Monday, September 16, 2013

Keystone's Morning Wake-Up 9/16/13; Summers Out; Empire State; Industrial Production

Today is Mexico's Independence Day so congrats to all our friends south of the border. The Lehman bankruptcy that accelerated the 2008 market crash occurred five years ago and President Obama will provide remarks this morning. Who can forget Lehman's symbol, LEH, that will live on in infamy? It now sports the dreaded 'Q' suffix indicating bankruptcy. The Larry Summers bombshell news sends the dollar lower, PM's higher (but softening), and the futures strongly higher; Dow is +180, S&P's +19 and Nasdaq +33. The 10-year yield collapses to 2.80% as the majority of traders continue to expect 3%+ numbers ahead. It is surprising that the markets had priced in 20 SPX handles for Summers. Yellen is perceived to be the most dovish Fed member so anyone in comparison would be less dovish, but the move in the futures indicates that Summers must have been viewed as an uber hawk, which makes no sense at all. Summers' fingerprints are on QE1 where easy money was given to unions and clean-energy failed projects, instead of infrastructure, and he now touts the need to spend on infrastructure. The U.S. is better off without him. Keystone views Summers just as Keynesian as Yellen so the the 20-handle move is a surprise. Yellen receives the uber dove moniker but if she is selected she may surprise everyone with her level-headedness and perhaps dispel the uber dove namesake. Oil is dropping on the easing Syria tensions. Brent crude plummets -2.3% to 109.13, almost a 108 handle. WTIC crude oil drops -1.5% to 106.54.

This morning's charts highlight the SPX 1707 gap fill which will likely occur at the open. The SPX all-time intraday and closing high is 1709.67. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. The inverted H&S on the 2-hour chart targets 1711 which should be satisfied this morning.  The SPX is at the upper standard deviation band on the daily chart and should poke up through this morning. Price may run higher but this violation will require a move back to the 20-day MA moving forward. The 20-day MA is 1656.51 and rising. Keystone's 80/20 rule says 8's lead to 2's, so the breach of 1680+ appears to be leading to the 1720's. The 1698 print would lead to 1702. The 1708 print would lead to 1712 and 1718 would lead to 1722. The upper standard deviation line on the weekly chart is 1716.

Markets struggled sideways on Friday waiting for a big decision this morning and the bulls receive the nod. President Obama had to cut Summers loose since there are already too many problems occurring that are consuming all of the president's energy; he did not need another. The Administration may now hold a grudge against Yellen, although they should not since she remains quiet and professional throughout, other supporters have been touting her, so a new candidate such as Geithner may ride in on a white horse, or even perhaps Bernanke will be convinced to stay on? The Continuing Resolution (CR) to fund the government must be approved within 14 days (only 10 legislative days)

Keybot is long to begin the week.  Volatility should drop today and the bulls are set to run higher.  Copper is all over the map in overnight trading, now up about 0.3% in early trading. The bulls need JJC 39.96 to lock in an extended market rally. JJC begins at 39.51 and +0.3% will send price about a dozen pennies higher to 39.63 remaining under the critical 39.96. This would indicate that the equities rally will run out of gas. Bulls must have copper on their side to continue higher. Bulls have one more secret weapon, utilities. With the lower yields, the interest-rate sensitive stocks will pop today such as utes, REIT's and telecom.  Watch UTIL 483.35 and 486.89. These two numbers can be used for the entire week ahead. UTIL begins at 476.89. If UTIL moves above 483, this will extend the upside rally. So the bears must keep JJC under 39.96, and UTIL under 483, to limit the market upside.

Empire State Mfg Survey is released at 8:30 AM and Industrial Production is 9:15 AM, both are key gauges on the manufacturing sector and overall health of the economy. Of course, bad news will likely be viewed as positive, just as the Summers news, since the long trading junkies need the crack cocaine easy money to keep the upside party going. The low CPC and CPCE put/call ratio's have been highlighted in recent days. The bullish joy will only serve to push the put/call ratio's back to low numbers again which continues to signal a significant market top at hand. Usually, the low put/call will create the market top from one to ten trading days after the low prints occur.  The NYMO has recovered during the recent rally and should print today at the same levels as the 5/22/13 and 8/2/13 market tops.

Keystone's Eclipse Indicator targets 9/26/13, give or take a week or two, as a potential area that begins a market sell off, ditto the 11/26/13 time frame, +/- a couple weeks. So markets are in this time frame now. During OpEx week, Monday's are typically up and a Tuesday low typically leads to a Wednesday high.  The full moon is Thursday and markets are typically buoyant through the full moon. Wednesday is a major market day with Housing Starts in the morning and the Fed in the afternoon. Watch copper and utilities very closely today, JJC 39.96 and UTIL 483.35, respectively, to determine the strength of the market rally, or lack thereof. Watch to see if the SPX 1707 gap is filled and also if the all-time high at 1709.67 is taken out, or not. As matching and/or new higher highs are printed for the SPX today, monitor the chart indicators to see if negative divergence sets up, as described in this morning's charts. This week was set to be an epic week for markets, a global circus, and the festivities are already underway under the Big Top.



    that's the very proof that this teflon rally post - 2009 is FED based!

    The reaction in futures proves it! All green with more than 1% rise WITHOUT ANY FUNDAMENTAL ECONOMICAL INFO RELEASED! Only because of some guy somewhat hawkish (Summers). So the addiction relation between stocks and FED's free bucks is real and trackable! Not only a story! It's the reality!

    I propose the modification of Bernanke's and the other FED's Job Descriptions as it follows:

    - "All FED ruling members are due to sustain by their decisions the US stock market in all aspects and under all circumstances."
    - Also: I propose that on a yearly basis (also aproved by the US Congress! :D) the FED should offer assurance for a minimum +20% rally in US stocks markets! So everybody will know how reality sets in! We don't need TA, we don't need other fancy stuff , all we need is a Big Daddy at FED and more and more free bucks!

    This things should appear in their JD's when they accept the job offered.

    And all things will be clear for everybody!

    There's such a great disconnect between the economy and the US stock markets ...pure insanity!
    The FED cornered itself and limited it's decisions by promoting the QE policy ever since the start of QE 1.

    They accepted the "water-boy" position in relation with the top-10 banks in US. They are only bucks provider for the big banks and nothing more.

    Accept it and make it OFFICIAL in their JD's and by US Congress resolution!


  2. KS,

    Take a look at the $NYAD. Does the blackjack trade come into play here given the indicator?

    1. this isnt a news event rally and has NOTHING to do with Summers lol - its a simple cycle being juiced by volume and Breadth (so many Breadth charts for geezus sake!)- cycle ends between 20th and the 26th and should extend well above 1710 at this point...Friday to Friday is the caution zone so that would be the time to consider shorts based on the charts not some viewpoint of a economic disconnect. the louder they scream the harder they've been squeezed I think.$NYUD&p=D&yr=0&mn=5&dy=0&id=p16344999931&a=312380641

      (note that the NYAD consolidation at the optimum moving average was KEY HERE)

      the pullback off the coming cycle high should be mild and be around a 38% retrace of the advance.


      charts like this confirmed nyad I said there have been so many breadth charts pointing the way higher.

    3. it's not rocket science and you can keep it simple and stay out of trouble...$NAUD:$NATV&p=D&yr=1&mn=0&dy=0&id=p13747641070&a=316216068&listNum=6

      that's it for me for a while - I'll leave you all to dissect me in virtual time while I make money.

      by the way this advance, once it confirms above 1710, should go to at least 1750.

    4. Thank you, Scott,


    5. Quite a spike in the NYAD yesterday, 2451. So a move back to the bear side would be anticipated after such an uber bull spike.

  3. He's right, this thing is just getting started. I would get the f&@k out of the way.


    All parameters are strongly bullish, I bet the coins left in my brokerage account that the FOMC pulls some $10 taper on Wednesday that juices the market up to 1750 by Friday. Like I said, no thanks.

  4. The festivities are underway under the Big Top. Haha, classic.


  5. to top it off the exchanges are mysteriously having technical difficulties AGAIN!!! circus is a good way to put it

  6. KS, what's our take on AAPL dropping under the 450?

    1. The chart a couple days ago highlighted the 450. (Type AAPL in the search box to bring the chart up) It failed through the 200-day MA at 456, bearish. The daily chart indicators are weak and bleak so even if a pop occurs, lower lows should come. It looks like the lower sideways range may develop with price moving through 415-475 moving forward. It does not appear attractive from either side right now. If the sideways range develops, you want to sell at 470-480 and buy at 410-420. If price bounces for a back kiss of the 200-day MA that may be a short entry play for nimble traders.

  7. Anon,
    KS stated in a post over the weekend that he saw AAPL trading in a range between 450 and 520, BUT if it lost the 450, LOOKOUT. We go back to the $420. Right now, we're hovering on the cusp. A prudent man might call the 450 broken.

    1. Yep, Anon, above comment highlights Apple. Daily chart indicators have turned weak and bleak.


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