Sunday, June 16, 2013
Keystone's Key Events and Market Movers for Trading the Week of 6/17/13
Key Dates and Times for the Week Ahead:
· Keystone’s Comments on the Upcoming Week: Happy Father’s Day. The Housing Starts are very important Tuesday morning followed by the Fed drama on Wednesday afternoon and global PMI’s on Thursday. Friday is OpEx. Key economic bellwether FDX earnings are released on Wednesday. The Sequestration budget cuts create concern over a second half slowdown this year. The Debt Ceiling limit and CR (Continuing Resolution to fund the government) deadlines are pushed into September after Labor Day. Politicians must solve the U.S. fiscal mess during July and August, reminiscent of 2011, which did not end so well. There is growing worry that the Whitehouse scandals will distract politicians from addressing the fiscal mess. Traders remain complacent since the politicians will always kick the can down the road but any stumble would impact markets negatively. Congress is in session during June which is a negative for markets. The European debt crisis is ongoing but the BOJ easy money has flooded into European stocks and bonds causing bond yields to drop and create faux calm. The ECB’s OMT bond-buying program is in place and not fully accessed as yet also creating a faux stability. Merkel (Germany) 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 Thursday, 7/4/13. Draghi leaves rates unchanged 6/6/13 after a one-quarter point cut to 0.5% on 5/2/13 and is now causing the euro to float higher over 1.33. A lower euro is needed to help the European manufacturing, export and automobile sectors. Europe must also compete with the race to debase (currency wars) ongoing around the world. The euro should move lower which moves the dollar higher and should move commodities and U.S. equities lower, however, weak commodities are not having much of a negative effect on markets due to the Fed and BOJ money-printing. The China hard versus soft landing saga continues. Copper and commodities have tumbled lower for a couple of months but, surprisingly, have not created any equity market weakness. Dr. Copper is a valuable market indicator but the Fed and BOJ central banker policies are distorting markets and masking price discovery. The BOJ (Japan) is the single most important bullish influence on markets over the last three months; weaker yen = higher dollar/yen = higher equities while stronger yen = weaker dollar/yen = weaker equities. Europe is imposing tariffs on China’s solar panels which results in a retaliation by China slapping tariff’s on European (French) wine. The ‘protectionism’ wars begin. The equity markets continue to ignore the geopolitical landscape. Syria is out of control with 100,000 dead from the bloody civil war. There are 4 million Syrian refugees and 10% of the people now in Jordan are Syrian refugees. Countries bordering Syria cannot support this influx of people causing destabilization across the Middle East. The Turkey protests are two weeks along with the government now beating citizens and throwing tear gas canisters into buildings to break up any crowds. The Middle East and northern Africa regions are a mess. Oil price is at one-year highs. Geopolitical risk is not priced into the markets. Q1 earnings season is winding down and the confessional season for Q2 earnings will begin. Listen during the remainder of June for the number of companies decreasing their earnings projections and guidance ahead of the Q2 earnings season. The theme of companies coming in light on top line revenue continues but traders are focused on the EPS beats and ignoring sales. 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 and this is why the structural unemployment situation remains. DFS, ORCL, FDX, DRI and KMX earnings provide economic insight this week especially the shipping bellwether FDX. The Fed and BOJ easy money continues to create new asset bubbles in dividend stocks, healthcare, staples, utilities (now retreating like a parabolic commodity stock), telecoms, REIT’s, MLP’s, high-yield instruments, home builders and blue chips in general. The interest rate sensitive sectors such as utilities, REIT’s, homebuilders and telecom are sold off as Treasury yields sneak higher. Volatility is higher and creates the large intraday and day-to-day point swings in the broad indexes last week. Broad market topping and roll over action is anticipated moving forward for the days and weeks ahead. Keybot the Quant trading algorithm is bearish but the markets remain erratic and unstable. Keybot is tracking UTIL 488.48 with interest, now causing bearishness, and GTX 4763, now causing bullishness. Any change to these two parameters will point the direction of the broad indexes. On the seasonality beat, the week after OpEx in June is down 20 of the last 22 times, which would be next week, 6/24/13. However, the June calendar is odd this year since the first Monday did not occur until 6/3/13 so we only enter the third week of trading of June this week. Typically the month would start earlier and OpEx would have been last Friday with this coming week is the seasonality down week. Window dressing occurs at month-end so this should create buoyancy in the final days of June also conflicting with the seasonality negativity. What may occur is that the seasonality simply plays out independent of OpEx and this week is negative leading into more bullish activity through the full moon next Sunday and window dressing following behind. On the esoteric side, Keystone’s Eclipse Indicator targets this June period 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. The second date keeps a window open from now through the end of June as having potential for a major market selloff. Interestingly, a major Bradley turn date is Saturday, 6/22/13, so a window is open from now through 6/28/13 for a market trend change (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),a major inflection point. The full moon is next Sunday and markets are typically buoyant through the full moon. Thus, the markets may be in for a wild ride for the last ten trading days of June. Solar flare activity is increasing and may affect electronics, communications and markets as the year moves along. Epic market and economic history is on tap from here forward.
· Monday, 6/17/13: Empire State Mfg Survey 8:30 AM. TIC data 9 AM. Housing Market Index 10 AM. Major Bradley turn window is open. Earnings: DFS, FIVE, HIS, MHR, MU, ORCL, RHT, RAD.
· Tuesday, 6/18/13: Japan economic data. FOMC Meeting begins. Consumer Price Index (CPI) and Housing Starts 8:30 AM. Markets are typically buoyant from Tuesday to Wednesday during OpEx week. Earnings: ADBE, BKS, LZB.
· Wednesday, 6/19/13: ECB meeting. Mortgage Applications 7 AM. Oil Inventories 10:30 AM. FOMC Meeting Announcement and FOMC Forecasts 2 PM—market pivot point. Chairman Bernanke Press Conference 2:30 PM—markets will react to comments. Earnings: FDX, FNSR, JBL, MU, RSH, SCS.
· Thursday, 6/20/13: ECB meeting. Jobless Claims 8:30 AM. Asia Flash PMI’s. Europe Flash PMI’s. Flash PMI Mfg Index 8:58 AM. Existing Home Sales, Leading Indicators and Philly Fed 10 AM—market pivot point. Natty Gas Inventories 10:30 AM. 30-Year TIPS Auction. Markets tend to be bullish through the full moon. Earnings: KR, PIR.
· Friday, 6/21/13: First Day of Summer for the northern hemisphere. OpEx—Quadruple Witching. Markets are typically bullish through the full moon so a low today may provide a short-term long opportunity. Earnings: CCL, DRI, KMX.
· Saturday, 6/22/13: Major Bradley Turn Date—window is open from 6/14/13 through 6/28/13 for a market trend change to occur.
· Sunday, 6/23/13: Full moon—markets are typically bullish through the full moon.
· Monday, 6/24/13: This week after OpEx is down 22 of the last 22 times but window dressing is on tap (a lot will depend on how previous week plays out). Chicago Fed National Activity Index 8:30 AM. Dallas Fed Mfg Survey 10:30 AM. Earnings: AVAV, AM, APOL, FDO, FINL, FUL, NKE, OMN, STZ, TIBX.
· Tuesday, 6/25/13: Durable Goods Orders 8:30 AM. FHFA House Price Index and Case-Shiller House Price Index 9 AM. Richmond Fed Mfg Index, New Home Sales and Consumer Confidence 10 AM—market pivot point. 2-Year Note Auction 1 PM. Earnings: WAG.
· Wednesday, 6/26/13: Mortgage Applications 7 AM. Corporate Profits and GDP 8:30 AM. Oil Inventories 10:30 AM. 5-Year Note Auction 1 PM. Earnings: GIS, MON.
· Thursday, 6/27/13: Jobless Claims and Personal Income and Outlays 8:30 AM. Pending Home Sales 10 AM. Natty Gas Inventories 10:30 AM. Kansas City Mfg Index 11 AM. 7-Year Note Auction 1 PM. Farm Prices 3 PM. Earnings: CAG, MKC, UNF, WOR.
· Friday, 6/28/13: EOM. Chicago PMI 9:45 AM. Consumer Sentiment 9:55 AM. Earnings: BBRY, FLOW, KBH, SCHN, WGO.
· Monday, 7/1/13: Asia PMI’s. Europe PMI’s. Motor Vehicle Sales. Construction Spending and ISM Mfg Index 10 AM—market pivot point. New money tends to enter the markets and create buoyancy the first couple days of the month.
· Tuesday, 7/2/13: Factory Orders 10 AM—market pivot point.
· Wednesday, 7/3/13: : Mortgage Applications 7 AM. Challenger Job Report 7:30 AM. ADP Jobs Report 8:15 AM—losing credibility as an indicator. International Trade 8:30 AM. ISM Non-Mfg Index 10 AM. Natty Gas Inventories 10:30 AM. Oil Inventories 11 AM. Markets close Early for holiday.
· Thursday, 7/4/13: BOE rate decision. ECB Rate Decision 7:30 AM EST and Draghi Press Conference 8:30 AM. U.S. markets are closed in Observance of July 4th Independence Day.
· Friday, 7/5/13: Jobless Claims and Monthly Jobs Report 8:30 AM.
· In September: The Debt Ceiling Limit and CR Continuing Resolution to fund the U.S. government deadlines occur. Politicians must develop solutions over the summer time reminiscent of 2011 which did not end well. The Whitehouse scandals may distract politicians from addressing the fiscal problems.
· 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 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.