Thursday, November 14, 2013

Keystone's Morning Wake-Up 11/14/13; WMT; Future Fed Chair Yellen Speaks

CSCO soiled the bed last evening. CEO Chambers paints a gloomy picture in global markets especially emerging markets. GDP's and sentiment are dropping. Other nations are looking for the U.S. to grow to pull everyone else out of the mud but are dismayed at the Washington, D.C. political clown antics. Tech and the Nasdaq may be challenged on the Cisco news today. CSCO is -12% pre-market. Watch related stocks such as JNPR as well as the chip sector, $SOX and SMH (reference this morning's chart). WMT beat on the bottom line EPS a short time ago but fell far short on top line revenue and guides lower. The sales are not there. WMT is -1.5% pre-market. The big news over the last 20 hours is the Yellen dovish rally orgy that has cascaded around the globe. This morning's SPX 10-minute chart highlights the market action where the privileged traders received the Yellen dove comments ahead of everyone else yesterday and benefited in the afternoon run-up. S&P futures are +2 set for a slightly higher open, however, the S&P's were +6 a short while ago.

The Yellen pop creates a weaker dollar and provides a lift to gold and silver. Overnight, the yen weakened with the dollar/yen tagging the one hundo mark for the first time in 2 months. A weaker dollar creates a stronger euro. A weaker yen creates a stronger euro. Exactly what Europe does not need or want. Germany's data is weak this morning and France's economy is actually contracting. Europe is potentially slipping into a Japan-style deflation. All the central banker intervention is coming to a head these days. Push on one side of the balloon and the other side juts out; everything is interconnected. The low CPC and CPCE put/call ratio's continue to signal a significant market top at hand. Yes, this forecast remains, and must be respected until clarity is provided. These are very special markets these days.

The SPX prints a new all-time intraday and closing high at 1782.00. Any smidge of green in the futures will continue the upside fun into the mid and upper 1780's and this appears likely at this juncture. The bull flag on the 30-minute chart this morning targets 1782-1787. Price has bounced twice off the 20-day MA now at 1759.57. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Key SPX support below is 1782, 1775, 1772, 1763, 1759, 1752 and 1745. Keybot the Quant remains short in the midst of this very odd market behavior. The algo is now 36 SPX handles detached from its entry on the short side at 1746; this magnitude of divergence has never appeared with the algo before. Something has to give and in quick order; either Keybot will flip long and take the loss, or, the markets will reverse and head lower allowing the algo to continue on the short side. It is very interesting. Bulls need utilities, copper and/or commodities to move higher to confirm the equity upside direction, however, copper collapsed yesterday, and has turned negative for today about one hour ago, and yields are flat to up which should not help utes. It is a head-scratcher.

The market bears need lower financials and/or higher volatility to begin the market selling. Watch UTIL 508.47, JJC 40.04, XLF 20.47 and VIX 14.10.  Future Fed Chair Yellen is on tap today at 10 AM and her words will move markets. International Trade, Jobless Claims and Productivity and Costs are all released shortly, at 8:30 AM. Fed's Plosser provides comments at 9 AM. Natty Gas Inventories are 10:30 AM and Oil Inventories are 11 AM delayed one day due to the Monday Veteran's Day holiday. The 30-Year Bond Auction is 1 PM. Utes, copper, financials or volatility must make a decision so market direction can be verified. Keystone took profits on the NUAN long trade exiting the position. NUAN should have plenty more upside especially if Carl Icahn pumps the stock talking his book. Will look to reenter. 
The beat goes on.

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