Wednesday, October 9, 2013

Keystone's Morning Wake-Up and Midday Market Action 10/9/13; Government Shutdown Day 9; Yellen Named New Fed Chair; FOMC Minutes

AA beat on top and bottom lines last evening to kick off Q3 earnings season on a positive note. But, the joy only lasted several minutes as the YUM results, a bellwether for the Chinese economy, disappointed greatly. YUM was bludgeoned -8% in AH's trading and should remains weak today. President Obama's talk yesterday lingered on for over one-hour but nothing new was provided. Sensing the weakness, the Whitehouse went ahead to announce Janet Yellen as the new Fed Chair and a ceremony occurs today at 3 PM EST.  Chairman Bernanke will likely have the largest smile of anyone since he will now be able to run away from the circus. The S&P futures popped 5 points on the Yellen news but that peters away as we approach the opening bell. The president wanted Summers, and then begged for Geithner to take the job, but ended up having to choose chopped-liver Yellen. Even if you disagree with her approach to economics, she should have been treated better in the process. Perhaps Yellen will surprise everyone and not be as dovish as her reputation suggests.

The retail sector broke down yesterday so focus on RTH 54.79. Markets will have legs higher if the RTH 54.79 is regained. If not, markets will remain weak. COST earnings disappoint which may create a pall on retail today. Also watch commodities and copper, GTX 4888 and JJC 40.19, respectively, both are weak today due to a rising dollar. Bulls need higher retail while bears need lower commodities and copper. Copper is weak in early trading and the JJC 40.19 may give way at the opening bell. For the SPX, starting at 1655, the bears have an easy road, only needing to push under 1655 to create a downside acceleration to 1652, 1649 and perhaps 1647.  The bulls must touch 1677 to regain mojo, a formidable task, so instead, the bulls will focus on pumping retail, commodities, copper, and utilities higher.

Wholesale Trade hits at 10 AM so a market pivot will likely occur (nope, the data is delayed due to shutdown). Fed's Evans speak at 10 AM. Oil Inventories 10:30 AM. The 10-Year Note Auciton is 1 PM; very important since many company, business, retail, individual and real estate rates key off of the 10-year yield. FOMC Minutes are 2 PM which will create a market pivot point. So there is some action ahead today. The politicians will move markets as they repeat their mantra's at the podium while equities will be subject to pivots at 10 AM, 1 PM and 2 PM, and you may as well lump in the Yellen ceremony at 3 PM. Watch RTH 54.79, JJC 40.19 and GTX 4888 since these three parameters will dictate market direction today.

Note Added 9:55 AM:  GTX fails 4888 and JJC fails 40.19 creating market negativity. RTH stays in the bear camp under 54.79. Whoa, bulls spiking utilities to create upside fuel. UTIL up through 483.63 creating bullishness now trying to punch up through 485.90 to create more upside to counteract the weak commodities and copper. Wholesale data is minutes away and will create a market pivot. UTIL 486.06. Strength in utes is counteracting the higher dollar and lower copper and commodities. SPX and Dow are slightly positive and Nasdaq slightly negative.

Note Added 10:01 AM: Wholesale Trade data delayed because of shutdown, but, SPX pivots lower from 10 AM anyway.

Note Added 10:04 AM: SPX 1655. JJC 39.65.  GTX 4866. RTH 54.45. VIX 20.64. UTIL 486.05 above both the 483.63 and 485.90 critical levels. Bulls lose a feather from their caps if UTIL slips back under 485.90. SPX:VIX 80.20. TRIN 1.00 directly at the neutral level refusing to pick a side today.

Note Added 10:13 AM:  UTIL 488.29 rocket launch. .... 488.63 .... 489.04 ....

Note Added 10:31 AM:  Markets favor another sideways stumble today. Bulls pull a sneak attack with utilities today. Right when the bears rolled the copper and commodities over, the utes came in for the stick save. Use UTIL 485.90 as a key market rudder today. Equities probably travel flat and directionless above 485.90 but market weakness will resurface below UTIL 485.90. UTIL is printing 486.88.

Note Added 2:37 PM: The FOMC Minutes come and go without much fanfare. Equities float upwards since the Fed appears willing to keep supplying the street drug called QE easy money. Utilities are the big story today. The bulls saved the day with UTIL moving above the critical 483.63 and 485.90 numbers. This provided bull fuel and then the RTH moved above 54.79 to help the bulls maintain today's buoyancy. Use UTIL 483.63, 485.90 and RTH 54.79 as the pivot points that will push markets in the same respective direction. UTIL is currently printing 484.28 and RTH is at 54.91. Bears need RTH under 54.79 and UTIL under 483.63 and the markets will sell off into the closing bell. Bulls need RTH to stay above 54.79 and UTIL to move above 485.90 and a big bull rally party will occur into the bell. SPX is at 1661. TRIN is 0.76 so this is a feather in the bull's cap.

Note Added 2:54 PM: The Yellen announcement is minutes away. Bernanke is already buying a fishing license. SPX 1661 status quo. RTH above 54.79. UTIL above 483.63, but below 485.90. One of these three parameters should flinch.

Note Added 3:25 PM:  UTIL 483.39 losing the important 483.63 level.... 483.55 ...... 483.56 .. Yellen is nominated as the new Fed Chiar and the short ceremony ends. Bernanke is seen clicking his heels as he exits the hall. Bernanke is not out of the woods yet; he has 3 more months of problems to handle.

Note Added 3:42 PM:  UTIL 483.14. RTH is 54.83 only 4 pennies away from causing a leg down in the broad indexes if 54.79 fails.


  1. Hello all,

    For those that have been long time readers I have been warning of the Tech masacre to come. Nobody know for sure when, but the NAZ 100 is underperforming.

    Look for AAPL to offer discounted pricing on their website as they did in 2008.

    1. Nasdaq is underperforming again today, negative all day long, and this after the -2% dump yesterday.

  2. I hope it gets above 1670.
    I'm a little underwater with my longs.
    Somewhat I was a little bit greedy with "buying the dip" mentality :(
    if it goes below 1627 I'll be fully burned cause I'm not in etf's , I'm in futures now.
    bad choice, I know.... hope I'll be ok, safe and sound.


    1. S&P's are +13 this morning V. The CPC put/call is 1.30 so that should identify a relief bounce so you should be okay. CPCE not as convincing with a market bottom so the relief rally will likely be shorted.

    2. Thank you KS.
      Next time I promise to have a better risk-reward assessment.
      I risked a lot now.
      I should think twice next time (hope it will be a "next time" and the leverage won't eat me now).
      Thank you.



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