Sunday, June 23, 2013
Keystone's Key Events and Market Movers for Trading the Week of 6/24/13
Key Dates and Times for the Week Ahead:
· Keystone’s Comments on the Upcoming Week: Summer is here in the northern hemisphere. The week begins slowly with data on manufacturing on Monday, which would be expected to remain weak. The housing data is important along with LEN and KBH earnings. The housing sector has been one of the bright spots supporting the tepid recovery. If the news is negative this week concerning housing, the markets will not take it well. Ag (agriculture sector) is important this week with GIS, MON, CAG and MKC earnings and Farm Prices. Consumer Confidence is important on Tuesday, then GDP Wednesday then Consumer Sentiment on Friday. Fed heads are speaking this week starting with Fisher, a hawk, so his words may dampen the market mood. 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 within the next 12 weeks, this summer, reminiscent of 2011, which did not end so well. The Whitehouse scandals are distracting politicians from addressing the fiscal mess. Traders are not concerned since the politicians will always kick the can down the road but any stumble would impact markets negatively. Congress is in session which is a negative for markets. The European debt crisis is ongoing with the Greek tragedy becoming worse daily. Greece will need additional funding by the end of July. Spain is very wobbly as well. European bond and note yields are creeping higher again. 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. The euro was moving higher due to the weaker dollar but once the Fed tapering news hit last week, the dollar is moving higher sending the euro lower. 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 China hard versus soft landing saga continues. Copper and commodities have tumbled lower for a couple of months and finally create overall 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 China banking system is tested as several banks are unable to meet overnight lending requirements. A China banking crisis may be on tap moving forward and the negative ramifications on global markets would be dramatic. 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. Russia is supporting Asaad with the U.S. now supporting the rebels, many of which are terrorists. The Turkey protests continue with the government now beating citizens and throwing tear gas canisters into buildings to break up any crowds. Turkey and Syria unrest is causing a slight premium in oil prices with oil printing at one year highs. The Middle East and northern Africa regions are a mess. Brazil protests continue as citizens complain over the spending on stadiums while spending on hospitals, schools and infrastructure is ignored. The Pope is scheduled to visit Brazil within the month. Geopolitical risk is not properly priced into the markets. Q1 earnings season is finishing up and the confessional season for Q2 earnings will begin. Listen during the remainder of June and early July for the number of companies decreasing their earnings projections and guidance ahead of the Q2 earnings season. The theme of companies meeting EPS but missing on top line revenue continues. The Fed and BOJ easy money created asset bubbles in dividend stocks, healthcare, staples, utilities, 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. Expect more of this action. Broad market topping and roll over action is anticipated moving forward for the days and weeks ahead and the last month hints that this behavior is beginning. Keybot the Quant trading algorithm is bearish. Keybot is tracking SOX 456.35, RTH 51.48 and XLF 19.25. Any change to these 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. However, the June calendar is odd this year and the week of negativity may have appeared last week. At any rate, the seasonality favors the bears since the last week was negative and the week after OpEx may add further negativity. On the bull side, the end of quarter mark-up and window dressing should create market buoyancy this week. 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 that perhaps has begun. Interestingly, a major Bradley turn date was Saturday, 6/22/13, so a window is open from now through 6/28/13 for a market trend change to occur and that may have begun as well. (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 occurs overnight and markets are typically buoyant through the full moon, so this may provide the bulls a lift on Monday. Solar flare activity is increasing and may affect electronics, communications and markets as the year moves along. Epic market and economic history is likely on tap from here forward and the last couple weeks have not disappointed.
· 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 in June is down 20 of the last 22 times but EOQ mark-up and window dressing is on tap and last week was negative. Chicago Fed National Activity Index 8:30 AM. Dallas Fed Mfg Survey 10:30 AM. Fed’s Fisher (hawk) speaks 1 PM. Earnings: AM, FUL, GBX.
· 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 (important; start watching 2-10 spread). Earnings: AVAV-drones, APOL, BKS, CCL, LEN, WAG.
· Wednesday, 6/26/13: Fed’s Kocherlakota speaks 1:55 AM. Mortgage Applications 7 AM. Corporate Profits and GDP 8:30 AM. Fed’s Fisher speaks 10 AM. Oil Inventories 10:30 AM. 5-Year Note Auction 1 PM. Earnings: BBBY, GIS, MON, PAYX-payrolls, UNF-uniforms.
· 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. Fed’s Powell speaks 10:30 AM. Kansas City Mfg Index 11 AM. Fed’s Lockhart speaks 12:30 PM. 7-Year Note Auction 1 PM. Farm Prices 3 PM. Earnings: CAG, KBH, MKC, NKE, SCHN, WGO, WOR.
· Friday, 6/28/13: EOM; EOQ2; EOH1. Fed’s Stein speaks 8 AM. Fed’s Lacker speaks 9:15 AM. Chicago PMI 9:45 AM. Consumer Sentiment 9:55 AM. Fed’s Pianalto speaks 12:00 PM. Fed’s Williams speaks 3 PM. Earnings: FINL, BBRY.
· 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 are distracting 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.