
·         1552
·         1551
·         1549.97 (50-day MA)
·         1548 (Previous Week’s Low:  1548.19)
·         1546
·         1544
·         1539
·         1536
·         1531
·         1528 (3/24/00 Closing Top: 1527.46)
·         1525
·         1524 (12/11/07 Top: 1523.57)
·         1521
·         1520
·         1518
·         1516
·         1514
·         1513.79 (20-week MA)
·         1512
·         1509
·         1506.49 (100-day MA)
·         1505
·         1503
·         1500
·         1498 (12/26/07 Top: 1498.85)
·         1495
·         1489
·         1485
·         1481
·         1478.19 (150-day MA; the Slope is a Keystone Cyclical Signal)
·         1476
·         1475 (9/14/12 Intraday HOD for 2012: 1474.51)
·         1472
·         1468
·         1466 (9/14/12 Closing High for 2012: 1465.77)
·         1465
·         1464.53 (10-month MA)
·         1461
·         1460
·         1457.87 (200-day MA)
·         1457
·         1456
·         1453
·         1447
·         1446
·         1444
·         1443.15 (12-month MA; a Keystone Cyclical Signal) (the cliff)
·         1441
·         1440 (5/19/08 Intraday HOD for 2008: 1440.24)
·         1439.24 (50-week MA)
·         1438 (9/13/12 Fed Announces QE3 Infinity)
·         1435
·         1433
·         1431
·         1430 (12/12/12 Fed Announces QE4 Infinity and Beyond)
·         1429 (11/6/12 President Obama Election Top)
·         1427 (5/19/08 Closing High for 2008: 1426.63) (2013 Begins at 1426.19)
·         1424
·         1422
·         1419