Sunday, December 15, 2013

Keystone's Weekend Reconnaissance 12/15/13; Flash PMI's; Industrial Production

The week begins with global PMI Flash data that will provide a read on manufacturing strength, or lack thereof. This will set the market tone and effect copper and commodity trading. Empire State Mfg Survey and Productivity and Costs are released at 8:30 AM. TIC data, which shows foreign investment interest in the U.S., is released at 9 AM. Is China and others continuing to buy U.S. paper? Industrial Production is 9:15 AM and provides a last minute adjustment to traders' attitudes before the opening bell. The big event this week is the Fed rate decision and Chairman Bernanke's press conference on Wednesday afternoon where he will don a Shakespearean outfit with puffy pantaloons, extending his arm high palming a human skull, pondering, "To taper or not to taper, that is the question?"

Housing Starts on Wednesday morning are the most important data this week. GDP and Quadruple Witching OpEx is Friday. A full moon occurs Tuesday and markets are typically bullish through the full moon. During OpEx week, markets are typically bullish from a Tuesday low to a Wednesday high so a down Monday and perhaps weakness into Tuesday morning would be a buying opportunity for a quickie long trade into Wednesday. For these Fed meeting weeks, equities tend to settle into a sideways pattern the day or two ahead of time so the trade may be boring until the fireworks on Wednesday.

Watch UTIL 473.37, XLF 20.98 and SOX 503.25. All 3 are causing bullishness to begin the new week of trading; bears need to move any one or more into the bear camp to continue the downside party. Watch GTX 4808 and VIX 14.04. Both are causing bearishness; bulls need to move either one into the bull camp to create a buy-the-dip environment and market rally moving forward. If all 5 parameters remain in their respective camps, equities will stagger sideways, sipping the Fed's booze and holding onto lampposts. For the SPX, starting at 1775, the bulls need to touch the 1781 handle and a move up through the strong 1781-1783 resistance will occur sending price higher for a back kiss of the 20-day MA at 1793-1796. The bears need to push under the uber strong 1772 support, and 10 or 20 handles lower for the SPX are likely a given, and in quick order. The 50-day MA is 1761.74. A move through 1773-1780 is sideways action for Monday. Key S/R is 1814, 1808, 1803, 1798-1799, 1796, 1791, 1788, 1782, 1775, 1772, 1763, 1745, 1733 and 1722.

The SPX is under the 200 EMA at 1782.65 on the 60-minute chart signaling bearish markets ahead. Ditto the 8 MA under the 34 MA on the 30-minute chart. Reference this morning's charts. In addition, the VIX is above the 200-day MA at 14.34, another very bearish market signal. So monitor these three stooges to see if they remain bearish, or not. Say hello to a veteran on Monday to commemorate the Battle of the Bulge which occurred toward the end of WW II 69 years ago, and no, for you younger folks, the battle of the bulge is not a reference to a weight-loss program.

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