Keystone's Evening Nightcap 9/5/13; Monthly Jobs Report On Tap

Copper was up overnight last night so the bulls were happy then one hour in front of this morning's opening bell for the equity session, copper collapsed. So the bears were happy. After the opening bell, the retail sector explodes higher making for happy bulls again. The SPX jumped to 1658 and then faded as traders decide to wait for the Monthly Jobs Report in the morning, that now takes on historic, although also circus-like, significance. ADP Jobs Report released this morning is 176K jobs thus, sprinkling in a few more to project tomorrow, since this is the trend, results in a target of 180K to 200K jobs for 8:30 AM EST. The consensus is 175K jobs and for the unemployment rate to remain steady at 7.4%. The whisper number is 180K-200K. Markets stumbled sideways today awaiting the thumbs up or thumbs down tomorrow morning. Fed's Evans, a dove, speaks at 8 AM, one-half hour before the Jobs Report, and Fed's George, she is a hawk, speaks at 1:30 PM. Tailgaters are already arriving for this historic Superbowl-style Jobs Report now less than 12 hours away.

The Treasury yields are the big story today. The 10-year touches 3%, Germany's 10-year is at 2%, the 5-year moved above 1.80%. The 2-year touched 0.50% so that places the 2-10 spread at 250, remaining only 5 bips under Keystone's critical 255 spread number that would signal happy bankers. AAPL is near a golden cross (50-day MA moving up through the 200-day MA) but not yet. The golden and death crosses are not tradeable actions, simply view them as a reference, or milestone type indicator. A golden cross simply verifies that in the long run, the stock will move higher, and a death cross simply verifies that a stock will move lower as time moves along.

Markets printed the highs today at 10 AM when the ISM Services number was better than expected. This bolsters the tapering case so yields move higher and stocks stumble sideways. The TRIN prints another uber low number today so this now begs for a snap-back in the opposite direction (higher TRIN lower equities). Reference the TRIN chart and analysis previously posted. CPC and CPCE put/calls remain low showing complacency and creating an interesting market juncture. The low put/calls signal a market top. The SPX could not move above the 20-day MA at 1658.90 today so this resistance held and is a large feather in the bear's cap. The Jobs Report is the big enchilada and markets may gap up, or gap down, violently, tomorrow. The 3% on the 10-year yield adds to the drama.

Copper and retail dictate market direction right now. Watch JJC 39.93, now only pennies away on the bear side at 39.87, and RTH 53.74, now at 53.73, one single penny on the bear side. Interesting how Keybot identifies these numbers ahead of time. If JJC moves above 39.93 and/or RTH above 53.74, the bulls will finally start the upside party. If both remain bearish, down is the direction for equities. Keybot the Quant will likely flip long if either RTH or JJC turn bullish.  For the SPX starting at 1655, bulls win above 1659, bears win below 1653. A move through 1654-1658 is sideways action but considering this tight range, and the Jobs Report hours away, price is going to make a decision one way or the other. Keystone added to the ongoing JO, DNDN and SCO long positions today, which are long coffee, long biotech and short oil, respectively. Also bot TLT opening a new long position. The market tone will be set at 8:30 AM.