Keystone's Morning Wake-Up 9/27/13; Consumer Sentiment

NKE beat on EPS last evening but is flat on top line revenue. Companies continue to make earnings not through ever-increasing sales that signal a healthy economy, but instead through cutting jobs and expenses streamlining operations. This behavior has a finite life. JBL is puking -10% and should create slight negativity in the tech sector. JCP is dumping -8% after the stock dilution news and now becomes an interesting long play. Allow a few days or week or two for the smoke to clear with JCP and it will likely be an attractive long play. Futures are lower this morning with the S&P's -8 and Dow -54. NKE should create a strong boost in the Dow if the AH's trading bounce continues which makes the weak Dow futures appear ominous. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bearish markets for the hours ahead. The SPX is above the 200 EMA at 1685 on the 60-minute chart signaling bullish markets for the hours ahead. For the SPX starting at 1699, the bulls need to touch the 1704 handle and price will jump to 1710 in a flash. The bears need to push under 1693 to accelerate the downside, which would fall through the gap at 1688-1691 in short order. A move through 1694-1703 is sideways action. Watch last week's low at 1691.88. The 20-day MA is 1680.13 and continues to need a back kiss. Th 1680-ish is also the middle standard deviation band that price should visit since the upper band was violated several days ago.

The following parameters dictate market direction to end the trading week; UTIL 485.33, 483.55, XLF 20.01, JJC 40.02, VIX 14.67 and GTX 4888. Utes, financials, copper and volatility continue to aid the bulls causing market lift each day. Commodities are in the bear camp creating market negativity. Therefore, for the bulls to move equities higher, GTX must move above 4888 to signal the all-clear. The bears must cross any one of the utility, financials, copper and volatility targets to create negativity. Markets will move flat today if all the parameters remain as is. If UTIL loses 485.33, watch 483.55 since this may open a trap-door for equities with the SPX tumbling 20 or 30 handles in quick order. Utilities will move opposite to the 10-year yield now at 2.63%. Keybot the Quant remains bullish, however, if any two of the five bull parameters mentioned turn bearish, and the SPX prints under 1693, and stays under, Keybot will likely flip short. Note that the yields have been slipping, as stocks slip lower, in tune with Keystone's disinflationary and deflationary theme moving forward that 95% of traders and analysts continue to poo-poo.

Personal Income and Spending data hits shortly. Consumer Sentiment at 10 AM will create a market pivot point. Fed heads are speaking again with Rosengren and Dudley on tap. The Fed speak is only creating further confusion each day. The CR deadline is Monday, the end of the month, EOM, but traders are not worried at all. It is the 'boy who cried wolf' syndrome. Everyone expects the politicians to kick the can down the road and vote in favor of easy money policies and pork for all, so there is no need to worry. The low VIX and low put/call ratios, as highlighted in last evening's CPC and CPCE charts, verify the uber complacency and the put/calls signal that a significant market top is at hand. Long traders are wearing rose-colored glasses while sipping the Fed's champagne.

Keystone's Eclipse Indicator time window is now through the next two weeks for a potential major market sell off to begin. The week after OpEx in September is down about 80% of the time. This week started at SPX 1709.91 so perhaps this reliable seasonality factor will hold true again. The Q3 window dressing was in play yesterday helping to bounce markets. September typically ends with two weak days and today and Monday are the last two days of the month. Markets are a crap shoot since any politician can take the podium at any time and proclaim a big upside rally, or, crushing downside collapse, with their chosen words. This is what happens when free markets are abandoned in favor of central banker control and intervention. The stock market is now beholding to the Fed and other central bankers for their daily easy money drug supply of crack cocaine. The Fed is the market. September began at 1633 so keep this in mind as the month ends. There are two days remaining, 13 hours of trading. Will the bulls print a positive month come Monday at 4 PM EST, or, will the bears spoil the upside fun and send the SPX under 1633 by Monday afternoon (60+ handles lower)?

Watch the SPX 8/34 MA cross on the 30-minute since it tells you who is winning moving forward. Watch UTIL 485.33, UTIL 483.55, XLF 20.01, JJC 40.02, VIX 14.67 and GTX 4888. The moves of these parameters will send markets in that respective direction. The UTIL 483.55 level carries serious negative clout. A big day is on tap. Perhaps Keybot will flip short today? Check the mic at the podium in Washington since the political talk will likely dictate the market story. The politicians are buying stocks and options right now since they know how their words will move markets. That way they can pay for the new beach house with cash. As George Carlin would quip, "it's a big club, and you ain't in it."

Note Added 8:33 AM:  Fed's Evans speaks and creates more confusion. The Fed is a joke; it has become a caricature of itself. Evans is so twisted in his words that he no longer even knows what he is even saying, he is confusing himself! The Fed may taper, but maybe not, the taper will occur either this year, or maybe next year, etc... It is pure comedy but tragically, there is no reason to laugh, since folks are suffering each day due to the structural unemployment and the sick lackluster U.S. economy. The Fed's actions benefit the have's at the expense of the have-not's. S&P's -7. Dow -50. Nas -13.

Note Added 8:58 AM:  NKE is trading up five bucks pre-market. Use a rule of thumb of 8 for Dow components to project the move in the Dow. Thus, 5x8 = 40. NKE will create 40 positive Dow points today on its own. With the Dow futures at -50 right now, if NKE was flat, the futures would be -90.