Sunday, November 24, 2013

Keystone's Weekend Reconnaissance 11/24/13

Thanksgiving week is typically bullish and the Friday after Thanksgiving is the most bullish day of the year. The EOM is Friday, a shortened session, markets close at 1 PM EST. Markets are closed all day Thursday in Observance of Thanksgiving. Thus, there is only 3-1/2 days of trading remaining in November that started at 1757. If the bears want to create a negative month they will need to be pushing equities lower tomorrow. The bulls begin with an advantage since UTIL is above 489.85. Keybot the Quant is bearish but may finally flip long tomorrow. If UTIL stays above 489.85, and the SPX moves above 1805, and stays above, Keybot will likely flip long.

The markets remain a coin-flip. The bulls need to keep the S&P futures positive overnight and this will set up a run to SPX 1810 for Monday and Keybot likely flipping long. The bears need to push the SPX under 1795 to accelerate the downside. A move through 1796-1804 is sideways action to begin the week. Bulls will benefit from higher utilities, copper and commodities. Bears will benefit from weaker utilities, semiconductors and financials, and higher volatility. The weekend charts are bearish in general and highlight price tops occurring across many individual stocks and sectors. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Negative divergence is developing or in place on the SPX minute, hourly and daily charts and should push equities lower beginning tomorrow or Tuesday. When a month is up strongly, like this month, the last couple days or so typically finish weak.

Pending Home Sales and Dallas Fed Mfg Survey are released at 10 AM so markets may take a little stutter step. The 2-Year Note Auction is 1 PM and worth monitoring since the 2-10 spread is very important these days. The 2-10 spread is the difference between the 2 and 10-year yields, in basis points, that indicates the steepness, or lack thereof, of the yield curve. Keystone uses a value of 255 and higher for the 2-10 spread to indicate happy bankers. Long traders are tripping over each other buying the financials believing they will lead the next leg of the markets higher, and they may, however, the 2-10 spread has not surpassed Keystone's magic 255 level sa yet and the banking charts are setting up with negative divergence. The 10-year yield is 2.74%. Thus, the jury is out on the bankers.

The next 3 days may be quite a wild ride despite the holiday week. Lower volume is expected and will help the bulls push the jello around the plate in favor of the market upside but if a negative news event or sour mood develops, the bears may develop some quick downside mojo. The SPX 20-day MA is 1775.32 and rising. Watch UTIL 489.85 and SPX 1805 and 1795 to determine market direction. S&P futures are +2 early Sunday evening. Copper is  higher. Oil is lower on the Iran deal. Dollar/yen 101.27.  Market bulls are running out of the gate, S&P's +4, now +5...must be optimism on Iran.....

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