Sunday, September 1, 2013

Keystone's Trading Week in Review and Path Ahead for Markets 9/1/13

On Friday, 8/23/13, Indonesia growth will fall under 6% this year. LLY is under bribery investigation in China. The dollar/yen rises to 99 as the dollar strengthens and the euro drops to 1.3347. Asia markets are up but finish the week down overall. The pro-Morsi supporters call for a ‘Friday of Martyrs’ so violence may increase after Friday prayers. U.K. GDP is better than expected so the pound moves higher. European stocks are flat to down and experience the worst week in two months.  The forensics on the Nasdaq Flash Freeze begins with a focus on the trading action at 10:19 AM EST yesterday when problems may have began. Greifeld defends not talking to the press yesterday and says the ‘professional community’ was updated during the shutdown. There is outrage over this comment since it unequivocally says there are two sets of rules in the rigged market game; the large players are given trading information but the retail trader and Ma and Pa is not. Greifeld says that ‘those that needed to know the status, knew’ driving the point home that the stock market is a good ole boy’s insider game.  Brazil launches a $60 billion currency intervention to defend the real and stop the outflow of capital.  The markets drift lower at the opening bell. At 10 AM, the New Home Sales lay an egg, dropping -13.4%, the lowest numbers in 3 years.  The sick home sales, however, tell traders that the Fed will now have to delay tapering and instead supply more easy money crack cocaine. Bad news is good news. Thus, the dollar drops, gold sky rockets, the 10-year yield plummets from 2.92% to 2.80%, a 12-bip move, and the stock market bounces higher, moving higher all day long. The home builders and ITB index move lower while utilities, telecom and REIT’s, the interest rate sensitive stocks, move higher. The Jackson Hole symposium continues but the big-wigs, Bernanke (Fed), Draghi (ECB) and Carney (BOE), are not attending. Kuroda (BOJ), however, is attending. ECB’s Nowotny says “we have to be cautiously optimistic.” Jackson Hole is a yawner. MSFT CEO Ballmer announces his resignation in the coming months and Microsoft stock jumps wildly higher. Traders do not mince words saying ‘don’t let the door hit you’ and ‘good riddance’ but Ballmer does not deserve all the criticism. After all, he took the position over from Bill Gates at the exact top of the Nasdaq bubble. Ballmer will not shed any tears due to the +9% jump in MSFT today since he benefits from owning a huge amount of stock. In the final one-half hour of trading, volatility collapses, the VIX drops under 14, utilities jump higher, and financials and retail sectors move higher pushing the SPX from 1660 to 1665, closing at 1664. The SPX moves above the 50-day MA at 1659. For the week, the SPX is up +0.5%, the Dow down -0.5%, the Nasdaq (tech) +1.5% and RUT (small caps) +1.4%. Tech and small caps leading is a plus for bulls but the lag in the Dow is very troubling. As noted technician Acampora quips on a business television interview, “never forget Papa Dow.” Acampora has turned bearish in recent days, reversing his bullish call when the SPX moved above 1700, and looks for a continued lower move for stocks ahead citing the weakness in Dow and emerging markets. Gold ends the week at 1396. The 10-year yield is 2.82%. The Dow ends the week above 15K at 15011.

On Saturday, 8/24/13, Jackson Hole Summit ends without fanfare. Fed members agree that QE tapering is needed but disagree on the timing.  California and western U.S. wild fires burn out of control. U.S. warships move towards Syria for a potential cruise missile strike. HNZ, the Pittsburgh ketchup giant, plans on firing 1,000 workers in the U.K., Canada and U.S. to reduce expenses.


On Sunday, 8/25/13, at noon time in Israel, the Tel Aviv stock market experiences a flash crash after a fat finger trade in Israel Corporation dumps the stock 99.9% for five minutes. This action causes the TA-25 to drop -2.5% triggering a shut down. The error was corrected and markets recover over the next three hours. Concerning, Syria, Russia warns the U.S. to not ‘repeat the mistakes of Iraq’. Insurgent attacks in Iraq kill 46 in the worst bloodshed since 2008. Donald Trump Investment School is sued by the Attorney General.

On Monday, 8/26/13, global markets are quiet and flat overnight with traders focusing on emerging market worries. The Fed easy money that flowed into emerging markets for years is now flowing outU.K. markets are closed today.  Concern over Syria grows but the oil markets actually start to leak lower in price. WTIC crude is under 107 and Brent is at 111. Durable Goods Orders are weak across the board.  Futures remain flat, however, since bad news is good news in these Fed-induced crack cocaine markets. The broad indexes open sideways and move higher as volatility drops and retail and financial sectors move higher. Volume is thin. The 10-year yield moves lower now at 2.79%. Italy’s center-right party warns that they will bring down the government if Berlusconi is expelled. Copper performs a dramatic reversal, up big in the early morning hours but now down big as the day proceeds. The broad indexes remain elevated. At 3 PM, Secretary Kerry provides a statement on Syria saying that the use of chemical weapons was large-scale and indiscriminate and there is proof of the atrocities. The U.K., France, U.S. and other nations are forming a coalition of the willing to bring action against Syria.  Markets do not respond to Kerry’s words. The news wires report minutes later that Russia says the U.S. should not strike Syria and also that Secretary Lew says the U.S. debt limit will hit mid-October. This confluence of news sends equities sharply lower. Utilities, financials and retail all drop lower. Volatility leaps higher. Gold and silver move higher, bonds move higher (yields lower) and defense stocks receive bids in what appears to be a knee-jerk safety and war-trade move for markets. The SPX drops under the 50-day MA at 1660. The SPX loses -0.4% and closes at 1657. The Dow is down -0.4% to 14946, losing the 15K level. RUT and Nasdaq are flat. Today is the lowest full-day volume of the year.

On Tuesday, 8/27/13, Japan’s debt is twice the size of its $5 trillion economy outpacing the U.S. and all other industrialized nations. The dollar/yen drops under 98 due to a stronger yen. The emerging and Middle East markets sell off overnight. The Phillipines PSEI is -4.0%. Thailand’s SET -2.5%. India’s Nifty -3.5%. China profit growth rebounds indicating that the economy may be stabilizing. Iran says a U.S. strike on Syria will ‘engulf the entire Middle East’. Gas masks are distributed in Israel since Syria may strike Israel if the U.S. strikes Syria. German business confidence is at a 6-month high but Finnish confidence is at a 7-month low. The Asian markets’ weakness cascades into Europe this morning. At 5 AM EST, the DAX is -1.4%, CAC -1.3%, IBEX (Spain) -1.6% and FTSE -0.6%. Italy’s bond yields are rising. Euro banks are dropping from -4 to -6%. The S&P futures are -9 and Dow -70. WTIC crude oil moves above 107 and Brent oil is above 111 on the Syria turmoil. Hedge fund activist Ackman sells off his entire stake in JCP, throwing in the towel after his 3-year debacle. BATS and Direct Edge Exchanges agree to merge. TIF earnings beat on EPS but are light on revenue. Tiffany increases the forward guidance so the stock pops +3%.  The futures deteriorate as the morning proceeds. At 7:30 AM; S&P -12, Dow -90 and Nasdaq -25. The 10-year yield is 2.77%. S&P -18.  Dow -130. Nasdaq -38. U.S. officials say air strikes against Syria may begin on ThursdayAt 9:29 AM, WTIC crude oil pierces 109 to the upside. Brent crude is well over 113. The broad indexes collapse at the opening bell with the SPX dropping to 1640 and the Dow to 14825Consumer Confidence is 81.5 the highest number since summer of 2008 so folks are optimistic, at least the ones with a job, even if it may be blind confidence. Equities remain weak through the morning session and gain steam to the downside into the closing bell as the Syria rhetoric increases. The Whitehouse tries to calm the growing hysteria saying a decision has not been made concerning a military strike on Syria. The higher oil prices, with Brent oil now above 114, is sending airlines, shippers such as FDX and UPS, and truckers such as R, all lower. Gold continues higher at 1420. The New York Times web site goes down and the hackers identify themselves as the Syrian Electronic Army, supporters of Asaad. The SPX ends the day down 26 points, -1.6%, to 1630, losing the 20-week MA at 1642 and 100-day MA at 1638. The Dow ends down 170 points, -1.1%, to 14776, losing the 150-day MA at 14819.  The Nasdaq loses 79 points, -2.2%, to 5579. The RUT is down 25 points, -2.4%, to 1013. Tech and small caps are bludgeoned. The 10-year yield is 2.72%. Gold 1424.  The BPSPX chart reverses six percentage-points which is a market sell signal.

On Wednesday, 8/28/13, Japan’s Fukishima nuclear disaster continues with the danger rating raised to Level 3 on continuing radiation leaks. The rupee is now at a 20-year low. Dolar/rupee is 68.08 moving higher, hitting 68.90, creating major stress on India. Fears grow over an India, Indonesia and/or Brazil currency crisis ahead. Asian markets are weak. The television news channels are dedicating the bulk of the coverage to the Syria escalation. Europe is weak today playing catch-up. Merkel blames predecessor Schroeder for allowing Greece in the euro years ago and this decision is the root of the Eurozone problems. At 4 AM EST, WTIC oil is 110.20 (2-year highs) and Brent oil moves above 116. S&P futures are +5. The 10-year yield is 2.75%. Printing problems with the new $100 dollar bills will delay their release and create higher costs of production.  The New York Times, Twitter and other web sites experience continuing problems due to hacking from the Syrian Electronic Army. Global bellwether JOY beats on earnings but guidance is lower; the stock is sold off -5%.  Mortgage Applications fall for another week continuing a 3-month slide. Refinancing applications have fallen off a cliff as rates rise. Futures drift lower and are flat two hours before the opening bell.  The broad indexes float along sideways all day long with an upward bias. The SPX teases the 100-day MA at 1638 and then stumbles lower into the closing bell ending at 1635. In the evening, President Obama appears on PBS television saying that he has not made a decision on Syria as yet. The rift widens over Syria with Russia saying that no action is required. Oil prices drop on what appears to be a softening of the Syria stance. WTIC crude oil is at 110 and Brent oil at 115.80.

On Thursday, 8/29/13, Asian markets recover. Indonesia and Brazil raise rates. An internal JPM spreadsheet surfaces that lists the children of China businessmen, now dubbed ‘princelings’,  that were allegedly provided token jobs in exchange for future business contracts.  Markets remain on edge that a currency crisis will occur in India, Indonesia, Brazil, South Africa and/or Turkey. The powerful contagion forces are a worry a la the Asian Crisis in 1997-1998 and U.S. financial crisis in 2008-2009. BOE’s Carney says QE is available if needed. German unemployment unexpectedly rises. The euro drops to 1.3261Oil prices drop overnight on President Obama’s statement of inaction and the U.K. softening the air strike rhetoric.  WTIC oil is 109.13 well off the 112+ high this time yesterday. Brent crude is 115.68 remaining more elevated than West Texas crude. Copper is weak. VZ is near a deal to purchase VOD’s wireless business for a major $130 billion telecom deal.  GDP is 2.5% which encourages the equity markets. The broad indexes open and jump higher. Fed’s Lockhart says the mortgage-backed support should be removed first (trouble for housing) for tapering QE and his view of growth remains at 2%-ish. These comments take the wind out of the market sails with the SPX dropping from 1646 to close at 1638.    Employees at MCD and BKW, in 50 cities across the U.S., mainly led by New York, protest the minimum wage law. Slogans such as “Seven twenty-five ($7.25/hr) is not enough to survive,” echo through city streets. British Parliament surprises the world by voting to not take action in Syria. France says they want to wait for the U.N. chemical inspector’s report that should be available next week (the inspectors leave Syria tomorrow). Thus, if President Obama decides to strike Syria, the U.S. must do it alone. The Allies do not appear on the same page. The U.S. Bankruptcy Court in California rules that San Bernardino is eligible for bankruptcy protection. The ruling further paves the way for other cities to reduce employee pensions and union wages and benefits.

On Friday, 8/30/13, today is the EOM and August will print as a down month. France says all options are on the table including an imminent strike on Syria reaffirming support to the U.S. Turkey would like to see an extensive strike to dethrone Asaad (since they are turning more Islamist). Arab nations, such as the Suadi’s, want the U.S. to take action, but they will never say that publicly, instead they denounce any U.S. involvement. The Middle East is a mess. Neither side in the Syria civil war is friendly towards the U.S. and 50% of Americans are opposed to military action in Syria. Since the U.K. Parliament voted to not take action, oil prices continue falling with WTIC crude under 108 and Brent oil under 115. Gold drops under 1400. Copper is weak for a second day. Global PC shipments continue falling and should drop -10% this year. The markets stumble along sideways today with large point moves up and down due to the higher volatility. VIX is now above 17. The SPX is down -1.8% this week. The Dow loses -1.3, Nasdaq drops -1.9% and RUT a huge -2.6%. Trannies dump -3.6% this week as oil rises. Berlesconi repeats the message that his expulsion will wreak havoc for Italy’s government but softened his tone saying his statements are not an ultimatum.

On Saturday, 8/31/13, President Obama says he will wait for Congressional approval before taking action in Syria. This delays any action until 9/9/13 or later (unless it is a fake-out move). The president says he will act regardless of how Congress votes which creates confusion. He speaks of urgency to act, but does not call Congress back immediately (Cameron called the British Parliament back for a vote) and instead goes golfing. President Putin (Russia) says he would like to see the evidence of chemical weapons use in Syria. Oil prices may drop dramatically next week, and perhaps equities will rally, on news that the U.S. will wait before striking Syria.


On Sunday, 9/1/13, Syria’s government-controlled newspaper says that the ‘U.S. delay is the start of the historic American retreat’.  President Obama’s actions are viewed as weak and indecisive across the Middle East. Secretary Kerry, on Meet the Press political talk show, says the chemical testing has confirmed the use of nerve agent Sarin. The U.S. maintains five destroyer battle ships off the coast of Syria as well as an amphibious assault ship. There are 2,000 United States Marines available to carry out any mission at a moment’s notice.

On Monday, 9/2/13, Markets are Closed in Observance of Labor Day. China and Asia PMI’sEuropean PMI’s.

On Tuesday, 9/3/13, Markets Reopen for trading. Congress returns from recess to address the fiscal problems within the next 4 weeks as well as vote on action against Syria. ISM Mfg Index.

On Wednesday, 9/4/13, Beige Book.

On Thursday, 9/5/13, Jobless Claims. Factory Orders. Natty Gas Inventories. Oil Inventories.

On Friday, 9/6/13, Monthly Jobs Report.


On Monday, 9/9/13, …

On Tuesday, 9/10/13, …

On Wednesday, 9/11/13, Anniversary of 911. Wholesale Trade. Oil Inventories. 10-Year Note Auction.

On Thursday, 9/12/13, Jobless Claims. Natty Gas Inventories. 30-Year Bond Auction.

On Friday, 9/13/13, PPI. Retail Sales. Consumer Sentiment. Business Inventories.


On Monday, 9/16/13, Industrial Production.

On Tuesday, 9/17/13, FOMC meeting begins as traders listen for ‘QE taper’. CPI.

On Wednesday, 9/18/13, Housing Starts. Oil Inventories. FOMC Meeting Announcement, Forecasts and Chairman Bernanke Press Conference.

On Thursday, 9/19/13, Jobless Claims. Philly Fed. Leading Indicators. Existing Home Sales. Natty Gas Inventories.

On Friday, 9/20/13, OpEx Quadruple Witching.


On Sunday, 9/22/13, Germany reelects Merkel and now there is no longer a need to keep countries like Greece or Cyprus in the euro, or even Germany itself.

On Monday, 9/23/13, Flash PMI’s.

On Tuesday, 9/24/13, Consumer Confidence. 2-Year Note Auction.

On Wednesday, 9/25/13, Durable Goods Orders. New Home Sales. Oil Inventories. 5-Year Note Auction.

On Thursday, 9/26/13, Jobless Claims. GDP. Natty Gas Inventories.

On Friday, 9/27/13, Consumer Sentiment.


On Sunday, 9/29/13, the Debt Ceiling Limit and CR Continuing Resolution to fund the U.S. government deadlines occur. Perhaps last minute antics occur today which is typical for the politicians. The Whitehouse scandals are distracting politicians from addressing the fiscal problems.

On Monday, 9/30/13, EOM. EOQ3.

On Tuesday, 10/1/13, Q4 begins. China and Asia PMI’sEuropean PMI’s. Construction Spending. ISM Mfg Index.

On Wednesday, 10/2/13, ADP Jobs Report. Oil Inventories.

On Thursday, 10/3/13, Jobless Claims. Factory Orders. Natty Gas Inventories.

On Friday, 10/4/13, Monthly Jobs Report. European bank stress tests will occur in Q4.

----------------------------- 2014 ----------------------

On Friday, 1/31/14, Chairman Bernanke’s term ends at the Fed. Yellen, Summers and Kohn are candidates. Summers is the front runner, especially since President Obama referred to Ms. Yellen as ‘Mr.’ Yellen. Long traders prefer Yellen since she has a reputation and history of dovishness which would keep the QE party going.

On Friday, 2/7/14, Winter Olympics begin in Sochi, Russia, through 2/23/14.

In February/March 2014, the new Fed Head testifies before Congress.

In March 2014, the ESM is officially “fully operational.” The banking union schedule has been delayed from January 2013 to January 2014 and now to March 2014.


  1. my opinion is that Obama added more to uncertainty with his Congress decision related to Syria attack... we all know how market reacts to attacks- they jump.
    this Congress decizion is prone to put even more pressure on stocks due to general uncertainty considering also that last week S&P 500 closed below weekly middle bollinger band = that opens the 50 WMA (weekly ma) at 1540 or weekly lower bollinger band.


    1. seems like the market has forget the very words of mr. Obama in his Saturday speech.
      He will consult Congress, although he has the right of starting an attack with or without Congress aproval.
      This strategy of him (the Congress thing) buys time for him before G20 meeting. Also buys time for this market before a grand rollover to the downside. Those who are trapped in long - use this chance to sell! It might be the last chance considering the waves morphology.

      KS might be right - in a comment a few articles ago he noted that the peak saw at 1709.xx might not be seen a few months or years.

      Use this opportunity created by Mr. Obama speech to unload longs/stocks.
      Syria will be attacked, it a matter of 'when', not 'if'. This happy rally in futures (now in the 1640's in spx 500) will die in a matter of hours/days as a fading rose :).

      You realize that we will not see new all time highs, don't you? :)?


    2. I don't know about you but I have some longs trapped at 1655 at it great that soon I will close them on break-even.

      Thank you Mr. Obama, you saved my money!


    3. V,
      I agree with you on a good number of things, but what you're saying about Syria is simply wrong. Obama's pushing it back to the congress to take it off his plate. If he were going to attack, he would go ahead and do it. He knows that he won't get the votes in Congress for an attack, but by doing so he's able to save a little bit of face. He's able to say 'look, I put it before the Congress and we couldn't get the votes.' Set aside the fact that he doesn't need the votes. What you're saying about 1709 being the high may be correct, but for a half dozen other reasons. If you're theory's based on imminent military action in Syria, it's not going to happen. It would be political suicide for him.

  2. Futures are up 14 on S&P..V-Any chance u can share yr analysis on TSLA?


    1. It's too bad that I was not in TSLA back then when I was watching it for a while around $30-$34 at the time. It's such a surprise to see that it has gone up more than 5X from the price I once saw.

    2. don't follow specific stocks, only indexes.


  3. It will be nice if oil prices fall during US market open instead during our holiday. This is too bad for people shorting on oil. When market reopen Tuesday, oil prices probably up again...

  4. Markets will likely remain jumpy moving forward. Since VIX becomes more and more elevated the market moves will become more erratic and large. The PMI's were mostly all in line or better. India's PMI is down but Sensex went up. Copper moving strongly higher so JJC will likely turn bullish at the opening bell Tuesday morning. So if utilities catch a bid higher, Keybot may flip to the long side. WTIC oil dropped under 106 last evening but is now back up to 107. The PMI's are helping send commodities higher. Should be lots of twists and turns ahead. New moon is Thursday so this is best time for a military strike. Perhaps the Syria news lulls everyone into complacency and a true surprise may occur. CPC and CPCE put/calls started to move higher but the recovery in equities on tap will likely send the put/calls lower again so a good market bottom is likely not in place. Rally may be a couple days duration. There are some pivot points ahead this week with markets. Lots of drama ahead.


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