Thursday, December 5, 2013

Keystone's Evening Nightcap 12/5/13; Monthly Jobs Report; Consumer Sentiment

Friday is the big decision day. Will it live up to all the hype? Probably not. The consensus nowadays is that yields are heading higher with the 10-year yield to 3% and higher with stocks selling off; this is due to the QE tapering beginning sooner rather than later. The 10-year yield is up to 2.87% in recent days. The TNX chart from a few days ago had the door open to 2.8%-2.9% but favored a sideways move forward rather than yield busting up through 3% and higher. This hints that the job number would be in line with the consensus at 180K jobs and 7.2% rate and yields would be relatively well behaved. Traders are getting antsy ahead of the number expecting a blowout 200K+ number since ADP was 215K jobs. A number over 200K will send yields higher and stocks lower. When the hype is this big, the move is typically muted.

Of great interest is the 2-10 yield spread now in the 255-ish area; Keystone's signal number that turns sad banks into happy banks. Traders are piling into financial stocks since everyone believes yields will continue higher non-stop, perhaps to 4% before they even take a breather. This steepens the yield curve which is a money-making machine for the banksters. If yields move higher, the 2-10 spread will move above 255 and provide a big feather for the bulls caps. The financial charts are negatively diverged, in general, saying down is the direction for bank stocks, which means yields should remain tame and not explode higher, so the stakes tomorrow are high. If yields move higher, and banks receive the positive nod due to the steepening yield curve above a 255 2-10 spread, the Volcker rule may stab the banks instead since new rules will limit the hedging strategies available for these large investment banks, thus knee-capping them from that angle. 

Personal Income and Outlays are very important and hit at 8:30 AM along with the Jobs Report. Consumer Sentiment will cause a market pivot point at 9:55 AM. Fed's Plosser speaks at 10:15 AM and Evans at 3 PM to pump the stock market higher. Consumer Credit is 3 PM. It is very odd to start a month with 4 down days so seasonality would point to an up day ahead.

Utilities sank today but could not push down through the UTIL 482.94 trap-door as yet. Bears need either UTIL 482.94, GTX 4809 and/or XLF 20.90. Any one will create market weakness. If yields pop, utes will drop, and UTIL will fail the 483 level and likely usher in a 20-handle or more drop in the SPX. The bulls need UTIL 491.25 and/or JJC 39.67. If 1 of these 2 turn bullish, and SPX moves above 1793, and stays above, Keybot the Quant will likely flip long. For the SPX starting at 1785, the bulls need to push above 1793 and the path to 1800 will occur. The bears need to push under 1783 which would accelerate a move lower to test the important 200 EMA on the 60-minute chart at 1777.73, where price will either bounce, or die. Markets will be in big trouble under 1778 and/or UTIL 483. Bulls will be happy if they push price back above the 20-day MA at 1789.08.

Key S/R is 1814, 1807-1808, 1803, 1800.58 (last week's low), 1798-1799, 1796, 1791, 1789.08 (20-day MA), 1788, 1782, 1777.73 (200 EMA on the 60-minute), 1775, 1772, 1763, 1749.55 (50-day MA), 1745 and 1733.

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