The cool Autumn days of October are here, and also time for Keystone to enjoy some pumpkin pie. October is the notorious month that congers up images of market crashes and panic, leading to the Wall Street adage, "The October Effect." This effect is simply the perception that the market tends to do poorly in October. Notable dates include The Panic of 1907 occurring in October, "Black Thursday" on 10/24/29, "Black Monday" on 10/28/29, "Black Tuesday" on 10/30/29 and "Black Monday" on 10/19/87, where the Dow Industrials dropped 23% in one day!
Returning to the seasonality aspects, the broad markets are up about 0.2% for the month of October, flatish, nothing to write home about but definitely not a large negative number which would be assumed considering the crashes and bad connotations that come with October. September, last month, ended as an up month which is uncharacteristic since it is typically a very bad month for stocks. Traders, however, were complacent during September, loaded on the bull side and not worried, and that turned out to be the correct call although the markets leaked lower as the month finished.
Technology and biotechnology sectors typically do well in Q4 (October-November-December) but both sectors have already ran a long ways. Last year, the tech rally did not begin until December and then catapulted higher on AAPL earnings in mid-January--in Q1. The quarter, Q4, is typically up 4.3%. October is not typically a good month for small caps (RUT) stocks. Many traders try to position themselves in tech during September and October to take advantage of the seasonality. This year appears to be a crap shoot due to the weak economic conditions now circling the globe and the rally that already occurred. October is the last month of the weak May thru October trading season. The largest gains in the market (on the long side) are made between November and April. Again, this year is an outlier since the markets have rallied strongly the last three months due to QE.
Gold is typically buoyant from August thru October with the India and China holiday events and marriage seasons. Diamonds, however, are now gaining in popularity. The coming Diwali season (11/13/12) of lights in India typically marks a pull back for gold. Typically a peak in oil prices will occur in October. This would be in line with the ongoing gobal weakness now occurring but the Middle East and Northern African oil-producing regions are erupting in turmoil, which will resist the negative seasonality. Gasoline prices are usually at their lows in the fourth quarter. The SPX is typically up the final couple days of this month. The results from the back-to-school sales help to project the holiday season sales. Anecdotal back-to-school sales can project holiday sales. Look for any indication that stores are starting to announce sales early since that would signal difficulty in moving merchandise.
Typically, market buoyancy occurs early October as the new quarter begins, with new money being put to work. The ECB Rate Decision and Press Conference is 10/4/12. The Jobs Report is 10/5/12 this month. Columbus Day is 10/8/12 but markets remain open. A Bradley turn date occurs on 10/9/12 which identifies 10/2/12 thru 10/16/12 as a window for a market trend change. A Bradley window remains open as the month begins, from 10/1/12 thru 10/5/12, due to the 9/30/12 turn date. Therefore, the overlap of two windows, 10/2 thru 10/5 may make for some dramatic markets this month. Another Bradley turn date is 11/1/12 so a window will be open during the last few days of this month, 10/25/12 into 11/8/12, thru Halloween on 10/31/12. The new moon is 10/15/12 so military actions which may affect trading would typically occur at the darkest period 10/11 thru 10/17. The full moon is 10/29/12. Markets are typically bearish into the new moon, 10/12 and 10/15, and typically bullish into the full moon, 10/26 and 10/29. Keystone's Eclipse Indicator targets the period from 10/19/12 on for an increased liklihood of a major market sell off.
A Euro Summit occurs on 10/18/12 where markets will require answers concerning Spain, Greece as well as other headaches. Will Greece remain or exit from the euro? The discussions on a banking union will be key. OpEx week is the week of 10/15/12 so Monday would tend to be buoyant, also the period from a Tuesday low into a Wednesday high (10/16 into 10/17). OpEx Friday is 10/19/12 so markets will tend to move in the opposite direction of Friday come Monday, 10/22. The FOMC Rate Decision is 10/24/12. The final days of October tend to favor the bulls, 10/29 thru 10/31.
Sunday, September 30, 2012
Keystone's Key Events and Market Movers for Trading the Week of 10/1/12
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: Q3 ends and Q4 (October-November-December) begins. The U.S. Presidential election is now only 36 days away and the fiscal cliff is 92 days away. The ISM Manufacturing Index will jump start markets at 10 AM Monday. The tension will build all week long with presidential debates Wednesday evening, the ECB rate decision and press conference Thursday morning, Fed minutes that afternoon, and then the Jobs Report circus on Friday morning. The main market mover is wishy-washy Spain deciding on whether or not it will seek a bailout. 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. If Spain requests aid, the euro and markets will bounce higher but that pop will likely not have much oomph. If Spain says the bailout request will be delayed until late October, then the euro will drop and markets will sell off. The ECB meeting on Thursday will either result in no rate change, which will help create euro and broad market buoyancy, or, a rate cut, which will weaken the euro and the broad markets. Europe must move to a weaker euro to help the continent grow out of its mess. Bank runs and European riots remain a concern, which is increasing each day. The Spain and Portugal riots are active this weekend. The Greece talk is heating up again since they need approval of another tranche of aid but cannot agree on austerity plans. The European news flow directly dictates global market direction. Watch for further China easing measures such as lowering rates or triple R’s which will bounce equity markets. China, however, appears hesitant to act and is now enjoying Golden Week. The anti-American protests in the Middle East and Northern Africa continue. Oil price should remain buoyant as the violence remains or escalates but WTIC dropped under 90 last week, closing at 92. This says the global economic slowdown carries more weight than oil-field war worries. A possible SPR (Strategic Petroleum Reserve) release may occur which would help President Obama’s reelection campaign but it is difficult to justify if the global slowdown is actually sending prices lower. The SPX moves in the same direction as oil. U.S. trading volumes are slowly increasing now that summer is over. Pre-announcement confessional season is underway where companies are lowering Q3 estimates at an alarming rate, including notables such as FDX, INTC, NSC, and CAT. Lower earnings lead to lower stock prices. Weaker shipping and semiconductor industries indicate a weak global economy. Volatility, the VIX, typically bottoms in August and now sits at 5-year lows so watch this closely going forward; far higher volatility is expected. Larger intraday price swings will occur as the volatility moves higher. Traders are much too complacent now since they expect the markets to be supported by central banksters forever. The low CPC put/call ratio and low VIX signal uber complacency and that the broad indexes are placing a major market top right now and should experience a significant sell off in the near future. Interestingly, the smart trade may not be by the majority of traders that jumped in long upon the QE3 announcement, which are in fact underwater long trades now, but instead the handful of traders that expect a strong pull back first, in the coming days and weeks, October, where the ideal long buying time may actually occur. Congress goes back 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.
· Sunday, 9/30/12: Bradley turn date-a window is open for a potential market trend change between 9/24/12 and 10/5/12. Golden Week holiday celebration begins for China.
· Monday, 10/1/12: Today begins Q4 when tech and biotech sectors typically outperform, but they have already outperformed. Spain needs to provide clarity on the bailout, if they plan on asking for a bailout in the coming days the markets will bounce on the news, if Spain says they will delay the bailout, the markets will sell off. Watch for a potential downgrade of Spanish debt by Moody’s which would cause equity markets to sell off. Troika Report is due this month after continual delays; it is needed for leaders to make a decision with Greece. Monday’s are typically down days in recent weeks. A Bradley turn window remains open thru this Friday for a market trend change to occur. Interestingly, the next Bradley turn date is close behind at 10/9/12 which opens a window from 10/2/12 thru 10/16/12. Therefore, the Bradley windows overlap from Tuesday thru Friday this week which may create some wild market action. Europe and Germany PMI’s are released overnight into Monday morning. PMI Manufacturing Index 9 AM. Construction Spending and ISM Mfg Index 10 AM-markets will pivot, watch the energy sector. Chairman Bernanke speaks 12:30PM. Earnings: CALM, FGP.
· Tuesday, 10/2/12: Motor Vehicle Slaes. PVH Analyst Day. Earnings: MOS, XRTX.
· Wednesday, 10/3/12: Mortgage Purchase Applications 7 AM. ADP Employment Report 8:15 AM. ISM Non-Mfg Index 10 AM. Oil Inventories 10:30 AM. First of Three Presidential Debates; Obama v. Romney 9 PM EST. If Obama does best, gold will move higher and the coal sector will sell off. If Romney does best, gold will move lower and the coal sector will move higher. Earnings: FDO, MAR, MON.
· Thursday, 10/4/12: 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. Challenger Job Report 7:30 AM. Jobless Claims 8:30 AM. Factory Orders 10 AM. Natty Gas Inventories 10:30 AM. FOMC Minutes 2 PM—markets will pivot on the news. Treasury STRIPS 3 PM. Fed Balance Sheet and Money Supply 4:30 PM.
· Friday, 10/5//12: Monthly Jobs Report 8:30 AM-second to last report before the election and perhaps the most important economic data release of the entire year. The Fed’s QE3 program, the presidential election and the markets all hinge on the monthly jobs number. Futures will react wildly. Earnings: STZ.
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· Monday, 10/8/12: Euro zone Finance Ministers meeting-next tranche of aid for Greece is needed. ESM Inaugural Meeting. Columbus Day.
· Tuesday, 10/9/12: Bradley turn date so a turn window opens for a market trend change to occur between 10/2/12 and 10/16/12. Note the overlap with the 9/30/12 window. YUM earnings—an important proxy for China.
· Thursday, 10/11/12: First and Only Vice Presidential Debate; Biden v. Ryan 9 PM EST.
· Monday, 10/15/12: New moon.
· Tuesday, 10/16/12: Second of Three Presidential Debates; Obama v. Romney 9 PM EST.
· Thursday, 10/18/12: ECB/Euro Summit-banking union outline is expected and Merkel may avoid a decision on Greece’s aid until now? Will Greece exit the euro? A Greece decision is needed now or sooner. Will the banking union discussions go smoothly?
· Friday, 10/19/12: Keystone’s Eclipse Indicator targets the time period of 10/19/12 thru 12/20/12 as potential for a large market selloff especially October into early November, 10/19/12 thru 11/9/12, then the period between Thanksgiving and Christmas, 11/26 thru 12/28.
· Monday, 10/22/12: Third and Final Presidential Debate; Obama v. Romney 9 PM EST.
· Tuesday, 10/23/12: FOMC meeting begins. FB earnings and conference call.
· Wednesday, 10/24/12: FOMC Rate Decision 2:15 PM.
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· Thursday, 11/1/12: Bradley turn date so a turn window opens for a market trend change to occur between 10/25/12 and 11/8/12. This period matches up with Keystone’s Eclipse Indicator.
· Friday, 11/2/12: Monthly Jobs Report 8:30 AM-last report before the election, do you magically see a 7.9% or lower unemployment rate (under the 8 handle) perhaps helping President Obama?
· Tuesday, 11/6/12: U.S. Presidential election decides on Obama or Romney.
· Thursday, 11/8/12: 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 18th Party Congress.
· Wednesday, 11/14/12: 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.
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· Tuesday, 12/11/12: FOMC meeting begins. FB earnings and conference call.
· 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.
---------------------------- 2013 ----------------------------------
· Tuesday, 1/1/13: 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 30-Minute Chart 8 and 34 MA Cross Sideways Symmetrical Triangle
There is a beautiful symmetry with the price action currently, equally balanced within the support and resistance zones, delicately balanced on the 20-day MA, she will break tomorrow morning and one side will win and the other side lose. To determine the winner, watch to see if price moves above 1442 which is bull friendly (which is above the 20-day MA) breaking up and out of the triangle. Under 1440 is bear friendly since this is a collapse out the bottom of the triangle and keeps price under the 20-day MA. Watch the RSI shown above, over 50% and bulls celebrate, under and the bears will throw confetti. The strong 1447 R is very important for Monday. The price move from the pink channel either above 1450, or below 1430 will verify the winner. Of course watch the 8 and 34 MA cross since this will tell you who is winning for the hours and days ahead. Monday morning should be eventful. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
SPX Daily Chart Upwards-Sloping Channel Negative Divergence
The red lines over the last three or so days show a weak and bleak profile which wants to see lower prices. The RSI did not drop, however, it bounced from the 50% level which would have confirmed the bearishness. The bounce on Thursday may have been the result of the short green RSI line and perhaps price is ready to head lower to fulfill the weak and bleak indicators. If the RSI drops under 50% that will signal bearishness moving forward.
The 150-day MA slope which is one of Keystone's Ccylical Signals. See how the 150-day MA green line is sloping up across the entire chart? That positive slope shows that the bulls rule. If the 150-day MA slope flattens, then rolls negative (little blue rectangle), that will indicate big trouble for markets moving forward. The last three prints for the 150-day are 1376.24 on Wednesday, 1376.78 on Thursday and 1377.27 to end the day Friday. That is a 54 cent difference that decreases to a 49 cent difference. If the 150-day prints a lower number any day forward that tells you to man the life boats since the long boat is going down. Projection is for lower prices moving forward to satisfy the weak indicators, however, if price moves above the 20-day MA, further buoyancy in price may occur before price comes down to print the lower lows. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
SPX Weekly Chart Overbot Rising Wedge Negative Divergence
The black rising wedge is bearish. The red lines show negative divergence in place, bearish. The hype this summer with Draghi's tall talk and bond-buying plan, as well as Bernanke's QE3, prints the neon green lines for the indicators indicating some long and strong action. Therefore, price will likely want to come back up to print matching or higher highs as compared to the 1366 closing high and/or the intraday high at 1375 but this should result in universal negative divergence, both shorter term and longer term. Watch for a potential support test at the 10 EMA at 1423 and possibly the middle BB at 1377, then a move back up again, then roll over. The alternate is price bounces early this week and tests those high levels right away, then roll over. In any scenario, the chart says the upside is very limited from here and far lower prices should be expected for the weeks, and months, moving forward. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
SPX Monthly Chart Overbot Negative Divergence
The chart remains negatively diverged wanting to see an extended pull back for the broad indexes. The Fibonacci Sequence is counting down, each quantitative easing move resulting in less oomph, 13 months for QE1, 8 months for QE2, 5 months for Operation Twist and LTRO 1 and 2, and now 3 months for QE3. But, you know what that means, don't you? Time's up. The first three quantitative easing money pumps occurred as a result of the U.S. falling into a deflationary spiral and Bernanke, learning from the Great Depression and Japan over the last two decades, wants to avoid this at all costs, so he acted. QE3 is an oddball, the jawboning served to bounce markets from summertime forward and by the time the Fed got around to announcing the move, the markets had already rallied a long way. This market behavior flies in the face of the trend from the first three money pumps.
Therefore, we find out in the coming weeks if the QE3 move is priced in for the most part and if the markets will roll over and plead for QE4. Note how the volume steadily increased for the bull market rally 2003-2007 building strongly year after year. For the last three years, volume continues to fall, less and less remaining in the sandbox to play, each trader thinking they can easily exit markets faster than the other guy. Projection is for lower markets moving forward. Watch the 12 MA, now at 1345, like a hawk this month. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
SPX Support, Resistance (S/R) and Moving Average Levels for Trading the Week of 10/1/12
SPX support, resistance, moving averages and other levels of import are provided below. The 9/14/12 morning price spike, the day after the Bernanke bazooka, placed the intraday and closing highs for the year thus far at 1475 and 1466, respectively. The SPX closed under the 20-day MA at 1441.58 on Friday so this provides the bears with a small feather in their cap. Price may want to touch the underside of the 10-day MA at 1452 early in the new week of trading but this is out of the question as long as price stays under the 20-day MA.
For the SPX starting at 1441, the market bulls need to push up over 1447 to ignite an upside acceleration. The touch of 1447 will surely lead to the back test of the 10-day MA and a test of 1453 R. The bears need to push under 1436 to begin a downside acceleration. This move would immediately test the critical 200 EMA on the 60-minute chart at 1433-ish. Remember last week when price came down to test the 200 EMA at 1431-1433 and bounced strongly, the bulls stick-saving the markets and preventing severe failure. If 1431-1433 fails, the 1424 should occur in quick order, then a further move down to test the strong support guantlet at 1403-1419. The key level in that range is the 50-day MA at 1412. A move thru 1437-1446 is sideways action for Monday.
For Keystone's algorithm, Keybot the Quant, the buoyancy in utilities will likely position Keybot to want to flip to the long side at Monday's opening bell. One of the key elements the quant is watching is SPX 1447. If 1447 and higher prints, Keybot will likely flip to the long side, if the SPX stays under 1447, Keybot will likely remain short.
For Keystone's algorithm, Keybot the Quant, the buoyancy in utilities will likely position Keybot to want to flip to the long side at Monday's opening bell. One of the key elements the quant is watching is SPX 1447. If 1447 and higher prints, Keybot will likely flip to the long side, if the SPX stays under 1447, Keybot will likely remain short.
· 1489
· 1485
· 1481
· 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
· 1452.16 (10-day MA)
· 1447.13 Friday HOD
· 1447
· 1444
· 1441.58 (20-day MA)
· 1441
· 1440.67 Friday Close – Monday Starts Here
· 1440 (5/19/08 Intraday HOD for 2008: 1440.24)
· 1438
· 1435.60 Friday LOD
· 1435
· 1433.28 (200 EMA on 60-Minute Chart a Keystone Turn Signal)
· 1433
· 1431
· 1429
· 1427 (5/19/08 Closing High for 2008: 1426.63)
· 1424
· 1422
· 1419
· 1416
· 1413
· 1412.09 (50-day MA)
· 1409
· 1406 (5/29/08 HOD)
· 1404
· 1403
· 1399
· 1394
· 1391
· 1389
Saturday, September 29, 2012
Keystone's Trading Week in Review and Path Ahead 9/29/12
On 9/21/12, Friday, news that a Spain bailout is near agreement launches the euro above 1.30 and the futures markets move higher. Rajoy (Spain) and Monti (Italy) meet today. Negative news concerning Greece is ignored by markets. An Italian official says that Spain and Italy will not request bailouts unless the bond yields blowout again but markets ignore this negative news as well. Today is Quadruple Witching OpEx. Markets jump higher after the opening bell and then slowly leak lower the entire day into the close. Keystone’s SPX 30-minute chart shows the 8 MA piercing up thru the 34 MA at 9:30 AM EST indicating bullish markets for the hours and days ahead. Apple’s iPhone5 is available for sale helping keep the tech sector buoyant today. Early complaints with the iPhone5 are that the aluminum scratches easily, the mapping capabilities are poor, since Google maps was discontinued, and the screen size which remains not as large as the Droid screens. Appleonians say the Apple screen is elegant and slips into a pocket easier while Droid lovers say bigger is better. The less-wide screen is clearly disappointing some of the Apple faithful but the long and short of it is that all these Smartphones are the same. At about 10:30 AM, the Troika says the Spain bailout may be delayed. Gold immediately takes a strong drop lower but remains up on the day. Lots of continual mixed signals and confusion are occurring out of Europe. Germany’s Schauble says that Spain does not need a bailout, they are doing the right things with austerity and will be successful. EU officials say that Spain will likely not request a bailout until the election in Spain’s Galicia region on 10/21/12 occurs. This neuters the ECB bond-buying plan since the country must ask for help first (and be subject to conditionality) before the Draghi bazooka can be fired. The markets are moving on Spain news, up on news that a Spain bailout is coming anytime, and down on news that the Spain bailout is to be delayed. The broad indexes were flat on the week taking a rest from the central banker pumping this month. Companies are lowering earnings forecasts for Q3 at an alarming rate, the largest amount of confessionals since 2006. Lower earnings means lower stock prices. The violence against America grows across the Northern African continent and across the Middle East but citizens in Libya demonstrate in favor of America and attack the radical fractions within Libya causing the anarchy and destruction. Despite the global tensions, WTIC oil dropped from near 100 down to a 90 handle this week, closing at 93, showing that the global slowdown is carrying more weight than the tensions caused by radical terrorists across the oil-producing regions.
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On 9/23, Sunday, in China, over 2,000 people are involved in a fight and riot at Foxconn factory dormitories, 40 are injured. 5,000 police were required to restore order. Foxconn manufacturers AAPL’s popular iPad’s and iPhone’s, as well as components for DELL and HPQ, and has seen recent trouble with employees sadly committing suicide, jumping from windows, due to the long stressful hours. Hollande (France) and Merkel (Germany) disagree on banking union details. France wants the union formed asap but Gemany says it is better to take it slow. The futures markets sell off on the news. Copper falls over 1%.
On 9/24/12, Monday, German business confidence drops for five months in a row. The euro moves lower to test 1.2900. Gold, silver, copper, aluminum, etc… are all weak and the lower futures carry into the U.S. opening bell. Luxury car sellers are seeing slower sales moving forward. Foxconn closes a factory unit due to yesterday’s rioting which may impact AAPL, DELL and/or HPQ. Keystone’s SPX 30-minute chart shows the 8 MA piercing down thru the 34 MA at 10:00 AM EST indicating bearish markets for the hours and days ahead.
On 9/25/12, Tuesday, Germany says the slowdown is getting worse. Draghi and Merkel say that Spain is dragging its feet in asking for a bailout. European auto manufacturers are weak. CAT, a bellwether of the global economy since it is the World’s largest construction and mining equipment manufacturer, lowers its outlook moving forward expecting anemic growth thru 2015 and citing a weak global economy. Italy’s central banker Saccomanni says that stable spreads are important and Spain’s bailout is a large gamble since accepting conditionality will be difficult. The futures are flat, gold flat, and the euro continues to tease 1.29 at 6 AM EST. In the afternoon, the Fed’s Plosser says that QE3 will not spur growth. At the same time, television screens show footage from the Spain riots. The violence rattles markets as rubber bullets are shot into the rioting crowds. Piling on late day, the homebuilders are downgraded. Markets rapidly sell off during the afternoon into the closing bell. The SPX is down 15 points, -1.1%, to 1442. The Dow Industrials lose 101 points, -0.8%, to 13458. The Nasdaq loses 43 points, -1.4%, to 3118.
On 9/26/12, Wednesday, Yom Kippur holiday. The global automobile industry is weak. Copper and platinum drop. The euro falls under 1.29. A strike occurs in Greece with 50,000 people taking to the streets. Tear gas is fired; a tree is set ablaze next to the parliament building. There is simply no money available for Greece to pay their bills and at the same time more austerity is needed. In Spain, Rajoy is in no rush to commit to the bailout so markets are in a negative mood. The Catalonia region of Spain actually wants to succeed. Rajoy says time is available since borrowing costs have come down but the yields calmed due to the ECB’s jawboning and bond-buying program which was based on Spain asking for the bailout right away. The politico’s have created a circular argument. Spain is balking on the conditionality but talks are occurring behind the scenes between the ECB and Spain to work things out. The Spain 10-year yield moves over 6%. Markets gave up waiting for Spain’s bailout, the broad indexes drop at the open, and remain weak all day long, losing about one-half percent across the board. WTIC oil moves under 90. Gold sells off strongly dropping to 1736 but recovers ending at 1756.
On 9/27/12, Thursday, China economic data is weak but the slowdown may force Beijing to act with stimulus so the whacky markets actually move higher on bad news with commodities, copper and equities markets jumping higher. German unemployment increases for six months in a row. VW say some automakers will go bankrupt if they do not receive government help. Protests continue in Madrid. The U.S. economic data is weak with GDP at a paltry 1.3% (in a regular recovery the GDP should be from two to five times higher). FDX and UPS say there is a drop in revenue per package delivered this year. The Dow Transportation Average is weak for many weeks failing to confirm the market rally as per Dow Theory. Fidelity’s fixed-income assets overtake equities for the first time ever. The central bankers can create all the money they want but their actions are pushing on a string. Since folks and businesses do not want loans, and the banksters are employing strict lending standards anyway, there is no velocity of money, which stifles the concept of quantitative easing and is why QE is not working. The euro is at 1.2854. The 10-year Treasury note is 1.62%. The markets open and jump higher on the China stimulus rumors that now what seems to be every few days. The SPX moves across the 1440 level.
On Thursday, in the 10 AM EST hour, Spain releases details on their budget plan but most of the information was already leaked and expected. The markets continue sideways with notable signs of weakness occurring. The euro drops to 128.30, an important bull-bear S/R level that projects strong market selling ahead if it fails. The XLF (financials) and RTH (retail sector) drop under their 20-day MA’s. The Spain yields are moving higher. Clearly, the broad indexes are starting to roll over, perhaps dramatically so. But, in the 11 AM EST hour, volatility starts to plummet (bullish). The euro comes down to test the critical 128.30 and immediately catapults higher, back up thru 128.50 and up thru the 129. The higher euro slaps the dollar so commodities, gold, copper and equities all catapult higher. Gold is up 25 bucks. The broad indexes experience a wild upside orgy, the SPX moves from 1440 to 1447 in a heartbeat, then up to 1450. Trader’s ask, ‘what happened?’. The Spain budget news was of no real import and in fact Spain continues to play games with the bailout request. The conspiracy theorists will have a field day with today’s market bounce since a benevolent hand appears to reach down and lift the markets just as the indexes were rolling over. Perhaps the PPT (Plunge Protection Team) was on the job today? Keystone’s SPX 30-minute chart shows the 8 MA piercing up thru the 34 MA at 2:00 PM EST indicating bullish markets for the hours and days ahead. The SPX closes up 13 points to 1447 but remains down on the week overall. Gold is at 1780. WTIC oil prints above 92 after being under 90 yesterday. Brent is 113. Natty gas prints a high for 2012 at 3.32, the highest number in about one year’s time.
On 9/28/12, Friday, Japan economic data is weak showing a continued funk in this demographically-challenged country. Today ends September and Q3; EOM, EOQ3. Futures drift lower into the U.S. open. The Spain 10-year yield moves above 6% again. The Chicago PMI drops under 50 for the first time in three years. Markets sell off at the opening bell. Keystone’s SPX 30-minute chart shows the 8 MA stabbing down thru the 34 MA at 12:30 PM EST indicating bearish markets for the hours and days ahead. The Spain stress tests are in line with estimates, seven banks have needs and seven do not. The euro pops and markets float upwards after the news but fade into the close. Keystone’s SPX 30-minute chart shows the 8 MA piercing up thru the 34 MA at 1:30 PM EST indicating bullish markets for the hours and days ahead. For the week, the SPX loses -1.3%. The Nasdaq loses -2%. The Dow Industrials -1.1%. The small cap RUT is down -2.1%. The SPX is exploring the same levels that were in place when the Fed announced QE3 twelve days ago.
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On 9/30/12, Sunday, China’s Golden Week holiday celebration begins.
On 10/1/12, Monday, markets will be listening for a potential Moody’s downgrade of Spanish debt. Troika Report on Greece is due this month (this is needed for leaders to make a decision on Greece) and has been continual delayed since the original due date in early September. ISM Manufacturing Index-watch the energy markets.
On 10/2/12, Tuesday, Motor vehicle sales.
On 10/3/12, Wednesday, ADP Employment Report. ISM Non-Mfg Index. First of three Presidential Debates Obama v. Romney.
On 10/4/12, Thursday, ECB Rate Decision and Press Conference—euro will drop if rates are lowered. Jobless Claims. Factory Orders. FOMC Minutes.
On 10/5/12, Friday, Monthly Jobs Report—second to last report before election but considering the Fed’s QE3 to help employment, this number is the most important data point in the markets here on out each month moving forward into and thru 2013. This report today is the most important economic data release for the whole entire year since the Novermber report is only three days in front of the presidential election, released in the middle of what will likely be a lot of commotion and last minute political antics, so that jobs report may be easier to sweep under the rug. Consumer Credit.
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On 10/8/12, Monday, Columbus Day. Eurozone Finance Ministers meet to discuss Greece aid. ESM Inaugural Meeting.
On 10/11/12, Thursday, first and only Vice Presidential Debate Biden v. Ryan.
On 10/12/12, Friday, Consumer Sentiment.
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On 10/16/12, Tuesday, second of three Presidential Debates Obama v. Romney.
On 10/17/12, Wednesday, Housing Starts.
On 10/18/12, Thursday, ECB/Euro Summit (Merkel may avoid a decision on Greece until now? Will Greece exit the euro? Is the banking union outline acceptable?)
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On 10/22/12, Monday, third and final Presidential Debate Obama v. Romney.
On 10/24/12, Wednesday, FOMC Rate Decision.
On 10/26/12, Friday, Consumer Sentiment.
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On 10/30/12, Tuesday, Consumer Confidence.
On 10/31/12, Wednesday, Halloween. EOM.
On 11/2/12, Friday, Monthly Jobs Report—last report before the election.
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On 11/6/12, Tuesday, U.S. Presidential Election Obama v. Romney, the result will be known in the evening from 9 PM thru 12 PM EST.
On 11/8/12, Thursday, the new China Premier Xi Jinping is officially selected and named the Head of Party, but, where is he? The transition of China leadership begins with China holding the 18th Party Congress.
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On 1/1/13, Tuesday, ESM is officially up and operating.
On 1/2/13, Wednesday, if Congress does not act, the U.S. hits 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. Bernanke states on 9/13/12 that the Fed does not have tools to handle the fiscal cliff, should it occur.
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In February or March, new China Premier Xi Jinping is named Head of Government and takes over complete control.
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