Keystone's Key Events and Market Movers Week of 3/5/12

© 2012 The Keystone Speculator™. All Rights Reserved. No part of this document may be copied although links to this site are encouraged.

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.

Summary for the New Trading Week Ahead:

The SPX has moved thru a 20 point sideways range, 1356-1376, for the last 11 days.  The tech sector, XLK, then Nasdaq 100 and Nasdaq Composite, then Dow Industrials, then SPX all have printed multi-year closing highs, but the small cap Russel 2000, RUT, has not.  Curiously, the RUT weakness in the Friday session had a lot of traders talking.  In a strong growth economy, small caps should be much stronger. For the new trading week, we find out if the broad indexes are rolling over, or, if they have additional fuel in the tank.

The previous post concerning the NYSE Circuit Breakers highlighted the strong negative indications that currently exist in the markets (read the red print in that message), so the items will not be repeated here.  Suffice it to say, stay on guard, the majority of the long traders in this market are complacent, without fear. Do not listen to any analyst or pundit in media waxing worry since the actual indicators show that the bulls simply expect the good times to last forever.  This lack of fear is a contrarian indication so the markets are ripe for a pull back. If you trade over a more relaxed time frame and avoid the day trading and hectic short term trading, Keybot the Quant, Keystone’s proprietary algorithm, motors along on the bullish side. Thus, simply watch the left margin, if/when Keybot flips short that would be an important market development.

Earnings continue with more second tier type companies this week.  Biotech, pharma and retail are prominent this week. RTH is important so watch the retail earnings carefully. For Monday, China legislative news may occur.  More importantly, Portugal 10-year yields are blowing out and this may become a major issue again before anyone expected.  In addition, Spain yields started to climb late day Friday placing concern on trader’s faces.  The Super Tuesday election results may effect Wednesday trading, keep an eye on the futures markets as the results come in Tuesday evening, especially to see if there are any effects on the dollar.

ADP Employment numbers on Wednesday are important since this number is used to fine tune the estimates for the Friday Jobs Report. Note how the excitement builds into the end of the week.  Finish your errands and family commitments early in the week since Thursday and Friday may develop into intense trading.  The fun will begin Thursday with China CPI data that will impact the dollar, euro, copper, commodities and the futures markets. Then the early morning fun with the BOE and ECB rate decisions. Quantitative easing will be front and center questions for each central banker. The ECB rhetoric will impact the euro; reference the asset relationship shown a few paragraphs lower depending on which way the euro goes. Jobless Claims will provide another ingredient for the market soup. These events occur before the U.S. opening bell rings and will set the tone for Thursday.

Then the fireworks start to explode on Friday with lots of Greece drama on tap.  At the same time, the U.S. Jobs Report hits at 8:30 AM EST and will show if recent improvements have staying power, or, if it was all a flash in the pan. Thus, hold on to your hat from Thursday morning into and thru the Friday morning trade.  By noon, traders may be hoping for an early happy hour. The stress may continue when they realize they will lose an hour of sleep on the weekend as Daylight Savings time begins.

High gasoline prices remain a worry and, referencing the March Seasonality, this is the time of year when gasoline prices move up due to winter to summer grade changes as well as scheduled maintenance. Folks need this like they need a hole in their heads because this seasonality will make it more difficult for prices to retreat.  However, any positive news from the Middle East will cause a large drop in oil since at least about $20 in premium is built into price currently, WTIC had pegged 110 while Brent was over 128.  Oil and the broad markets move together.  Thus, like copper, commodities, gold and silver, if the dollar strengthens this week, this should move oil and the SPX lower.

Continue watching AAPL since as AAPL goes, so goes the markets.  As Keystone points out with the Apple charts in recent days, the negative divergence is in place requiring a spank down for price.  As AAPL moves lower, so will the broad markets.  Keystone has been looking for a reversal in AAPL from 525-550, so this week will tell a lot.  The last three candlesticks on the daily chart show a doji, hanging man and doji again for Friday, all three pointing to a trend change, all that has to occur is one day of follow-thru to the down side to confirm the current highs as a temporary top, thus, Monday is key.

Watch the Nasdaq versus S&P 500 percentage moves in real-time. If the Nasdaq 100 and Nasdaq Composite start to lag the broad market, the SPX, that will show tech running out of gas and thus affect the broad markets negatively. Tech leads overall market direction. Traders enjoying the technology rally will likely take profits moving forward. A pull back in AAPL will negatively impact the tech sector, Nasdaq, and the broad markets, as well as the 90% of fund and money managers that own the stock.  Traders enjoyed the parabolic ride up in Apple, will everyone enjoy the ride down as much?

Market bulls have made serious gains in the broad markets in 2012, overtaking the moving average lines as well as other key levels indicating a return to secular bull markets.  The bulls are in good shape as long as they stay above SPX 1290 and NYA 7650. The dollar and euro dictate the markets, up dollar = down euro = down commodities, copper, gold, silver, oil = down markets and down dollar = up euro = up commodities, copper, gold, silver, oil = up markets.

Key Dates and Times for the Week and Month Ahead:

·         Monday, 3/5/12: The Europe debt crisis soap opera continues.  Portugal 10-year yields are blowing out indicating trouble brewing.  Late session Friday, the Spain 10-year yield started to move upwards again and requires close watching as the new week begins. This week gauge how much of the LTRO2 program is already priced into markets; by the look of last week’s action, a significant portion of LTRO2 appears to already be priced into the markets.  Congress in session, as well as continued political rhetoric is a market negative. Listen for any China news from the CPPCC and NPC, national legislative and advisory bodies.  The China CPI on Thursday is important.  China news impacts copper and commodities markets which in turn effects the broad markets. Factory Orders and ISM Non-Mfg Index 10 AM.  Earnings: ACUR, DPW, FTEK, NATR, NTRI, URBN, PAY.

·         Tuesday, 3/6/12: Super Tuesday Election Day. Earnings: ACAD, AEGR, AVAV, ALTH, DKS, FCTY, HDSN, MAKO, ONTY, P, SHFL, SYNM, MTN.

·         Wednesday, 3/7/12: Note the futures reaction, if any, to the Super Tuesday results. Mortgage Purchase Applications 7 AM. Challenger Job Report 7:30 AM.  ADP Employment Report 8:15 AM. Productivity and Costs 8:30 AM.  Oil Inventories 10:30 AM. Consumer Credit 3 PM.  Earnings: ACHC, AEO, AHS, BONT, BWS, CLDX, CIEN, CWTR, FTK, GERN, HRB, HOTT, HOV, KWR, MFB, MW, MYRG, NANX, OPTR, OXGN, PLL, PLCE, SQNM, SIGM.

·         Thursday, 3/8/12: China CPI. BOE and ECB Rate Decisions. Jobless Claims 8:30 AM. Natty Inventories 10:30 AM.  Fed Balance Sheet and Money Supply 4:30 PM.  Earnings: AONE, ACHN, ARO, AFFY, ALJ, ALTR, BKE, BQI, CECE, COO, CRTX, CYTX, DXGN, DYN, EPL, HEK, HITK, IDN, LUNA, MNTG, NGS, OREX, POWR, RENN, SFD, STP, ULTA, ESM, ZUMZ.

·         Friday, 3/9/12: Greece debt swap results.  International Trade and Jobs Report 8:30 AM. Wholesale Trade 10 AM.  Earnings: ANN, ARNA, BDSI, CHDX, DCTH, HIBB, OSIR, PPHM, PTEK, URRE, USCR.

·         Monday, 3/12/12: Euro Finance Ministers meet in Brussels. 3-Year Note Auction. Treasury Budget.

·         Tuesday, 3/13/12: IMF decides on its contribution to the Euro debt situation. Retail Sales. Business Inventories. 10-Year Note Auction. FOMC Meeting.

·         Wednesday, 3/14/12: Greece and its creditors are to sign the new lending agreement. Import and Export Prices. Chairman Bernanke speaks. Oil Inventories. 30-Year Bond Auction.

·         Friday, 3/16/12: Major Bradley Turn date so watch for a major market trend change in the window between 3/9/12 and 3/23/12, especially the 3/13/12 thru 3/21/12 area.  Interestingly, if you reference the previous post on March Seasonality, the OpEx week in March is typically a bullish week, up 85% of the time, and the FOMC meeting day this week is up three-fourths of the time. Simply monitor the market direction leading into and thru the week of 3/12/12. Perhaps any market move down over the coming days will then result in a broad market recovery as this 3/16/12 date approaches? Simply take it all hour to hour.

·         Tuesday, 3/20/12: Greece deadline for financing.

·         Friday, 3/30/12:  Informal meeting of EU finance ministers in Copenhagen. EOM.

·         Thursday, 6/28/12: EU Summit for heads of state in Brussels.