Keystone's Morning Wake-Up 10/29/12; Hurricane Sandy; U.S. Markets Closed

European trading is thin in response to the U.S. markets closure. Rajoy and Monti meet today. Spain continues to delay the bailout request but Italy wants the request to occur asap. The ECB bond-buying cannot begin until Spain requests the bailout.  Italy is looking out for its own interests since the bond-buying will help their debt situation, hence, they are encouraging Spain to forge ahead. The worries over Spain, light volume, as well as the hurricane, are creating global market negativity. Boiling down the charts and information since the Friday close, keep an eye on the following parameters to determine broad market direction moving forward;

• Watch the euro, $XEU, the 1.29 level; below and the equity bears are happy, above and the bulls are happy. 1.2880 signals market trouble deepening and 1.2830 signals significant market turmoil. The euro moves in the same direction as the equity markets, inverse to the dollar, $USD.
• Watch the 8 MA and 34 MA cross on the SPX 30-minute chart (reference the Turn Signal page on this site). The 8 is under the 34 right now, which is bearish for markets moving forward, but only by a hair.
• Watch RTH 44.47. The retail sector is bearish and shows signs of rolling over. The bears are happy with RTH under 44.47 since it causes broad market bearishness. Above 44.47 will make the bulls smile and create a recovery rally.
• Watch GTX 4895. The commodities sector is in the bear camp but only by a hair. Bears want GTX to remain under 4895 and head lower, bulls want GTX to move back above 4895 to create a recovery rally.
• Watch XLF 15.60. The financials sector is bullish currently, above this level, and contributing bullishly to markets. If the 15.60 fails, the bears will rule the markets with the SPX dropping well under 1400.
• When trading resumes, watch SPX 1403 and 1417. If the bears take out the uber strong 1403 support level, the markets will drop far lower.  The 1403 support is the Draghi put level (a floor of support for the broad indexes) where the OMT bond-buying program was announced; markets are in for a world of hurt should it fail.  The first stop lower would be in the 1371-1377 support zone. The bulls need to punch up thru 1417 which will create an upside acceleration thru 1419 and upward to test 1424 resistance. A move thru SPX 1404-1416 is sideways action. 

The euro is at 1.2911, slipping below 1.29 this morning, but recovering, now dancing across the psychological 1.29 level. The dollar is higher. S&P futures are down eight. The 10-year Treasury yield is at 1.73% well off the 1.80% and higher levels a week ago. A drop in yields reflects the rise in note and bond prices, as money drifts from the equity markets into perceived safety. Copper, a key global enconomic indicator, is dropping like a stone. Lots of excitement is ahead. Keep the car in the garage and instead prepare the canoe for service.

Note Added 10/29/12 at 8:33 AM:  Personal Income and Spending data is released as scheduled, albeit a minute late.  No great shakes to markets.  The euro is 1.2895. The 10-year yield is 1.72%. The S&P's futures are down 9.40, -0.67%.  The Nasdaq is down -0.88%. Tech is leading the broad markets lower which is bear-friendly. Futures markets will close in about 40 minutes at 9:15 AM EST and it is currently unknown when they will reopen (6 PM EST (5 PM CST) would be the targeted opening).

Note Added 10/29/12 at 9:22 AM:  Futures close with the S&P's at -5, Dow -60 and Nasdaq -15.  The 10-year yield is 1.71%.  The euro is 1.2900 not tipping its hand on which side of 1.29 it prefers.  Copper continues bleeding.  The waiting game begins.

U.S. Stock Trading Canceled Due to Hurricane Sandy 'Frankenstorm'

70-MPH winds and an eleven-foot anticipated storm surge, exacerbated by the full moon, causes the U.S. securities industries to cancel equity trading on all markets, obviously to try to keep folks out of harm's way. Conditions have to be taken hour by hour with the worst of it hitting from now thru this time tomorrow, specifically Monday afternoon, today, overnight, and into Tuesday, East Coast time. The hurricane should hit U.S. shores early Tuesday morning (overnight tonight). The shutdown should extend thru Tuesday; the situation can only be taken hour to hour.  All exchanges are suspending operations. These weather shutdowns are rare, the last one occurring for the blizzard of 1996 with a delayed opening and early close, and then back in 1985 with the Hurricane Gloria full market closure.

Several companies plan on delaying their earnings releases, probably for only a couple of days until trading resumes, but other companies, such as PFE, plan on releasing earnings as scheduled. The banks, such as GS and C, are closing their New York offices. New York buses, subways and trains are already shut down. Airline flights are canceled. The casino's are shutdown, including the largest casino on earth, the NYSE. Halloween is providing the trick this week and not the treat. S&P futures are off seven. The down-time early this week supplies valuable time to catch up and clear the mountain of paperwork off the desks.

Note Added 10/29/12 at 7:10 AM:  PFE is postponing their earnings release until Thursday. ETR will release earnings on 11/5/12.  NRG will release earnings on Friday. APC should release earnings today as scheduled.

Keystone's Key Events and Market Movers for Trading the Week of 10/29/12

Keystone presents the following underlying market currents, sometimes subtle, sometimes turbulent, that move global markets in real time.  The key dates and times below typically correspond to market pivot points.

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week: The U.S. Presidential election is now only 8 days away, one week (election day is 11/6/12), and the fiscal cliff is 64 days away, 9 weeks.  There is lots of Fed speak on tap this week to spin the attributes of QE3 Infinity.  The earnings will play a key role in trading this week especially F, PFE, X, CLX, GM, MA, V, K, XOM and CVX.  Consumer Confidence is key on Tuesday morning and will create a market pivot point. Likewise the ISM on Thursday morning then the Grand Daddy of all economic data, the Monthly Jobs Report, on Friday.  The European news flow directly dictates global market direction. The main market mover is wishy-washy Spain deciding on whether or not it will seek a bailout.  The bailout will likely be delayed until November and potentially a package deal for Spain, Greece and Cyprus is under development.  A Spain bailout request will bounce equity markets higher; the absence of a bailout request will allow markets to drift lower. The ECB’s bond-buying program cannot be unleashed unless Spain requests the bailout but Spain does not want to give up sovereignty by accepting conditionality.  The SPX 1403 level represents the Draghi put supporting the markets where the ECB’s OMT bond-buying program was announced. The next ECB meeting is Thursday, 11/8/12, two days after the U.S. presidential elections. Europe must cut rates to weaken the euro and help the continent grow out of the debt mess. A flight of deposits out of Greece, Spain and Italy is ongoing which may lead to bank runs.  Spain’s bad loan percentage is now over 10.5% and growing.  The European riots and violence is worrisome with events occurring in Greece, Portugal, Spain and France. The banking union is very important but European leaders do not appear to be making progress.  Merkel likely wants Greece to stay in the euro until her election next year.  Watch for further China easing measures such as lowering rates or triple R’s which will bounce copper, commodities and equity markets, but, do not hold your breath.  China appears hesitant to act since they correctly worry about the commodities inflation and asset bubbles that will be created (Chairman Bernanke incorrectly defends QE and says it does not create asset bubbles). Oil price should remain buoyant as the violence remains or escalates in the Middle East but overall, the weak global economy is driving the oil price lower.  California is getting hit with high gasoline cost due to refinery issues, pipeline problems and other issues. A possible SPR (Strategic Petroleum Reserve) release appears unlikely with WTIC at 90-ish.  A lower oil price will help President Obama’s reelection campaign but it is difficult to justify. Most importantly, the SPR will likely not be released because if the Iran sanctions continue to bite hard, Iran may do something stupid like block the Strait of Hormuz, which would violently spike the oil price skyward, and then the SPR would truly be needed.  The SPX moves in the same direction as oil.  U.S. trading volumes are increasing now that summer is over. Earnings season is in full force. Oil companies, energy, utilities, natty gas, nanotechnology, insurers, automobiles, and gold miners are a major focus this week. Many companies warned of lower Q3 earnings, the largest warnings in a few years, so the bar is sufficiently low so that even Grandma Edna can walk across in her orthopedic shoes. Even so, top line revenue numbers are missing and do not project good times ahead. In addition, major companies are canning workers which will help those stock prices short term but the ramifications to the economy over the intermediate and longer term are worrisome. The weak copper, utilities, transportation stocks, shipping sector and tech and semiconductor industries indicate a weak global economy. The weak behavior in the tech (COMPQ) and small cap (RUT) market leaders is signaling trouble ahead for the broad markets but last week tech and small caps did not lead the downside providing some hope for market bulls.  Watch AAPL closely moving forward since it has a huge impact on tech and the markets. As AAPL goes, so goes the markets.  The VIX continues to climb which will lead to large and wild intraday and daily swings in the equity markets.  Congress is on vacation until after the presidential election; markets are typically bullish when Congress is not in session but considering the seriousness of the impending fiscal cliff, Congress is creating market negativity on a continual basis moving forward. Keystone’s Eclipse Indicator targets this period from now thru the end of the year as having potential for a large market selloff, especially over the next three weeks and then the period between Thanksgiving and Christmas. A Bradley window is open from now thru 11/8/12, for a potential market trend change to occur, especially now thru next Monday. The markets could rally early in the week and set up a trend change to the downside as the week progresses and we move into next week, or, the bulls can come to play this week and the turn would be up to reverse the recent downward market slide. Therefore, the trading early in the week is important and will help forecast the potential trend change.

·         Sunday, 10/28/12: Finnish municipal elections. Hurricane Sandy, the ‘Frankenstorm’, will wreak havoc in Delaware, New Jersey, New York, Pennsylvania and the East Coast in general. The storm may affect trading at the New York Stock Exchange on Tuesday since extremely high winds and rain will be in full force.

·         Monday, 10/29/12: Italy bill auctions.  Rajoy (Spain) and Monti (Italy) meet. Personal Income and Outlays 8:30 AM (a fave indicator of the Fed). Dallas Fed Manufacturing Survey 10:30 AM. Monday’s are typically down days in recent weeks.  The full moon is tonight which will exacerbate the Hurricane Sandy storm surge. Markets are typically bullish about two-thirds of the time going into the full moon. Earnings: ALJ, APC, AUY, BIDU, BKW-burnt burgers?, BZ, CRUS, EDU, FLS, FMC-machinery indicates health of global economy, FST, GDI-a gauge for manufacturing and E&C industries, HW, HLF, HTZ-a flat tire?, IGTE, IRIS, KERX, LIFE, LMNX, MNKD, MTRX, MAS-important gauge for housing, NU, OCZ, OSG, PEIX, PAR, PCL, PRGX, TIE, TNH, VRTX, XCO.

·         Tuesday, 10/30/12: Italy bond auctions. Spain releases Q3 growth numbers. Troika review of Cyprus should occur before month-end. S&P Csae-Shiller House Price Index 9 AM. Consumer Confidence 10 AM—a market pivot point will occur. Fed’s Dudley speaks 12:30 PM. Fed’s Kocherlakota speaks 8 PM. Another FB lock-up ends so watch the price action. Earnings: ACPW, ADM, AGN-the Botox wrinkle biz, AMTD, AVP, BP, CAR, CBT, CAH, CVLT, DNDN, DB, DWA, EA, ETR, FIRE, FISV, F, FDP, GNW, GERN, JDSU, JCI, LLL, MASI, MIPS, NANO, NI, ODP-a gauge for business spending, OKE-natty divvy play, ONXX, PZZA, PNR, PFE, RDY, SIRI, STX, TLM, TARO, TRLG, TRW, UHS, VLO, WM, WMB, WTS, X, YNDX.

·         Wednesday, 10/31/12: Halloween—are the markets a trick or treat? EOM—monthly charts receive new prints.  Mortgage Purchase Applications 7 AM. Employment Cost Index 8:30 AM.  Treasury Refunding Announcement 9 AM.  Chicago PMI 9:45 AM. Oil Inventories 10:30 AM. Fed’s Williams speaks 12:45 PM. Farm Prices 3 PM. Earnings: ALL, AMT, BMC, BWA-autos, CACI, CZR, CCJ-uranium, CLX, EEP, EXC-ute, GRMN, GM, GLRE, HES, IRM, ITT, KEG, MA, MET, MGM, MUR, NANX, NICE, NRG, PVA, RDC, RL-retail, RGR-guns, SO-utes, SPW, SU, TSO, V, VRX.

·         Thursday, 11/1//12: Merkel and Kenny (Ireland) meet.  Fed’s Rosengren speaks. Motor Vehicle Sales. Chain Store Sales. Challenger Job-Cut Report 7:30 AM.  ADP Jobs Report 8:15 AM.  Productivity and Costs and Jobless Claims 8:30 AM. PMI Manufacturing Index 8:58 AM. Construction Spending and ISM Mfg Index 10 AM—expect a market pivot point. Natty Gas Inventories 10:30 AM. Fed’s Lockhart speaks 12:30 PM. Fed Balance Sheet and Money Supply 4:30 PM. Today is a Bradley turn date so a turn window remains open for a market trend change to occur anytime thru 11/8/12. This period matches up with Keystone’s Eclipse Indicator as described above. Earnings: APA, BYD, CBOE, CI, CKP, COR, CHK, GTLS, ELON, EIX-ute, EL, FICO, FLR-important gauge for E&C, GLUU, GDOT, IMMR, IRF, JOE, K, KEM, MCHX, MHK-a gauge for housing, NILE, NFG, NEM, NGD, OPTR, RAIL, RGLD, SAM, SBUX, SKUL-heavily shorted, SFY, SWKS, SWN, SEP, TE, TRMB, UPL, VNO-a REIT, WNR, XOM, YELP, ZAGG.

·         Friday, 11/2//12: Monster Employment Index. Monthly Jobs Report 8:30 AM-last report before the election, A 0.1 tick higher in the rate to 7.9% (7.8% is the current number which sparked controversy a la Jack Welch) will quiet the negative BLS conspiracy talk while remaining under 8% which helps President Obama’s reelection prospects. Do you think it will print 7.9%? Factory Orders 10 AM. Fed’s Williams speaks 2:25 PM. Earnings: ALU-telecom, ANR-coal, BEAM-trader’s may need a shot by the end of the week, CCC, CVX, CTB-rubber an important global bellwether, IT, WTR.

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·         Sunday, 11/4/12: G20 Finance Ministers meet in Mexico.

·         Tuesday, 11/6/12:  U.S. Presidential Election decides on Obama or Romney. Type ‘Presidential’ into the search box above to bring up the Presidential Election Stock Market Effects article that highlights the effects that either outcome will have on stocks.

·         Wednesday, 11/7/12: European Commission provides economic forecasts.

·         Thursday, 11/8/12: Spain bond auctions. ECB Rate Decision 7:45 AM EST and Press Conference 8:30 AM- if the rate is lowered the euro will weaken and weaken markets, if the ECB stays on hold, the euro will elevate and elevate commodities and equities. New China Premier Xi Jinping is officially selected and named Head of Party, but, where is he? The transition of China leadership begins with China holding the 18^th Party Congress.

·         Monday, 11/12/12: Ecofin Finance Ministers meet.

·         Tuesday, 11/13/12: Italy and Greece bill auctions.

·         Wednesday, 11/14/12: Italy bond auctions. EU announces carbon requirements-watch utilities and energy markets. Bradley turn date so a turn window opens for a market trend change to occur between 11/7/12 and 11/21/12. This period matches up with Keystone’s Eclipse Indicator.

·         Thursday, 11/15/12: European GDP reports.

·         Tuesday, 11/20/12: Spain bill auction.

·         Wednesday, 11/21/12: Spain bond auction.

·         Thursday, 11/22/12: EU Leaders Summit. Thanksgiving Day.

·         Friday, 11/23/12: Markets close early at 1 PM.

·         Sunday, 11/25/12: Catalonia regional elections.

·         Tuesday, 11/27/12: Spain bill auction and Italy bond auction.

·         Wednesday, 11/28/12: Italy bill auction.

·         Thursday, 11/29/12: Italy bond auction.

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·         Tuesday, 12/11/12: FOMC meeting begins.

·         Wednesday, 12/12/12: FOMC Rate Decision, Forecasts and Press Conference at 12:30 PM, 2 PM and 2:15 PM, respectively.  Expect market pivot points especially at 12:30 PM and after 2 PM.

·         Saturday, 12/22/12: Major Bradley turn date so a turn window opens for a significant market trend change to occur between 12/14/12 and 12/28/12. This period matches up with Keystone’s Eclipse Indicator.

·         Monday, 12/24/12: Christmas Eve. Markets close early at 1 PM.

·         Tuesday, 12/25/12: Christmas Day. Markets are closed.

·         Monday, 12/31/12: Last day of trading for 2012.

----------------------------  2013  ----------------------------------

·         Tuesday, 1/1/13: New Years Day. Markets are closed. ESM is officially up and operating.

·         Wednesday, 1/2/13: If Congress does not act, the U.S. drives off the “massive fiscal cliff” (a phrase coined by Chairman Bernanke in early 2012) that will cut the GDP, increase unemployment and immediately launch the country into recession, but, on the positive side, the nation’s debt will decrease. Chairman Bernanke stated that the Fed does not have the tools to help should the fiscal cliff occur.

·         In February or March:  New China Premier Xi Jinping is named Head of Government and takes control.

SPX Support, Resistance (S/R) and Moving Average Levels for Trading the Week of 10/29/12

The support, resistance (S/R), moving averages and other levels of interest are provided for the SPX for the new week of trading ahead. The SPX is moving inside of the 1403-1419 S/R gauntlet Keystone targeted last weekend. The 1403 level is very strong support, the 20-week MA and where the Draghi put was initiated on 9/6/12 with the ECB OMT bond-buying announcement.  The bulls must hold 1403, if not, bad things will happen to the markets.

If 1403 would fail, the 1391-1397 area provides the next level of support followed by 1385.  The bulls face strong resistance at 1419 so upside momo can be developed if this gives way. The 1424 R is next, then 1429, then the 1433-1435 resistance gauntlet.  Two of the most important gauges of bull markets versus bear markets are Keystone's 200 EMA on the 60-minute chart and of course the 50-day MA.  Both are at 1434.40 so consider this number uber important. If the bulls launch a rally this week and it has legs, the test of 1434.40 will be epic. Price will either run up thru and forecast strongly higher numbers likely into the 1440's and higher, or, price will be rejected at this critical 1434.40 level and collapse.

For Monday trading, starting at 1412, the bulls need to touch the 1417 handle and hold it a few minutes, if so, price will accelerate higher taking out the 1419 quickly and moving immediately higher to test 1424. The bears need to take out the 1403 support which will accelerate the downside immediately into the 1391-1397 support zone. A move thru 1404-1416 is sideways action.   

·        1479

·        1478 (12/31/07 gap fill needed: 1475.83-1478.49)

·        1476

·        1475 (9/14/12 Intraday HOD for 2012: 1474.51)

·        1472

·        1468

·        1466 (9/14/12 Closing High for 2012: 1465.77)

·        1465

·        1461

·        1460

·        1457

·        1453

·        1451

·        1447

·        1446

·        1444

·        1441

·        1440 (5/19/08 Intraday HOD for 2008: 1440.24)

·        1439.10 (20-day MA)

·        1438

·        1435

·        1434.40 (200 EMA on 60-Minute Chart a Keystone Turn Signal)

·        1434.39 (50-day MA)

·        1433

·        1432.71 (10-day MA)

·        1431

·        1429

·        1426 (5/19/08 Closing High for 2008: 1426.63)

·        1424

·        1422

·        1419

·        1417.09 Friday HOD

·        1416

·        1413

·        1411.94 Friday Close – Monday Starts Here

·        1409

·        1406 (5/29/08 HOD)

·        1404

·        1403.60 (20-week MA)

·        1403.28 Friday LOD

·        1403

·        1399

·        1397

·        1396.78 (100-day MA)

·        1394

·        1391

·        1389

·        1385

·        1384.67 (150-day MA; the Slope is a Keystone Cyclical Signal)

·        1379.55 (10-month MA)

·        1378

·        1377.11 (200-day MA)

·        1375

·        1371(5/2/11 Intraday HOD for 2011: 1370.58)

·        1370

·        1369

·        1366

·        1364 (4/29/11 Closing High for 2011: 1363.61)

·        1363

·        1362

·        1358.34 (12-month MA; a Keystone Cyclical Signal)

·        1358

·        1357

·        1355

·        1354.82 (50-week MA)

·        1351

·        1348