Wednesday, October 16, 2013

Keystone's Morning Wake-Up and Midday Market Action 10/16/13; Shutdown Day 16; Debt Limit Ceiling Hits Tomorrow; Beige Book

Today is National Boss Day; only bosses themselves could come up with a day that tells everyone how great they are, the employees certainly would not. The futures are taking a wild ride since yesterday. The House attempted to develop a political solution but those talks collapsed last evening. Fitch places the U.S. on credit watch negative but the AAA rating remains. This drama sent futures lower but word hit that the Senate restarted talks so the futures lift overnight. In the last few minutes, futures are up big with the S&P's +11.3, Dow +103 and Nasdaq +16. Senate Leaders Reid and McConnell must already have a plan on paper with the optimism growing each minute. Traders expect a Senate bill this morning and then for Leader Boehner to put it up for a vote in the House where it will pass. Snag points may be Reid and McConnell unable to reach an agreement (unlikely since McConnell always rolls over like a puppy dog), or Senator Cruz or others conducting a filibuster which will not allow the bill to move to the House until next week, or Boehner does not allow the bill to come to the House floor for a vote. Welcome to the Theatre of the Absurd. The band plays on.

The CPI data is delayed today due to the shutdown but a Housing Index hits at 10 AM and the Beige Book is released at 2 PM which will cause a market pivot point. Keybot the Quant remains long but the equities are far more of a toss-up currently than anyone gives credit. Complacency rules with near-universal agreement that the politicians will reach an agreement today or tomorrow. Interestingly, the political deadline date tomorrow is not considered significant to many, so it would not be too surprising to see the political drama continue into next week. Watch UTIL 484.03, GTX 4888 and JJC 40.19. Utilities and commodities are causing market negativity while copper is causing bullishness. Bulls need UTIL above 484 and/or GTX above 4888 to signal the all-clear for upside. The SPX is set to pop at the opening bell but if GTX or UTIL do not cooperate, bulls got nothing. The market bears need to push JJC under 40.19 to create more downside mojo. If JJC drops under 40.19, and the SPX under 1696, and stay under, Keybot will likely flip short.

For the SPX today starting at 1698, the bulls need to push above 1711.50 to create an upside acceleration and happy bull party. The 1715 would be tested and if it gives way, price will seek 1720 and 1722 resistance. The bears need to push under 1696 to create an instant acceleration lower to test the strong 1691-1692 support. A move through 1699-1711 is sideways action today. If the SPX pops 10 or 11 points, this places price in the 1709-ish area remaining short of today's 1711.50 bull goal. Copper is weak today down as much as -1% which would send JJC into the 40.19 neighborhood for a look. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead (see this morning's chart), however, the 8 is about to stab down through the 34 to place the bears in control. The bulls need the gap-up open to send the 8 MA higher and avoid the negative cross to save the day. Watch UTIL 484.03, GTX 4888, JJC 40.19, SPX 1711.50 and 1696, and the 8/34 MA cross as described above to determine market direction today.

Note Added 9:58 AM:  Bulls are running today. UTIL, GTX and JJC are all bullish. SPX punches through 1711.50 so runs to 1715, pops through that, so 1720 and 1722 resistance is next. News outlets say Leader Boehner will allow a vote of the Senate plan so it appears the political drama will end today. All of yesterday's losses disappear and then some. The bounce in equities reflect the happiness over an imminent political deal. The 1720 and 1722 resistance may create a ceiling for the happiness. The SPX 2-hour and 1-hour charts are not enthusiastic although the 30-minute and 15-minute charts have some juice.

Note Added 10:10 AM: UTIL 485.69. GTX 4901. JJC 40.49. SPX 1716. Senate meets at noon so that should be the next inflection; Senate will only bring a plan forward if they are positive that Boehner will allow the vote, which will result in approval, in the House, which apparently he will.

Note Added 11:41 AM:  SPX hits 1720, punches through to then test the strong 1722 R. HOD is 1721.75. If 1722 gives way, a test of the all-time closing high at 1725.52 is on tap and then perhaps the all-time high at 1729.86. The SPX 1718 level is establishing itself as S/R today so the price action dances between 1715, 1718, 1720 and 1722 awaiting more happy political talk. Bulls are starting to pull away to the upside with UTIL 486.12 and GTX 4915. Market bulls will receive the juice for new all-time highs if VIX falls under 15. VIX is now printing 15.39. Bears can hold the line on the market upside if they keep VIX above 15 and can push markets lower if they send UTIL under 484.08 and/or GTX under 4888. TRIN is uber low at 0.58 stoking the bull furnace. Interestingly, the minute and hourly charts continue to set up with negative divergence. Perhaps the pending happy Senate and House announcements over the next couple or so hours will push the SPX to more firmly test 1722 R and perhaps create a near-term top, sell-the-news-type, event.


  1. closed my shorts ..waaaay too strong that spike :)


  2. The big pop is based on a news report that says Leader Boehner will place the Senate plan coming this morning on the House floor for a vote, so it will pass since the House democrats will pass it. So it looks like this is the rally for the political resolution.

  3. VIX getting crushed. 15.12. I have a feeling the ATH is about to be tested.

  4. What does the 1715 S/R level corresponds to ? Thanks

    1. Price action simply favors this level with price using 1715 as support intraday, reference the minute charts such as the 10-minute or 5-minute. Thus, 1715 deserves respect moving forward due to the intraday price action.


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