Keystone's Evening Nightcap 9/9/13

Copper (JJC 39.96) lead the markets higher. Sunday evening told the story. Retail (RTH 53.74) jumped at the opening bell so the rally was in full gear.  The SPX 1665 held until the Syria positive news pushed markets through the 50-day MA at 1666.68 (watch to see if price can hold the 50 tomorrow). The Syria rally today pushed the SPX up through 1665 (remember the 1640-1665 range from Friday) creating an upside acceleration. The thrust was created on news that Syria may work with Russia and the international community to account for its chemical weapons. So the politicians are able to kick the can down the road and avoid a Syria strike. The markets rally, and more folks will continue dying in Syria, but everyone is back slapping each other all afternoon anyway. Markets do not like indecision and may realize in the coming days that the Syria problem will only continue and fester.

Copper, retail and financials are the market drivers right now. XLF 19.94 is the key parameter for Tuesday and will provide the thumbs up or down for markets at the opening bell. XLF is 20.03 creating bullishness in the markets moving forward unless the bears can push XLF under 19.94, so XLF will indicate market direction from the get-go.  Also watch RTH 53.74 and JJC 39.96, both are causing bullishness, the bears need to move one or both under the levels shown to create market downside. The bulls need the utilities sector to move higher to provide more equity upside. Keybot the Quant is long now but a move back to the short side would be anticipated as the week plays out. For the SPX starting at 1672, bulls only need one positive point, so watch the overnight S&P futures, and the rally will accelerate after the opening bell. Bears are trying to stop the thrust higher by pushing financials, retail and/or copper lower.

The TRIN prints another uber low number so the markets need to sell off to relieve the uber bullish pressure. At the same time, the CPC and CPCE put/call ratios indicate that markets are at a significant top right now and should begin to sell off at any time in the days ahead. The SPX may be targeting the gap at 1680-1685. The strongest S/R is 1669, 1685 and 1691. So the anticipation would be a top in the SPX between here, 1672, and the gap. The next month will prove interesting. Maintain short protection and it is likely prudent to accelerate the pace of ditching longs and adding shorts since time is likely short. The markets may not see these highs for months, or one or two years, or longer, once the selling begins. The 8 MA is above the 34 MA on the SPX 30-minute chart and the SPX is above the 200 EMA on the 60-minute chart both signaling bullish markets for the hours and days ahead so watch these two signals to indicate the start of a market move lower.

NFIB Small Business Optimism Index hits at 7:30 AM; it has been on the flat to gloomy side for months reflecting a lackluster business environment. JOLTS Report is at 10 AM and this provides data on job openings. The 3-Year Note Auction is 1 PM. President Obama speaks to the American people tomorrow night at 9 PM EST, but it does not seem necessary since they all plan on kicking the chemical canister down the road now, which created today's war-relief rally. XLF 19.94, RTH 53.74 and JJC 39.96 dictate market direction for Tuesday.

Keystone took profits on the TLT long trade exiting the position. Will look to reenter as the 10-year yield likely makes one last move higher towards 3% again but should roll over again. TLT is likely a good place to park money if looking for hiding places from a pending market sell off. TLT should move sideways to sideways higher moving forward (bonds up yields down). Also took profits on the long coffee JO trade exiting the position. Then, reentered JO today to establish a new long JO position. The long coffee trade remains Keystone's fave commodity and should move steadily higher for weeks and months to come, another good place to hide some dough. Also took profits on DNDN exiting this long play. Then bot it back in again on the intraday pull back and DNDN exploded higher again for a 5% jump, so that was taken as a twenty-minute day trade, and the position was exited. Then in the afternoon DNDN was reentered again establishing a new long position. DNDN should have more upside but it is a very speculative biotech play. Also bot SMN, a speculative 2x inverse materials ETF, opening a new long position. Materials were very strong today, check XLB, and likely have more momo go juice, but SMN has attractive positive divergence and a falling wedge forming pointing to upside ahead, which is bad for basic materials and markets in general. Also bot SPXL, the triple X long S&P, only as a countertrend play. Looking at the put/call ratios this evening, SPXL is the last ticker in the world you want to own. It will be nice to see a market bounce tomorrow so this can be exited, even if a bounce does not occur, and markets begin the selloff, it may be wise to throw SPXL back as soon as possible.