Sunday, May 12, 2013
Keystone's Key Events and Market Movers for Trading the Week of 5/13/13
Key Dates and Times for the Week Ahead:
· Keystone’s Comments on the Upcoming Week: Happy Mother’s Day. The week starts with Retail Sales which will set the tone for markets. Key retail earnings are on the slate for Monday and Thursday with WMT the highlight. The economic data is more back loaded in the week with Housing Starts, manufacturing data, Consumer Sentiment and Leading Indicators important. Global bellwether DE earnings are important. Fed heads are out in full force with an all out barrage on Thursday no doubt spinning the attributes of QE. The geopolitical landscape is heating up with markets watching the deterioration in Syria and the strain across the Middle East. This week it is important to see if the Dow 15K and SPX 1600 round number levels hold, or not. The Sequestration remains in play creating concern over a second half slowdown this year. The Debt Ceiling limit will be pushed to after Labor Day. This action would place the Debt Ceiling limit in the September time frame with the CR (Continuing Resolution to fund the government) deadline and provide Congress and the president time this summer to develop solutions for America’s fiscal mess. The summer negotiations did not have a happy ending in 2011.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 back in Washington which is a negative 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 task 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. The BOJ easy money is creating the drop in European bonds and the perception that things are calming in Europe. 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 6/6/13. Draghi lowers rates one-quarter point to 0.5% on 5/2/13 to help the European manufacturing, export and automobile sectors, and compete with the currency race to debase ongoing around the world. The euro should move lower which should move U.S. equities lower. The China hard versus soft landing saga continues. Copper and commodities have tumbled lower for two months but surprisingly have not created equity market weakness. Commodities, especially oil and copper, bounced back strongly over the last two weeks. The Fed and BOJ money printing is creating the bullish stock market obviously over-ridding the negative effects of lower commodities, for now. The BOJ is likely the single most important influence on markets over the last three months; weaker yen = higher dollar/yen (now over 101) = higher equities while stronger yen = weaker dollar/yen = weaker equities. The equity markets continue to ignore the geopolitical landscape. Syria is out of control with over 70,000 now dead from this bloody civil war. Israeli airstrikes, U.S. and U.K. evacuations in Libya, Egypt unrest and other trouble is destabilizing the Middle East and Northern Africa regions. Syria refugee’s flood into Jordan and other neighboring countries that are unable to handle the huge influx of people. Egypt is in chaos. North Korea theatrics keep popping up from time to time. Markets do not have any geopolitical risk priced into the markets. Q1 earnings season continues. The theme of companies coming in light on top line revenue continues, even after the bar is lowered. 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. Earnings of interest this week include the two heavy-hitters, DE and WMT. DE is a global bellwether since machinery and ag lead the way forward. Many retail earnings are on tap, especially Monday and Thursday, and WMT provides a great gauge for the average consumer spending. JWN indicates whether the wealthy continue spending, or not. NAT is of interest for the shipping sector. The tech (COMPQ) and small caps (RUT) show leadership to the upside over the last couple weeks so that is a feather in the bulls cap. Traders and investors use the Fed and BOJ easy money to pump the dividend stock bubbles in healthcare, staples, utilities, telecoms, REIT’s, high-yield instruments, home builders and blue chips in general. Last week shows a rotation from utilities and healthcare into industrials, materials, technology and energy. The sector charts are unimpressive, however, across the board. The utilities, UTIL, chart went parabolic (behavior expected in commodities not in utilities) and is now receiving the expected fall to earth, just like a speculative commodity, dropping about -5%. Aunt Betty and Uncle George cringe over investing their entire life savings in perceived safe haven dividend stocks a couple weeks ago. The Fed and BOJ easy money is creating the new dividend asset bubbles. Lots of Aunt Betty’s and Uncle George’s are likely to have their heads handed to them as the year plays out. The low volatility provides bullish rocket fuel for equities as evidenced by Friday’s late-day orgy. VIX 13.70 is key for the week ahead; bulls win with VIX under 13.70 and bears win above VIX 13.70. Broad market topping and roll over action is anticipated moving forward for the days and weeks ahead. The NYMO chart continues to signal a significant market top. The SPXA150R shows that over 92% of stocks are bullish; an ideal time to comfortably short the market moving forward. The BPSPX is at levels where all other significant market tops have occurred. The low CPC put/call verifies the low volatility and signals trader complacency and fearlessness in the markets. Traders have no concern over markets selling off since the central bankers will pump markets higher forever. The CPC is a contrarian indicator and the complacency and disbelief in any downside occurring is actually signaling a market top right now. Keybot the Quant trading algorithm remains long. Keybot is tracking copper and volatility (watch JJC 41.93 and VIX 13.70) as the two most important market metrics that affect broad index direction to begin the week. If copper is higher overnight Sunday, the markets are going up; if copper is lower overnight, the markets will begin the week on the weak side. The month of May began at the very important SPX 1597-1598 support/resistance level so pay close attention to this level as we move into the back half of May. This week is OpEx week so Monday’s tend to be bullish and a Tuesday low typically leads to a Wednesday high. The next Bradley turn is a major turn on 6/22/13 (Bradley turns do not forecast direction only that a major trend change or melt-up, or melt-down, in markets may occur +/- 7 days around the turn date). Keystone’s Eclipse Indicator targets this period through June as having potential for a significant market selloff. The 4/10/13, and 6/10/13 dates, allowing +/- 2 weeks before and after these dates, are the key windows targeted for a major market pullback. Interestingly, the 4/10/13 date, forecasted months in advance by Keystone, identified the exact market top in April. A major market sell off can occur at anytime forward but the window between 5/27/13 and 6/24/13 is particularly important. May and June is set up as an epic period for markets and economic history.
· Monday, 5/13/13: Eurozone Finance Ministers meet. Retail Sales 8:30 AM. Business Inventories 10 AM—market pivot point. Markets tend to be bullish on the Monday’s of OpEx week. Earnings: ANN, ARTX, BWS, DKS, EBIX, ES, FONR, GIGM, JCP, LUFK, MACK, LNG, NAT-shipping, PSUN, PLAB, RENN, SVNT, SINA, SINO, SORL, TBAC, TTWO, TNH-fertilizer, VSAT.
· Tuesday, 5/14/13: Fed’s Plosser speaks 2 AM EST. NFIIB small Business Optimism Index 7:30 AM. Import and Export Prices 8:30 AM. Markets are typically bullish from a Tuesday low to a Wednesday high during OpEx week (reference Keystone’s OpEx Tuesday to Wednesday Bullish Indicator on the Other Market Signals page). Earnings: A, EXP, GFN, GSOL, PRMW, VAL, VOXX, YOKU.
· Wednesday, 5/15/13: Mortgage Applications 7 AM. Empire State Mfg Survey and PPI 8:30 AM. TIC data 9 AM (foreign investment). Industrial Production 9:15 AM. Housing Market Index and E-Commerce Retail Sales 10 AM. Oil Inventories 10:30 AM. Earnings: AGRO, COGO, DE, JACK, M, NTES, PF, QTWW, SB, VIP.
· Thursday, 5/16/13: Fed’s Plosser speaks 3:45 AM EST. Fed’s Rosengren speaks 7:45 AM. Jobless Claims, CPI and Housing Starts 8:30 AM. Fed’s Fisher speaks 9 AM. Philly Fed 10 AM. Natty Gas Inventories 10:30 AM. Fed’s Raskin speaks 12:30 PM. Fed’s Williams speaks 2:30 PM. ECB’s Draghi speaks. Earnings: ADSK, ARUN, BRCD, KSS, JWN, SOL, WMT, ZUMZ.
· Friday, 5/17/13: Markets are closed in Hong Kong and South Korea in observance of Buddha’s birthday. OpEx. Consumer Sentiment 9:55 AM. Leading Indicators 10 AM. Fed’s Kocherlakota speaks 1:45 PM. Earnings: OCZ.
· Saturday, 5/18/13: Armed Forces Day. Chairman Bernanke speaks. The 16.4 trillion Debt Ceiling Limit is hit, however, the government will extend the Debt Ceiling deadline to after Labor Day into September. Congress and the president are now free to develop a plan forward for America during the summer. The Debt Ceiling limit will be hit in September along with the CR continuing resolution deadline required to fund the government. The markets will monitor the politician’s progress now through August in handling the U.S.’s ongoing fiscal mess.
· Monday, 5/20/13: Victoria Day (Canada). Chicago Fed Activity Index 8:30 AM. 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: PMI Flash Mfg Indexes. Jobless Claims 8:30 AM. New Home Sales 10 AM. Natty Gas Inventories 10:30 AM. Markets are typically bullish the two days leading into the three-day holiday weekend (reference Keystone’s Pre-Holiday Bull Indicator on the Other Market Signals page). Markets are typically bullish moving through the full moon (reference Keystone’s Full-Moon Indicator on the Other Market Signals page). Earnings:
· Friday, 5/24/13: Durable Goods Orders 8:30 AM. Three-day holiday weekend ahead. Bond markets close 2 PM EST. Full moon and eclipse. 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. 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 or other nations, and/or Germany will 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.