Thursday, August 29, 2013

Keystone's Morning Wake-Up and Midday Market Action 8/29/13; GDP

The EOM is tomorrow and August began at 1686. GDP is 2.5%; most everyone expected a number in the 2's. The S&P futures were up 5 early this morning, then dropped to flat, and are now +5 again. The 10-year yield jumps strongly higher to 2.83% after the GDP and lower Jobless Claims news. The markets are very indecisive right now and utilities and copper will light the way. Watch UTIL 483.32 and JJC 40.07. UTIL is printing below which is creating market negativity. JJC is printing above which is creating market bullishness. Bulls will drive markets higher with higher utilities. Bears will drive markets lower with lower copper. If UTIL stays under 483.32, and JJC above 40.07, the markets are moving sideways unable to decide on a direction. The higher yields should hurt the utilities and other interest rate sensitive stocks. Copper is weak in early trading.

For the SPX starting at 1635, the bulls need to push above 1641 to create an upside acceleration. If the SPX moves above 1641, and UTIL moves above 483.32, and both stay above, Keybot the Quant would likely flip to the bull side. The bears need to push under 1627.50 to accelerate the downside. A move through 1628-1640 is sideways action. The CPCE put/call is very interesting printing an uber low at 0.34 indicating that there is zero fear in the markets despite all the ongoing macro problems. Traders are complacent and simply not worried at all. The low CPCE indicates that the markets are at a significant top that, once confirmed to the downside in the weeks ahead, may continue lower for months or a year or more. The print may be an outlier but it is interesting none the less. The CPC put/call remains tame as well, dropping slightly yesterday now at 1.01.

SPX S/R is 1686 (August begins), 1685, 1673.55 (20-day MA), 1669, 1666, 1664, 1661, 1659.50 (50-day MA), 1659, 1655, 1654, 1652, 1651, 1650, 1649, 1647, 1643, 1642.67 (20-week MA), 1640, 1639.43 (last week's low), 1638.27 (100-day MA), 1636, 1634, 1632, 1629, 1627, 1626, 1624, 1623, 1618 and 1614. The 62% Fibonacci landing zone based on the June-July rally is 1616-1624 which serves as strong support, especially since it encompasses the strong horizontal support at 1623 and 1618. The SPX bounced off the strong 1627 support yesterday. The 1614-1624 zone is a serious support area. Bulls will recover and float markets higher as long as this area is not violated. Bad things will happen to markets if price drops under 1614. For Thursday, watch UTIL 483.32, JJC 40.07, SPX 1641 and 1627.50 to determine market direction. Futures trailing lower to the flat line and negative in the time it took to type this missive.

Note Added 9:37 AM:  JJC drops to 40.06 but Keybot is now tracking 39.96 as the bull-bear line in the sand. The higher yields are sending utilities lower. UTIL 478.25So markets move sideways until either UTIL or JJC makes a decision. If JJC drops another dime under 39.96, the markets will noticeably sell off. Otherwise, another sideways malaise today. SPX is 1636 remaining under the 100-day and above the strong 1627 support. TRIN is 0.82 favoring the bulls today so far.

Note Added 2:14 PM:  The beat goes on. UTIL 477.97. JJC 40.02. Note that UTIL remains five points from the 483.32 bull-bear line but JJC has been knocking on the 39.96 bull-bear level all day long. The bears do not have the oomph as yet to push down under JJC 39.96, so markets stagger sideways. VIX is 16.77 moving higher. TRIN 1.05 favoring bears. It is surprising to see equities as elevated as they are today.  The dip-buyers and complacent traders believe in the Fed. SPX is 1641.64.  HOD 1669.51.  The 20-week MA is 1643.01. The 100-day MA is 1638.99. Last week's key low print was 1639.43. So price has to choose between 1643.01 and higher, or 1639.43 and lower.

Note Added 2:36 PM:  Here's the test of the 20-week MA, bounce, or die.

Note Added 2:48 PM:  SPX 1643.08. The 20-week MA is 1643.08. Bounce or die.

Note Added 3:23 PM:  Die. SPX 1641.51. Price continues through the sideways 1639-1643 range, however, so no great shakes. Copper keeps hanging on by pennies. JJC 40.01. UTIL 477.89.

Note Added 3:30 PM:  SPX loses both last week's low and the 100-day MA. JJC 39.99 keeps holding above 39.96 by a hair on its chinny chin chin.

Note Added 5:44 AM on 8/30/13:  EOM today. August started at 1686 so a down month should be logged at 4 PM EST.  The monthly charts all receive new prints today. It took the whole day but JJC (copper) finally gave it up in the final minute of trading falling to 39.96. It is amazing how Keybot the Quant algo can identify these important levels before they occur. Watch JJC  39.97 since it is now a key pivot. Equity markets move higher if JJC moves higher and will move lower if JJC moves lower. Copper is down in early morning trading. SPX is 1638.17. The 100-day MA is 1638.96. The 20-week MA is 1642.83, a sturdy ceiling. Last week's low 1639.43. BPSPX is now a market sell signal. Markets receive a couple-day pop from the high TRIN and uber low NYAD discussed earlier this week. It is surprising to not see equities far lower and weaker. Traders believe strongly in the Fed and worship at Chairman Bernanke's feet; the junkies need the drug-pusher. CPC and CPCE put/calls continue to show complacency. VIX is climbing towards 17 but still not near 20 so overall, traders continue to lack fear. Politicians, the Fed and other central bankers always save the day and kick the cans down the road, supplying infinite easy money, so why worry? As Alfred E. Neuman says, "What, me worry?" So there are dip-buyers in the market more worried about missing the next big run-up in stocks rather than worrying about the markets selling off in any substantive way. Copper is key. S&P futures are +3.5. If copper is weak, markets should be weak.

59 comments:

  1. Thank you KS, a very short and very concise update!

    The GDP data is uber-bullish USD and might put some pressure on gold, oil and cooper today.
    Interesting day ahead...today and also tomorrow!

    Claims and GDP is pro-QE taper in September - maybe 10, maybe 20 bln $ (in case there are some that didn't understood that!).

    V.

    ReplyDelete
    Replies
    1. edit: Claims and GDP ARE pro-QE taper in September!

      sorry, was in a hurry to write and didn't checked the message! :)

      V.

      Delete
  2. I have a dream!
    To see the US10 Y bond int.rates at over 3% next week!

    Martin Luther King

    ReplyDelete
  3. I hope now everybody still sane in this world understands the importance of this link posted here yesterday at the end of US session !!!

    http://www.forexlive.com/blog/2013/08/28/fed-officials-on-the-sidelines-at-jackson-hole-said-a-sept-taper-likely-cnbcs-liesman/

    Yes, in September there will happen the taper job!

    V.

    ReplyDelete
    Replies
    1. It seems to be a unanimous consensus that 'yes, there will be tapering'. In fact, no tapering seems to be the minority position. With that in mind, 'tapering' is already priced into the market.
      Mark

      Delete
    2. Mark,

      You don't know what you're speaking!
      At only 4,5% of the all times highs ...TAPER IS PRICED INTO THE MARKET????

      Hahahhahaaaaaaaa :))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))

      Delete
  4. Maybe the cat is out of the bag already V ...

    Enjoy the ride !

    GS guy

    ReplyDelete
  5. OMG!
    Cooper falling like a stone after a double-top formation !!!!
    Don't follow to the upside this market ramp in spx..it's a hoax, it will fall today BELOW 1627 !!!

    V.

    ReplyDelete
    Replies
    1. Why do you think so? As long as yen is weak, i think this rally is real

      Delete
    2. There are a lot of factors that ponder each other, it's not that simple.

      V.

      Delete
    3. More than that, related to your yen idea: the japanese gov. is marching with their 'third arrow' idea : the fiscal approach as alternative for yen weakening... so no more japanese QE for the moment!
      Moreover, USD (DXY) since november 2012 has entered in a long term bull market for the next 2-3 years minimum (on DXY target is 115-125). That will put a lot of pressure on oil, gold, copper... on almost everything, including US stock markets, after a certain DXY level will be broken to the upside!

      i repeat: it's not that simple!

      V.

      Delete
    4. so much for 1627.... 1658 next?

      Delete
    5. so now taper is priced in, war is priced in.. what else can one do to make this market to fall?

      Delete
    6. before letting yourself hypnotized by this market , check:

      a. volume (no mainstream follow through)
      b. remember that today, maybe tomorrow it's the end-of month (funds "clean their house").

      so much for this BIG rally ...laughable ....

      V.

      Delete
  6. http://www.bloomberg.com/news/2013-08-29/u-s-stock-index-futures-advance-before-gdp-jobless-data.html
    I'm starting to feel like I live in Red China and not the USA. I have zero confidence in any of the numbers that our government releases as reflecting anything that resembles reality. Where I live, which I acknowledge to be the armpit of the country, we're not seeing all this wonderful growth. We're seeing the opposite. Grant it, it's anecdotal. But maybe someone can show us where all this wonderful sunshine is, because it's sure not here. There 21 homes in foreclosure in my neighborhood alone. I've been trying for three years to sell a house. The prices keep going down not up. And every day I hear the sad story of another round of layoffs. Unemployment is a way of life here. And there's not a household in town that doesn't know how to make a meal of Top Ramen. When does reality catch up with the fantasy?

    ReplyDelete
    Replies
    1. when d.c. gets a dose of reality. until then the stock market will flourish and the average Joe will keep getting held down. the stock market is the only place to put money to work that will earn anything.

      Delete
    2. you do live under a "democratic" totalitarianism my friend - Sheldon Wolin called it "Inverted Totalitarianism"

      Totalitarian simply means, from its root, to control the totality of life...

      YOU are not in control - WE are not in control.

      That much is clear! lol

      http://en.wikipedia.org/wiki/Inverted_totalitarianism

      Delete
  7. looks like the Daily Cycle got extended and since we are into that cycle pretty good now the rally will only go to around 1710.

    distribution coming in but there are towo important lows scheduled - Oct and the end of the year or beginning Jan next.

    this is going to be more bullish than people expect I think and is going to catch people flat footed.

    ReplyDelete
    Replies
    1. now the Oct low could be the result of a massive autumn top here but once that low is in then it could be rally ho!

      one day at a time as they say

      Delete
    2. as for todays rally, the util and jjc canaries aren't playing along. don't know what to make of it all but time will tell

      Delete
  8. Any hints for the masses mr gs guy?

    ReplyDelete
    Replies
    1. stay long with a good stop or exit strat...

      1640, 1680, 1709

      Delete
    2. thanks gs guy.. hmm vix seems strong in the face of such a rally.. but it could fall off tomorrow as usual...

      Delete
  9. http://www.wnd.com/2013/08/video-shows-rebels-launching-gas-attack-in-syria/

    CLEAR PROOF THAT NOT THE SYRIAN GOV. , BUT THE SYRIAN REBELS HAVE MADE THE CHEMICAL ATTACK!
    US and it's allies has no right to attack Syria considering that the syrian rebels are paid and find support at the countries in Middle East that are US allies!!!!!

    V.

    ReplyDelete
    Replies
    1. something we agree on V! Al Qaeda is the CIA middle east arm of US policy - so now ask yourself, if we use Al Qaeda to gas people to justify an illegal war, who do you think was really behind 9/11?

      peace and love are not words, but acts

      Delete
  10. v

    can you give it a rest?

    ReplyDelete
    Replies
    1. no, I'm young and restless :)

      V.

      Delete
    2. ps V

      NEVER GIVE IT A REST OR LET MEAN SPIRITED MATERIALISTIC WARMONGERING AMERICANS OFF THE HOOK!

      NOT EVER BROTHER

      KEEP IT UP

      Delete
    3. Hey Scott,

      What's up with you? I have nothing against americans :).
      But I have something against sending CIA troops in Syria (facts noted also on zerohedge.com) at the start of August 2013 to help the rebels there and after that..bang! a chemical attack executed by the rebels!

      I'm a guy that thinks and is using his brain (that's not dead weight!)...

      Pay attention that I'm a logical guy, not an extremist! I have friends in US, I know your culture and I admire your enterprise and free spirit!

      But I have a problem with being agressive with other countries!
      What you give is what you get - it's a universal law!

      V.

      Delete
    4. I'm an america that is sick of the fascist tendencies of his own stupid neighbors

      that's what's up with me

      it is time to SEE the empire and the absurd myth of the United States - torture, murder INC., multinational corps and mercenary armies, no Bill of Rights, no representation...

      “The duty of a patriot is to protect his country from its government.”
      ― Thomas Paine

      "A patriot must always be ready to defend his country against his government."
      - Edward Abbey

      "War is the health of the State"
      - Randolph Bourne

      Delete
    5. Scott,

      Listen to me. just listen cause I'm just a foreign guy, not an american (I'm from Europe, Romania).

      If you want to protect your country and make it flourish you don't have to be an extremist! Extremism has lead in 100% of cases to anarchy and pain.
      You have to take care to behave in your own life the way that you want the people around you to behave.
      If in every country, every citizen would behave empathically to the others, respecting and being respected there would not be wars in the world anymore!

      And think how high this world could get if all the funds allocated for guns developing and wars would be rediverted to inventics and science!

      Listen to me, I've got one more thing to tell you. I've learned this during my University studies at the psychology course. Violence is the expression of personal incapacity at language level, at communication level. That's why a very young child is kicking and screaming when he doesn't receive what he wants to receive. It's a form of violence due to communication incapacity.

      My approach is based on empathy and communication as a form of elimination of violence. I'm absolutely thrilled by the violence in US... so much deaths by violence with fire guns. That should not exist. When someone pisses you off you don't take a gun and blow you neighbour head! Maybe you kick him some good punches in his head, but YOU DON'T KILL HIM! That's a form of respecting life!

      Don't destroy what you cannot recreate in the same form!

      :)
      V.

      Delete
    6. you cannot create peace and prosperity THROUGH WAR

      there is NO MIDDLE GROUND in peace

      you cannot negotiate with people who would murder children for profit

      until YOU GET THAT you will always be driven by fear

      think about it V - I see it in your posts

      you are FEAR driven...you have plenty of company! lol

      I think if you actually and SLOWLY reread your rant you'll see that you are a highly CONDITIONED, CONTROLLED and MYTHOLOGICAL man.

      As for anarchy, you are definitely conditioned by the TPTB to fear what is your only peaceful hope - free men associating freely BY CONSENT.

      Force is not a part of anarchy. It is a the necessity of the state.

      You need to review what anarchists are historically all about and once you do you might actually become free.

      You speak like an educated fool -

      http://www.alternet.org/story/85427/howard_zinn%3A_anarchism_shouldn't_be_a_dirty_word

      http://www.utne.com/politics/howard-zinn-speaks-emma-goldman-ze0z1304zsch.aspx#axzz2dNVbUF72

      peaceful civil disobedience WAS CREATED BY an AMERICAN ANARCHIST named Thoreau!
      http://en.wikipedia.org/wiki/Henry_David_Thoreau

      Any Taoist text will lead you in the right direction and away from your free of being free...

      Delete
    7. fear of being free! lol typing skills!

      Delete
    8. ok Scott :).

      V.

      Delete
    9. Read "liberty amendments By "The great one"

      Delete
    10. Billy, if the constitution was such a great document and the roadmap back to "freedom" then how is it that IT has allowed for the current state?

      Thomas Paine recognized this when he boycotted the the constitutional convention. He highlighted that the constitution was a property document not a RIGHTS DOCUMENT (slaves defined as less than human therein might have been a clue - lol!)

      Paine also correctly identified that the corrupting aspect of the constitution that was purposely written in to maintain control over the people was placing the supreme court under the control of the executive branch. This he maintained guaranteed a de facto monarchy that would favor power and influence.


      the us constitution is a horrible document and the fact that the Bill of Rights were added as an after thought highlights the primary focus of the Federalists.



      Delete
    11. billy - ps - the constituion hasnt existed since Reconstruction anyway.

      Reconstruction was a statutory reconstruction of
      a document that ceased to exist the moment the the southern states left congress and dissolved it.

      Delete
  11. Ok my two cents and i have money in the game.

    between last week and two weeks ago the market did exactly the same before breaking down as shown on the diagram below. The breakout happening right now is roughly, if the pattern repeats the max height of the fakeout 'peekover' designed to freak you out or excite you - depending upon your direction. A breakdown should occur shortly - If not - close out your shorts.

    I even have a diagram for you to calm your nerves

    We should be on point 5 of the diagram - much higher and my theory is invalid - This pattern can clearly be seen on /ES 5min

    http://www.wavetrack.com/media/articles/diagonal-ending-exp-report/frost-prechter-discount-of-the-expanding-diagonal.gif

    Stay strong and Short - for just a little longer

    BB

    ReplyDelete
  12. my system remains short and so is keybot

    Take a small short position here with a very tight stop.

    BB

    ReplyDelete
  13. http://www.marketwatch.com/story/stronger-gdp-likely-means-less-qe-hugh-johnson-2013-08-29?link=MW_home_latest_news

    so...it takes a big shot guy to say the same idea said by me here to become credible ..hmmmm.

    SEPTEMBER = QE TAPER
    V.

    ReplyDelete
  14. 1646-1649, after that... snowboarding!
    As time, watch what happens tomorrow at 12.00 GMT - Brazil and India GDP at the same hour, also watch tomorrow's US data.

    ;)

    GS guy

    ReplyDelete
  15. all this war talk how about some doughnuts? KS I see you are still short KKD, the earnings come out today AH, I was considering some puts, you Bearish on KKD for tomorrow morning? or are you long term bear on it?

    ReplyDelete
    Replies
    1. It's a bugger since its always crazy to short momo, but its charts remain bad with negative divergence. The weekly may squeeze out one or two more weeks of sideways but it is surprising to see it hold up like it has. If they hit a home run tonight the orgy may continue, but overall, this one is in big-time lofty territory from a technical perspective and could likely be shorted here on out.

      Delete
  16. Copper keeps knocking on the door at JJC 39.96, now at 39.99. If JJC 39.96-39.97 fails, there should be a whoosh lower for equities. If JJC remains above 39.96 it is probably a sign that the bulls are building strength and plan on fighting back into the holiday weekend, and will stop further market down side. The euro is down so the dollar is up, and commodities, gold, silver are hit. Dollar/yen moves up but it is due to dollar strength rather than yen weakness. In fact the yen was strengthening yesterday and this moves counter to what the BOJ is trying to accomplish. A weaker yen is desired to help their exports and manufacturing sectors. So it is all one big circus. Watch copper, JJC 39.96, now at 39.99.

    ReplyDelete
  17. Fed's Lacker in his speech today in Virginia:
    ''Fed's Lacker, conditions for a taper 'have been met.'"

    sounds so beautiful! :)

    V.

    ReplyDelete
    Replies
    1. one more goodie from Mr. Lacker:

      ''Fed's Lacker: QE taper would be 'starting to reach closure.'''

      V. :)

      Delete
    2. Do you think that this taper talk isn't already priced in V..? It is hardly going to be a shock if they do taper is it???

      Delete
    3. Anon,

      If you're the same person.... you keep coming and coming with the same wrong idea ...
      NO, TAPER IS NOT PRICED INTO THE MARKETS!
      We are at hardly 4-4,5% of the all time highs!
      Look at a chart please, think again where QE 1,2,3 were introduced and evaluate the diferential between hard price of SPX 500 and it's correlated yield.
      The market (spx 500) would have been now in the 800-900 area if no type of QE present!

      At -4.5% of all time highs you are saying to me that ...TAPER IS PRICED IN????????
      You're trippin' , believe me!
      With not one single correction of more than 10% in more than 2 years , you are trippin' hard on this idea of pricing in of tapering!
      Haven't seen a correction of 10-20% in YEARS! And you are saying to me that's priced in the tapering ?!?!?!?!? :)))))))))))))))))))....
      You dont remember how feels like a day with -5% on spx 500? That's pricing in, stop kidding around!

      No, TAPER IS NOT PRICED IN! Nobody believes FED will make the move, that's why when they will do it , it will be a bloody market!
      At 4,5% of the all time highs , he 's saying the taper is priced in.. OMG!

      V.

      Delete
  18. and here comes the calvary...

    ReplyDelete
  19. JJC 40.00, it does not want to break the 39.96-39.97, this is what the bears need.

    ReplyDelete
  20. Shane -

    Sorry to hear your story.

    I live in the Cleveland, Ohio area. Bank of America just laid of 1000 workers today in one small suburb. It was their home mortgage lending area. Paper said people were crying in the parking lots. BoA is getting out of the mortgage biz.

    ReplyDelete
    Replies
    1. Curiously ...

      http://www.cnbc.com/id/100997543

      "... Across the country, a growing number of single-family rentals provide an option for many who lost their homes in the housing crash through foreclosure and for those who cannot obtain a mortgage under today's tougher credit conditions. ..."

      It's hard to feel sorry for bankers.

      Delete
    2. There's also a lot of people out there who have good jobs, but wouldn't dream of buying a home right now. It's hard to blame them. Since 2007 jobs have become a sometimes thing. Your employer can walk in the door tomorrow and hand you a slip for any reason. It could be a layoff or it could be that they don't like your hairstyle. Until people start to really feel secure in their employment again, housing will lag (at least where I live). A lot of people are starting to feel like this American dream thing is dead. And there's little argument that our country is continuing to decline.

      Delete
    3. WFC axed about 2400 folks a couple weeks ago in their mortgage department. WFC is the key bank to watch in relation to the housing sector. The wage deflation is key. Inflation cannot exist without wages moving higher, and they are not, bosses know they have employees over a barrel these days. Many folks are either wishing they could find a job, or the ones working are exhausted from working free hours trying to make sure they do not lose their job. When you see wage inflation, wages moving up, this will tell you the economy is okay and improving. The Fed says they watch employment numbers and are using that as guidance but Bernanke likely focuses on wages although he never talks about it.

      Delete
  21. http://www.cnsnews.com/news/article/obama-president-does-not-have-power-under-constitution-unilaterally-authorize-military

    versus

    http://www.reuters.com/article/2013/08/30/us-syria-crisis-idUSBRE97K0EL20130830

    no comment.
    Reality check!
    US president is a lier!

    ReplyDelete
  22. British Parliament votes to not strike Syria, but they will likely revisit this next week after the U.N. report on the chemical attack. France says it wants to wait for the U.N. results which should be out next week. So if the U.S. moves forward, they have to go it alone, and they will likely not. France says it may act this morning. So it is simply the Keystone Kops stumbling around. The Allies seem to be mixed up and on different pages. The problem is that both sides fighting in Syria are hostile to the U.S. So there is no easy answer. The folks suffering are the ones stuck in the middle of both nutcase sides fighting when these folks simply want to live a peaceful life and become more technologically savvy, and build their economy. These poor folks simply get shot up in the middle of it all. The Middle East is a mess.

    ReplyDelete
    Replies
    1. KS , USA will get involved in Syria very, very soon, won't wait for UN report, or USA-Russia meeting next week at St Petersburg...

      http://www.marketwatch.com/story/us-prepares-for-solo-strike-on-syria-2013-08-30?link=MW_home_latest_news

      I have a very bad feeling that the market prepares the penetration of 200 DMA and some further trip below 200 DMA in a very fast and ugly way in a matter of days, not weeks.

      Those who have longs/stocks be very aware of the long 3 days week-end!!! Be very very aware of what you are doing!

      US has the capacity and will to action all alone!

      V.

      Delete
    2. Also found out that Soros consolidated his SPY puts (shorts) ... this isn't the kind of man to play for a tiny 5-10% profit .... he had top informational contacts and if he assumed this SPY position that means he knew something is brewing!

      Those long on the market think a little bit!

      http://blogs.marketwatch.com/thetell/2013/08/15/soross-biggest-holding-a-bearish-call-on-the-sp-500/

      V.

      Delete

Note: Only a member of this blog may post a comment.