Wednesday, January 15, 2014

Keystone's Evening Nightcap 1/15/14; CPI; Philly Fed; Chairman Bernanke Speaks

The SPX prints new all-time highs. Volume was robust. Traders continue tripping over each other for fear of missing out on the never-ending upside party fueled by Fed and BOJ booze. CPI and Jobless Claims are on tap in the morning, also TIC data. Fed's Williams speaks at 9:15 AM so he can cheer lead the stock market right before the opening bell, kind of like the pep rally before the big high school football game. Philly Fed Mfg Index and Housing Market Index hit at 10 AM and will create a market pivot point. The Beige Book commented on encouraging manufacturing, and the Empire State data today was stronger than expected, thus, the Philly Fed should verify this stronger manufacturing trend, or not.

Chairman Bernanke speaks at 11:10 AM and will not be heard in public much anymore. He just crossed out the number 16 on a chart taped to the back of his office door. 16 more days remaining until he hands the keys over to future Fed Chair Yellen. BLK, GS and C earnings will set the tone. GS jumped 1.2% and C 1.9% today as traders are giddy trying to front run the anticipated morning orgy. So all the excitement tomorrow is weighted in the morning. AXP earnings are important after the closing bell. The CPCE put/call ratio prints 0.48 this evening. Last evening the low CPC put/call ratio was highlighted (see that chart for further study) as it has been the last two months. Traders are extremely complacent and completely lack any fear of market downside occurring. This is evident yesterday and today as everyone proclaims that the coast is clear and the good times are ahead again. Ma and Pa Kettle heard the bullish talk on television and just took their entire life savings and put it all in the stock market. The uber multi-year low put/calls signal a significant market top at hand.

Keybot the Quant remains short. Watch RTH 60.03, UTIL 494.10, JJC 40.42 and VIX 13.87. Bulls need stronger retail and utilities to verify the market upside. Bears need lower copper and higher volatility to get back on track. If either RTH moves above 60.03 or UTIL moves above 494.10, and the SPX moves above 1851, and stays above, Keybot will likely flip long. For the SPX starting at 1848, the bulls need to touch the 1851 handle and that will ignite the upside. The bears need to push under 1841 to regain their mojo. A move through 1842-1850 is sideways action. Watch the all-time high at 1850.84. Watch volatility since oddly, with such a robust up market day, the VIX held stone-cold flat. At the opening bell, use RTH 60.03 as the main guide for market direction. The full wolf moon occurs in the hours ahead. Will the bulls or the bears be howling come morning?

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