Wednesday, September 4, 2013
Keystone's Evening Nightcap 9/4/13; ECB Rate Decision On Tap
Today was a wild day under the Big Top. When copper failed at the opening bell (JJC under 39.93), the bears appeared in full control and ready to drive equities lower. The bulls had a different result in mind with the low TRIN, volatility dropping like a stone, VIX under 16, and semiconductors in a wild orgy higher today, up a huge +2.6%. Retail and financials joined in for the thin-volume bull move. Keybot was on the verge of flipping long, and still is, for most of the day. The SPX needed to produce certain price levels to but when it did, the retail sector failed. Watch JJC 39.93, RTH 53.74, XLF 19.98 and SOX 467.60. Copper, retail and financials are creating market negativity while semiconductors are creating bullishness. Any change to these parameters will cause equities to move in that same direction. JJC 39.93 is the key. Watch copper trading overnight since up copper means equities will likely be up tomorrow while down copper means the markets will likely move lower tomorrow.
For the SPX at 1653, the bulls only need 2 or 3 upside points, to touch the 1656 handle, and an upside acceleration will occur to test 1661. If JJC, RTH or XLF turn bullish, and the SPX stays above 1656, Keybot will likely flip long. The bears need to push under 1638 to create a downside acceleration to 1627. A move through 1639-1655 is sideways action. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets ahead.
Rosh Hashanah arrives this evening. The new moon hits at 7:37 AM EST minutes before the ECB announcement at 7:45 AM. The Draghi press conference is 8:30 AM. Markets are typically weak moving through the new moon. However, the broad indexes are typically buoyant from the last day of the month through the first few days of the new month. The TRIN is looking for some market selling so it can recover from the low numbers and print above 1.00. BPSPX is 75 working lower. The bears need the BPSPX to fall under 70 to create more downside fuel. The CPC and CPCE put/call ratios continue to show complacency and volatility joins that camp with the drop in the VIX today. The put/calls continue to indicate markets are at or near a top.
Markets are at an interesting juncture right now. The last five days are a knock-down, drag-out fight, bull versus bear, for market control, and it remains unclear who will win. Tomorrow will likely tell the story since the JJC, RTH and XLF listed above are at their inflection points, so markets should either bounce, or die, tomorrow, and to commit to the chosen direction. The ECB will move the futures pre-market. JJC 39.93 and SPX 1656 are important. ADP Jobs Report provides a heads-up for Friday's Monthly Jobs Report. Keystone bot more JO in the afternoon adding to this ongoing long coffee position.