Keystone's Morning Wake-Up 9/16/13; Summers Out; Empire State; Industrial Production

Today is Mexico's Independence Day so congrats to all our friends south of the border. The Lehman bankruptcy that accelerated the 2008 market crash occurred five years ago and President Obama will provide remarks this morning. Who can forget Lehman's symbol, LEH, that will live on in infamy? It now sports the dreaded 'Q' suffix indicating bankruptcy. The Larry Summers bombshell news sends the dollar lower, PM's higher (but softening), and the futures strongly higher; Dow is +180, S&P's +19 and Nasdaq +33. The 10-year yield collapses to 2.80% as the majority of traders continue to expect 3%+ numbers ahead. It is surprising that the markets had priced in 20 SPX handles for Summers. Yellen is perceived to be the most dovish Fed member so anyone in comparison would be less dovish, but the move in the futures indicates that Summers must have been viewed as an uber hawk, which makes no sense at all. Summers' fingerprints are on QE1 where easy money was given to unions and clean-energy failed projects, instead of infrastructure, and he now touts the need to spend on infrastructure. The U.S. is better off without him. Keystone views Summers just as Keynesian as Yellen so the the 20-handle move is a surprise. Yellen receives the uber dove moniker but if she is selected she may surprise everyone with her level-headedness and perhaps dispel the uber dove namesake. Oil is dropping on the easing Syria tensions. Brent crude plummets -2.3% to 109.13, almost a 108 handle. WTIC crude oil drops -1.5% to 106.54.

This morning's charts highlight the SPX 1707 gap fill which will likely occur at the open. The SPX all-time intraday and closing high is 1709.67. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. The inverted H&S on the 2-hour chart targets 1711 which should be satisfied this morning.  The SPX is at the upper standard deviation band on the daily chart and should poke up through this morning. Price may run higher but this violation will require a move back to the 20-day MA moving forward. The 20-day MA is 1656.51 and rising. Keystone's 80/20 rule says 8's lead to 2's, so the breach of 1680+ appears to be leading to the 1720's. The 1698 print would lead to 1702. The 1708 print would lead to 1712 and 1718 would lead to 1722. The upper standard deviation line on the weekly chart is 1716.

Markets struggled sideways on Friday waiting for a big decision this morning and the bulls receive the nod. President Obama had to cut Summers loose since there are already too many problems occurring that are consuming all of the president's energy; he did not need another. The Administration may now hold a grudge against Yellen, although they should not since she remains quiet and professional throughout, other supporters have been touting her, so a new candidate such as Geithner may ride in on a white horse, or even perhaps Bernanke will be convinced to stay on? The Continuing Resolution (CR) to fund the government must be approved within 14 days (only 10 legislative days). 

Keybot is long to begin the week.  Volatility should drop today and the bulls are set to run higher.  Copper is all over the map in overnight trading, now up about 0.3% in early trading. The bulls need JJC 39.96 to lock in an extended market rally. JJC begins at 39.51 and +0.3% will send price about a dozen pennies higher to 39.63 remaining under the critical 39.96. This would indicate that the equities rally will run out of gas. Bulls must have copper on their side to continue higher. Bulls have one more secret weapon, utilities. With the lower yields, the interest-rate sensitive stocks will pop today such as utes, REIT's and telecom.  Watch UTIL 483.35 and 486.89. These two numbers can be used for the entire week ahead. UTIL begins at 476.89. If UTIL moves above 483, this will extend the upside rally. So the bears must keep JJC under 39.96, and UTIL under 483, to limit the market upside.

Empire State Mfg Survey is released at 8:30 AM and Industrial Production is 9:15 AM, both are key gauges on the manufacturing sector and overall health of the economy. Of course, bad news will likely be viewed as positive, just as the Summers news, since the long trading junkies need the crack cocaine easy money to keep the upside party going. The low CPC and CPCE put/call ratio's have been highlighted in recent days. The bullish joy will only serve to push the put/call ratio's back to low numbers again which continues to signal a significant market top at hand. Usually, the low put/call will create the market top from one to ten trading days after the low prints occur.  The NYMO has recovered during the recent rally and should print today at the same levels as the 5/22/13 and 8/2/13 market tops.

Keystone's Eclipse Indicator targets 9/26/13, give or take a week or two, as a potential area that begins a market sell off, ditto the 11/26/13 time frame, +/- a couple weeks. So markets are in this time frame now. During OpEx week, Monday's are typically up and a Tuesday low typically leads to a Wednesday high.  The full moon is Thursday and markets are typically buoyant through the full moon. Wednesday is a major market day with Housing Starts in the morning and the Fed in the afternoon. Watch copper and utilities very closely today, JJC 39.96 and UTIL 483.35, respectively, to determine the strength of the market rally, or lack thereof. Watch to see if the SPX 1707 gap is filled and also if the all-time high at 1709.67 is taken out, or not. As matching and/or new higher highs are printed for the SPX today, monitor the chart indicators to see if negative divergence sets up, as described in this morning's charts. This week was set to be an epic week for markets, a global circus, and the festivities are already underway under the Big Top.