Tuesday, November 26, 2013

Keystone's Morning Wake-Up 11/26/13; Consumer Confidence; HPQ

Keybot the Quant remains short. The bulls had the markets on a silver platter yesterday but fell short of firmly locking in further market upside. Today is another day and Keybot is in position to flip long. If the SPX moves above 1808, and stays above, Keybot will likely flip long. The algo is tracking UTIL 490.68 (now causing market bullishness), SOX 498.52 (now causing bullishness), VIX 13.90 (now causing bullishness) and JJC 39.80 (now causing bearishness). Hence, the bears need lower utilities and semiconductors and/or higher volatility while the bulls need higher copper, respectively. If all 4 parameters remain in their respective camps today, the markets will float along sideways. For the SPX starting at 1802, the bulls need 1808+ for an upside acceleration and the bears need to push under 1801 for a downside acceleration. A move through 1802-1807 is sideways action. S&P futures are currently flat as a newlywed's souffle. The market bulls have it on silver platter again today only needing SPX 1808+ to confirm continued market upside ahead.

Two huge data points hit this morning, Housing Starts and Consumer Confidence. These are market movers and a market pivot point will occur at 10 AM on the confidence data. The Starts teased 1 million in April but in the last 3 months are in the 800K's, so watch to see if the number is in the 800's, 900's or over one million. Other housing data is also on tap and the Richmond Fed Mfg Index. The 5-Year Note Auction is 1 PM. TIF earnings are a blowout and the stock pops +5%. The wealthy continue to have lots of money to spend since the Fed helps the rich folks by pumping the stock market higher. CBRL, DSW, TIVO and HPQ are all of interest as well. HPQ is after the bell.

The BOJ weakening the yen over the last month has provided the upside fuel for equities. Yesterday case in point. The weaker yen moves the dollar/yen currency pair higher to 101.70 giving the SPX the early session pop yesterday. Then, around the noon hour, dollar/yen drops (stronger yen) to 101.60, hence, the SPX leaks lower. Then, early afternoon, the dollar/yen rebounds to 101.70 (weaker yen), hence, the SPX moves higher to test the 1807-1808 highs again. Then the dollar/yen collapses to 101.45 (stronger yen) as the U.S. session heads into the closing bell and the SPX collapses to the flat line. How obvious is it that the Fed and BOJ are the markets? It is shameful and obscene the damage the central bankers are performing to markets which will be felt in time. If a war, terrorism, a pandemic, or other serious event occurs, however, markets will drop and the central bankers will never be blamed. This is how the game is played. Dollar/yen is trading at 101.44. Use this 101.45 as a pivot. In general, the stock market will move higher if the dollar/yen moves to 101.50, 101.55, 101.60 and higher. The stock market will move lower if the dollar/yen drops to 101.40, 101.35 and lower.

The VIX and SPX were both up yesterday so one of them was wrong; into the close the SPX faded. The 10-year yield is 2.72% ten basis points off the 2.82% high late last week. Copper is negativePay attention to the semiconductors today, SOX 498.52, and of course SPX 1808. The snow falls in Pennsylvania with a couple inches already on the ground.

Note Added 8:03 AM:  Housing Starts are cancelled until 12/18/13 citing the government slowdown. Conspiracy theorists will ponder that the numbers must have been bad. The dollar/yen leaks slightly lower to 101.40 so the U.S. index futures leak slightly lower.

Note Added 8:43 AM:  Dollar/yen climbs back above 101.45+ so futures move higher.

Note Added 9:32 AM:  Dollar/yen 101.59 so stocks move higher. Banzai!! Semi's up. Utilities dropping, whoopsies daisies, directly on top of the UTIL 490.64 bull-bear line in the sand (50-week MA). Bounce or die. The market bears will drive equities lower if UTIL 490.64 fails. Bears will maintain elevated markets if they hold UTIL 490.64.

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