Keystone's Morning Wake-Up 10/31/13; Fed Aftermath; Chicago PMI; CLX; NEM; XOM

Happy Halloween. Fortunately, for one day a year, Keystone does not need to wear a mask. Global markets are responding to the Fed's trick rather than treat yesterday. Let's take a look at yesterday afternoon. The FOMC Meeting Announcement is as expected; the Fed continues the 85 billion per month purchase program without changes. Equities immediately spike higher on the news but the headline statement is followed by the Fed saying ‘labor market conditions show some improvement’ and ‘downside risks to the outlook have diminished’. The Fed also does not mention the government shutdown so the overall tone on the economy is more positive than anticipated (thus, less QE, not more, and now traders are thinking a December or January taper may actually be possible). Markets quickly reverse and sell off. How ridiculous it is for markets to be purely driven off the Fed's actions; fundamentals be d*mned. The Fed is the market. The Dow drops over -100 points but recovers. The dollar pops and euro drops.  Commodities and copper weaken on the stronger dollar. The 10-year Treasury yield jumps from 2.48% to 2.52% then to 2.54% which chases the utility sector lower. At the bell, the SPX is down 9 points, -0.5% to 1763. The Dow loses 61 points, -0.4%, to 15619. The Nasdaq drops 22 points, -0.6%, to 3931. The RUT is crushed 16 points, -1.5%, to 1105. Tech and small caps lead lower. After the bell, V misses on earnings. SBUX misses on earnings due to weak China sales and drops -3%. FB earnings are stellar, however, the tween participation on FaceBook is dropping off dramatically. Anecdotally, young people now refer to the popular social site as MomBook. Mobile ad revenue continues to grow which is a big plus despite the loss of teen interest. FB pops +18% on the headline earnings but drops back to the flat line during the conference call. President Obama speaks on Obamacare and promises to fix the situation.  C and JPM currency traders are placed on leave when it is discovered they colluded through instant messaging for 3 years exchanging internal information and potentially rigging the Forex markets. A NBC News/Wall Street Journal poll shows a large drop in President Obama’s approval rating with only 42% of the country in favor of his actions (the lowest level for his presidency thus far) while over one-half of the country now disapproves of his actions. 70% of the country now says the U.S. is on the wrong track forward. The 3 years of lying about allowing folks to keep their current health insurance and doctors, which is untrue, is hurting his credibility.

For today, this is the EOM and October will print another up month. The monthly charts receive new data points today. Asian markets sell off in response to the weaker U.S. markets. Bad debt on China’s bank balance sheets continues increasing. Beijing’s tourism drops 50% this year due to the nasty air pollution. The BOJ meets and plans to continue stimulus measures without changes which helps the Asian markets slightly recover. The BOJ also upgrades GDP estimates moving forward despite a higher sales tax. Sony cuts profit forecasts. German retail sales and confidence data falls. ECB’s Nowotny hints at more stimulus coming so the euro weakens to 1.3700 (weaker euro will send the dollar higher and commodities lower). Royal Dutch Shell misses on earnings. AB Inbev (Budweiser) beat on earnings but volumes are dropping. Eurozone unemployment rate remains above 12%.   The Challenger Job Report hits in a few minutes. Jobless Claims 8:30 AM.  Chicago PMI at 9:45 AM after the opening bell. Natty Gas Inventories 10:30 AM.  Farm Prices are released at 3 PM so commodity markets are of interest today. Notable earnings today include AIG (financial), CLX (staple), COP (big oil), FLR (engineering and construction), GBX (M&A), GTLS (LNG), MOD (housing), NEM (gold) and XOM (big oil). PMI's are released overnight tonight.

On the technical side, the bulls need to push UTIL above 506.22 and/or GTX above 4874 to reestablish the market upside. The bears need to push JJC under 40.20 and/or VIX above 14.60 to increase the market selling. If all 4 parameters remain in their respective camps, the markets will stumble sideways. For the SPX today starting at 1763, the bulls need to push above 1775 to regain their mojo, a formidable task, but not impossible. The bears need to push under 1757 to accelerate the downside. A move through 1758-1774 is sideways action. S&P futures are -5 as this missive is written. Keybot the Quant remains short through all this market drama and despite the market buoyancy the last few days. If UTIL moves above 506.22 or GTX attains 4874, and the SPX moves above 1775, and stays above, Keybot will likely flip long. The 8 MA stabbed down through the 34 MA on the SPX 30-minute chart signaling bearish markets ahead in this VST time frame so watch to see if the bears maintain control, or not. Bring up an SPX daily chart and note the 5/22/13 market top which occurred on Chairman Bernanke's words. Yesterday's candlestick and Fed announcement is very similar where price leaped higher early in the day and then failed. The fractal from late May may repeat moving forward (price dropped for 2 days after 5/22, then popped to a lower high, then began the May-June selloff into the June low). UTIL 506.22, GTX 4874, JJC 40.20 and VIX 14.60 dictate market direction.

Note Added 10:19 AM:  The status is quo. Chicago PMI blows out to the upside so perhaps traders are worried about QE ending in these bazaar markets. UTIL is collapsing with a 497 handle. GTX is 4786. JJC 40.54. VIX 13.89.Thus, all 4 parameters remain in their respective bull and bear camps so the expectation is sideways equities but clearly utes and commodities are weakening further with volatility popping which provides a slight edge to bears so the SPX is down slightly leaking 4 points lower to 1758. Bears need a couple more points to create a downside acceleration. TRIN is 0.79 favoring the bulls today. Perhaps traders need a day of rest after yesterday's drama, plus time to prepare for trick or treating this evening. Bernanke and Yellen masks are the most scary masks of all. Keystone took profits on EUO (double X inverse euro ETF) and will look to reenter; it should have plenty of upside ahead (this is the short euro long dollar theme highlighted over the last few days).

JJC Copper ETN Daily Chart Sideways Symmetrical Triangle

The sideways symmetrical triangle patern for copper was highlighted a few days ago and the price action continues to dance across the centerline ready to make a major decision. Keybot the Quant, Keystone's trading algorithm, has the ability to identify which sector or area of the market is most impacting market direction in real-time, and currently identifies JJC 40.20 as the bull-bear line in the sand. JJC popped yesterday to 40.67 giving the bulls, and the broad indexes, the nod higher, however, copper is leaking lower in early trading today. ECB's Nowotny hints at stimulus on the way so the euro is weakening which will send the dollar higher and copper lower. The chart indicators verify the sideways price action. Watch the 50% levels; RSI is a hair above helping bulls, ditto stochastics, but money flow is under 50% helping bears. The MACD line is dead flat at zero. The 20 and 50-day MA's are flat sideways at the critical 40.20-ish area as well. JJC price is balancing on the head of a pin right now and is about to fall in one camp or the other and will take the broad indexes in that direction.

Copper dropping would hint at an extended disinflationary and deflationary scenario moving forward while higher copper and commodities would hint at inflation finally beginning. The vertical side of the blue triangle is about 4 or 5 handles so the breakout move is key. If the bulls can follow through to the upside, the target is 45-46. If JJC collapses lower, the downside target is 35-36. Wall Street analysts poo-poo the idea of deflation although Keystone continues to project a period of disinflation and deflation moving forward. The inflation and hyperinflation is likely a few years away yet. Watch JJC 40.20 to see who wins moving forward. Bulls will be able to keep equities buoyant as long as they maintain JJC above 40.20. Market trouble will occur sub 40.20. 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.

Keystone's Morning Wake-Up 10/30/13; Fed Announcement; V

The bulls continue to pump markets higher since traders expect the QE tapering to not begin until March 2014 or later, and the Fed is expected to reinforce this opinion this afternoon with the 2 PM EST decision. The boat is fully loaded to the bull side and the S&P futures are already +5 at this writing. The boat was fully loaded to the bear side for the prior Fed meeting which provided a big surprise in the opposite direction. Also of interest is the 5/22/13 market top which occurred exactly at that Fed announcement that said tapering is on the table. The short-sellers gave up yesterday and are unwilling to hold shorts heading into the announcement. This adds further short-covering bull fuel to push equities higher. Markets may want to idle sideways ahead of the Fed decision since it is only a few hours away. The ADP Employment Report is minutes away. This provides a heads-up for the Monthly Jobs Report that is now delayed from this Friday until next Friday, 11/8/13. CPI is on tap at 8:30 AM. Oil Inventories 10:30 AM. 7-Year Note Auction 1 PM. The Fed announcement and a market pivot point occurs at 2 PM. Earnings continue with V the heavy-hitter today.

Copper and utilities continue to dictate market direction; JJC 40.19 and UTIL 506.22. JJC is above 40.19 creating market bullishness and copper is up strongly this morning so this does not appear to be changing providing the bulls more happy news. UTIL moved above 506.22 to confirm further market upside, but reversed, and UTIL finished the day under 506.22 keeping the bears in the game. Keybot the Quant is short but if UTIL moves above 506.22, and the SPX moves above 1772, and both stay above, Keybot will likely flip long. The bulls can eek out additional market upside with the help of copper, commodities and utilities.

For the SPX today starting at 1772, the bulls only need a sliver of green in the futures, which is the case currently, and an upside acceleration will occur towards 1780. The bears need to push under 1763 to accelerate the downside. A move through 1764-1771 is sideways action. The SPX is up 4 days in a row, up 9 out of the last 10 days, and up 13 of the last 15 days. The SPX price is extended above the moving average ribbons in all time frames begging for a mean reversion (lower prices). The low CPC and CPCE put/call ratio's occurred about 7 trading days ago so markets remain in the window where a significant market top is at hand. The CPC drops to 0.74 and CPCE to 0.52 with yesterday's bullishness confirming the ongoing complacency and fearlessness in the markets.  Traders are not concerned about any market downside since since the Fed will be goosing markets until March 2014 and beyond. Party on Garth. The thrust higher currently is likely a gift to exit the long side.

The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Bears got nothing until they receive a negative 8/34 cross. The negative divergence on the SPX hourly and minute charts continue to signal a spank down on tap. This behavior may create weak price action into the Fed decision at 2 PM where all bets are off. Chairman Bernanke will simply turn his thumb up, or down, like Caesar, and determine the fate of the markets this afternoon. The Fed and other central bankers control the markets as evidenced yesterday by a goose higher in the SPX when the BOE's Carney promised more stimulus. Watch JJC 40.19, UTIL 506.22, VIX 14.60 and GTX 4890. Bulls need higher utilities and commodities to send the SPX to 1800. Bears need lower copper and higher volatility to begin a market move lower.

Note Added 8:15 AM: The ADP Jobs Report is a paltry 130K jobs. This is sickening; not even enough jobs to absorb new workers entering the work force. Traders will not care, instead, they will be happy since more Fed QE crack cocaine will be on tap.

Note Added 10:17 AM:  Sideways drama so far. UTIL is on each side of 506.22, now on top at 506.85. Keybot the Quant will likely flip long if UTIL stays above 506.22 and the SPX moves above 1775.22. VIX sneaks above 14. Bears may be gunning for 14.60 to initiate market downside. Both the VIX and SPX are up today; more odd behavior; one of them is wrong. This only occurs about 10% of the time but now the SPX and VIX are both moving up together for the last few days. Very odd. Equities may stumble sideways until the Fed today at 2 PM, less than 4 hours away. Whoopsies daisies, UTIL under 506.22 again. It is all a crap shoot today. Flip a coin.

Note Added 10:31 AM:  Weird vertical spike lasting seconds for VIX above 21. Now back down to 14.09. Strange stuff going on for Halloween Eve. Watch your wallet moving forward. UTIL 506.62.  SPX 1771.77.

SPX 30-Minute Chart 8/34 MA Cross Overbot Rising Wedge Negative Divergence

The Fed is the all-powerful Oz.  The stock market moves higher purely off the happy QE news these days. Traders believe that QE tapering will not begin until after March 2014 and QE will not end for months after that, then raising rates would not occur until months after that.  The easy money fuels asset bubbles such as the dividend stock bubble now ready to pop. In addition, companies are encouraged to pursue accounting tricks this year such as stock buy-backs to pump stock prices higher. These scenarios goose markets for the short term, weeks and months, but set up disaster in the monthly and yearly time frames forward.

The SPX hourly and minute charts continue to show negative divergence. Each spank down caused by the neggie d results in dip-buyers rushing in, tripping over themselves to buy the long side. With the Fed on tap today, the short-sellers threw in the towel yesterday not willing to be short ahead of the Fed decision at 2 PM EST today. This adds the bull fuel to keep pumping prices higher. The rising wedge, overbot conditions and negative divergence all say a spank down is on tap but the Fed's happy QE Infinity talk manipulates the traders to buy long instead. The 8 MA is above the 34 MA signaling bullish markets for the hours ahead. Bears got nothing unless they receive a negative 8/34 cross. The SPX would have to drop under the 8 MA at 1770 to curl it downwards for a potential negative 8/34 cross. Projection is for lower prices despite the bullishness. The S&P futures are +5 indicating a move towards 1780 this morning. 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.

Note Added 6:24 AM on 10/31/13:  The 8 MA stabs down through the 34 MA at 2 PM EST yesterday just before the Fed announcement signaling bearish markets for the hours ahead.

SPX Daily Chart Channel-Break-Out Rising Wedge Overbot Price Extended

The daily chart has become a mixed bag of signals as the bears throw in the towel giving up on the short side. The short-covering fuel pushes price above the black channel for a break-out. Price is greatly extended above the 20 MA above the 50 MA above the 200 MA so a reversion to the mean (lower prices) is needed just like the May and early August tops. Stochastics are pushed into the ceiling in overbot territory with no further to go which hints that a pull back is needed now. The rally thrust over the last few days creates momentum and the RSI, MACD line and money flow all follow along with near-term long and strong profiles wanting to see additional price highs after a pull back occurs. The power of the Fed's QE is unmistakable; it is the main driver of the stock market upside. Traders do not expect any mention of tapering QE today by the Fed and the S&P futures are already running +5 to keep the bull rally alive.

Projection is for price to top out and drop but return higher for another high, then roll over for more extended downside, so markets may need a few days or week or two to peak out sideways and roll over to the downside. The top channel line is at 1750-ish and the 20-day MA is 1717.29 and rising. Both serve as downside targets. Note the gap in the 1730's along with the September top at 1730-ish. The 20-day MA is rising which will enter this zone as well forming a confluence marking the 1730-1740 area as an attractive downside target--if the bulls are finally willing to give up the ball. 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 Upward-Sloping Channel Overbot Rising Wedge Negative Divergence Price Extended

The Energizer Bunny keeps moving up through the upward-sloping blue channel. The indicators are negatively diverged across the board in the multi-month time frame but the shorter term green lines show the bull juice added as short sellers throw in the towel and give up on the short side due to the power of the near-term rally. The thought of Fed QE continuing well into 2014 is a strong elixir for bulls. Price is extended above the moving averages requiring a reversion to the mean (lower prices) just like the prior tops. The red rising wedge is a bearish pattern with price sitting at the top rail. There is space above to the top channel line at 1790-1800 so if the Fed pops champagne corks this afternoon with happy QE news, the bulls will push towards the top channel rail.

The stochastics are up against the ceiling, there is no further upside available, which hints at the need for the SPX to pull back. The near-term rally has added momentum which may need 1 to 3 weeks to burn off. Projection is for price to top out here at 1772+ over the coming days and week or 3, moving sideways to absorb the recent upside energy, then move lower to the 20-week MA at 1683 and rising, as time moves along. 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 Rising Wedge Negative Divergence Price Extended

The bulls keep running higher and momentum begets momentum. Shorts are throwing in the towel adding the bull fuel. Price is far extended above the moving average ribbon requiring a reversion to the mean (lower prices). The overbot conditions with RSI and stochastics continue. The 4-1/2 year rally is within the top 5 longest rallies in market history. Extra oomph in the RSI 3 months ago leads to another monthly high print with October set to lock in another up month. Indicators are now negatively diverged across the shorter few-month time frame as well as the longer peak-to-peak time frame from October 2007 except for the MACD line that wants to keep squeezing out price highs.

The red rising wedge is bearish but price is also moving up through the bullish blue channel. Projection is a move lower on the monthly basis, November should be weak, but price will want to come back up for another matching or higher high to satisfy the bullish MACD line, perhaps as the year ends, which should lock in a multi-year top. 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.

COMPQ Nasdaq Composite Index Loses Data Feed Update

At 11:53 AM, the Nasdaq Composite loses the data feed update. The price is displayed in a  frozen state on business cable television outlets and web sites. About 45 minutes later, around 12:40 PM, the Nasdaq begins updating again. The computer glitch is blamed on human error and a data service feed problem involving the Global Index Data Service (GIDS 2.0). The computer glitches and flash crashes continue with frequency. 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.

Keystone's Morning Wake-Up and Midday Market Action 10/29/13; Retail Sales; Consumer Confidence

PPI and Retail Sales hit within one-half hour. Case-Shiller House Price Index is 9 AM.  Business Inventories and Consumer Confidence will create a market pivot point at 10 AM. The 5-Year Note Auction is 1 PM.  The FOMC 2-day meting begins today and the Fed decision is tomorrow at 2 PM EST. Traders believe that QE will continue well into and beyond March 2014 so the announcement is expected to be uneventful. Interestingly, equities are in a similar position as the 5/22/13 market top when Chairman Bernanke rattled markets creating a near-term top. Earnings continue with APD, AMP, ADM, CBI, DDD, JCI, LLL, LNKD, GT, X and YELP.

Watch UTIL 506.22, JJC 40.19 and VIX 14.60. Utilites and copper are currently creating market negativity and capping the upside helping the bears while the low volatility is helping the bulls. Any change to these 3 parameters will push the markets in the same direction. Copper is higher in early trading. Both the SPX and VIX were higher yesterday so one of them is wrong and today we find out which. For the SPX starting at 1762, the bulls need to touch the 1765 handle and an upside acceleration will occur. The bears need to push under 1758 to accelerate the downside. A move through 1759-1764 is sideways action.

Markets may favor a sideways path into the Fed decision tomorrow afternoon despite any pops or drops. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. Bears need a negative 8/34 cross on the 30-minute or they got nothing. The SPX hourly and minute charts are set up with negative divergence so price weakness would be anticipated moving forward today. If the bulls can send UTIL over 506.22 and JJC above 40.19, and SPX above 1765, and all 3 remain above, Keybot will likely flip long. Otherwise, the bears continue to drive the bus even if they appear to be driving down a wrong-way street. If VIX moves above the 14.40-14.60 area, equities will begin selling off substantially. Bulls are fine if they keep VIX under 14.40. So it is a battle of utes, copper and volatility. Watch UTIL 506.22, JJC 40.19, VIX 14.60, and SPX 1765 and 1758. AAPL earnings beat last evening but the margins are dropping. Apple also says the holiday season sales may be the lightest in the last few years. Retail Sales will set the early tone until the 10 AM pivot...... what say you Retail Sales......

Note Added 3:15 PM: Another odd day. Retail Sales were a touch weak and Consumer Confidence was terrible but traders do not care since, if anything, that means more Fed QE. VIX and SPX are both higher; one of them is wrong. The battle with JJC 40.19 and UTIL 506.22 continues. Keybot the Quant remains short although the algo may flip long before the closing bell if UTIL moves above 506.22 and the SPX moves above 1770.88, and both stay above. Higher copper is helping the bulls while lower utilities are helping the bears. Traders are getting all bulled up ahead of the Fed. The bulls touched the 1675 handle this morning so the jump to 1770+ was in the cards. Carney at the BOE is pumping the QE talk creating buoyancy in equities. The global bankers want higher stock markets so all their rich friends become wealthier just like the U.S. Current print for UTIL is 505.34 and SPX is 1770.10. The drama continues......

Note Added 3:38 PM: JJC 40.22 above the 40.19. UTIL 504.54 below the 506.22. SPX 1769.01. VIX at 13.60, bullish under 14.60, but receiving some late day bear love moving higher. TRIN 0.94 helping bulls but only by 6 pennies. SPX hourly and minute charts continue to set up with negative divergence after incorporating today's bullishness so a roll over to the downside for the SPX continues to be anticipated. The 8 MA remains above the 34 MA on the SPX 30-minute chart signaling bullish markets ahead. The bears need to push the SPX under the 8 MA at 1770 to curl it to the downside and move the chart towards a negative 8/34 cross perhaps for tomorrow.

SPX 2-Hour Chart Overbot Rising Wedge Negative Divergence E-Waves

The price action creates a rising wedge and the indicators are overbot with negative divergence (red lines) all indicating a top and spank down needed, however, the S&P futures are up a couple points at this writing. The bulls keep finding a way to push higher fueled by the ongoing QE easy money booze. The thin blue lines show the e-wave pattern which may end in the wave 5 at the top currently. The Fed decision is tomorrow so markets may favor a sideways path until tomorrow afternoon, despite any bounces higher, or drops lower, until Chairman Bernanke brings the tablets down from on high and announces to the minions that QE will continue forever. Traders will bow and worship the easy money news sending equities higher. Any hesitancy in the Fed's language concerning QE Infinity would rattle equities. Projection is for the SPX to move sideways to sideways lower going 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.

Note Added 3:34 PM: The bulls run higher another day and poke the RSI higher. Sometimes divergences are divergences, until they aren't. This gooses price higher for today's session but at this writing the indicators, including the RSI are set up with negative divergence so the expectation continues to be for a roll over to the downside for the SPX moving forward. The Fed is the wild card tomorrow.

SPX Daily Chart Upward-Sloping Channel Upper Band Violation Overbot Rising Wedge Negative Divergence

The bulls keep pumping markets higher waving the QE flag. Consensus is that the Fed does not taper QE until March 2014, at the earliest, so it is party-time well into 2014. Traders are fearless without any worry buying stocks on any minor dip. Price is at the top rail of the blue channel. The SPX tagged its upper standard deviation band so a move back to the middle band at 1713 and lower band at 1646 is on the table. Note the prior tops. The 5/22/13 top occurred on the Fed announcement as price tagged the upper band and the Fed is on tap again tomorrow with the same set-up. Markets took 2 weeks to top in the back-half of July once the upper band was violated so a similar fractal may work out now with some additional marginal upside play on tap before the roll over to the downside. The Friday candlestick was a hanging man indicating potential trend change and needed follow-through yesterday to verify the change but, alas, for the bears, the SPX continued higher instead and prints a doji spinning top yesterday. This indicates a trend change but follow-through to the downside would be needed today to verify the change. The prior tops favored doji-style candlesticks to mark the roll over.

The SPX is overbot, although RSI is a touch short of 70%, and the indicators are universally negatively diverged across the one-month time frame. In the VST, the MACD line and money flow continue to show long and strong behavior wanting to see another price high after any pull back occurs. Thus, another jog move may be on tap for a couple-few days to allow the MACD line and money flow to create negative divergence. Equities will likely want to motor along sideways since we are at Fed Eve today. The Fed decision is only 11 trading hours away. No one expects the Fed to make any statement concerning the tapering of QE so the risks are obviously heavily-weighted to the downside. If Chairman Bernanke coughs and it sounds like he said taper, the markets would sell off strongly. The consensus is that the meeting will be uneventful and equities will float sideways to sideways higher.

The low CPC and CPCE put/call ratio's occurred about six trading days ago. This behavior typically identifies a market top within a couple weeks of so of time so each day forward may become more dramatic. 70% of the stocks are now overbot which is another indicator of a market top at hand. The evidence keeps mounting that equities are at a significant top right now, however, no one told the bulls that keep buying each day.  Projection is for the SPX to top out in the days ahead, at anytime, and move sideways to sideways lower going 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.

Keystone's Midday Market Action 10/28/13; AAPL

The fight for UTIL 506.22 and JJC 40.19 continues as the new week of trading begins. Both are on the bear side so this places a cap on equities and the broad indexes are stalled, although elevated. Both the SPX and VIX are higher so one of them is wrong. This behavior only happens about 10% of the time but over the last few days it is appearing frequently each day. Traders are holding their longs but bringing on more downside protection. Pending Home Sales were weaker than expected so housing numbers will be soft moving forward. Insiders are selling stock, such as Blackrock, but no one cares since the Fed will pump the stock market higher forever. Party on.

The SPX printed positive today so it popped to near 1763 and is currently teasing these highs again. The SPX minute and hourly charts hint at a roll over to the downside is on tap moving forward. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. The bears need to push the SPX under 1760 asap to develop market weakness. Bulls will try to float the markets out sideways today awaiting the Apple earnings at 4 PM EST. SPX is 1762. UTIL 504.05. JJC 40.11. VIX 13.50. TRIN 0.81 which helps the bull case today. UTIL 506.22 and JJC 40.19 are the bull-bear lines in the sand currently, identified by the Keybot the Quant algorithm, and are dictating market direction. Bulls cannot move equities higher unless they punch through one or both of these parameters.

SPX 30-Minute Chart 8/34 MA Cross Overbot Rising Wedge Negative Divergence Upper Standard Deviation Band Violation

The minute and hourly charts are peaking out with rising wedges, overbot conditions and negative divergence so a roll over in SPX price is anticipated moving forward. Traders may try to keep the markets floating along sideways into the closing bell to await the AAPL results after the bell. Independent of Apple's success, or failure, in less than four hours, the very short-term charts favor a roll over for the broader market. The 8 MA is above the 34 MA signaling bullish markets for the hours ahead.  The bears need to push the SPX under the 8 MA at 1760 to curl the 8 MA to the downside.

Price keeps tagging the upper standard deviation band so a trip back to the middle and/or lower bands are in order at 1757 and 1751, respectively. The VIX is up today and the SPX; one of them is wrong. This broad market versus volatility action, moving in the same direction, is becoming common place the last few days. The oddity is that this should only occur about 10% of the time. Traders are willing to hold their long positions but are now seeking downside protection. Market bears got nothing until they receive the negative 8/34 cross. 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.

TNX 10-Year Treasury Note Yield Daily Chart Downward-Sloping Channel H&S Gap

The 10-year yield continues to drift lower (bond prices higher) through the downward-sloping channel. The top call in yields in late August early September occurred as expected due to the rising wedge, overbot conditions and negative divergence. The yield is tapping on the lower rail of the channel now and the histogram, stochastics and ROC are positively diverged wanting to see a bounce in yields for a couple-few days. The RSI and MACD line remain weak and bleak, and the RSI is not yet oversold, so lower lows in yield are anticipated moving forward. The weekly chart reinforces this downward path. There is a juicy gap at 2.30%-2.40% that serves as a downside target. The neon blue lines show an H&S pattern in play. There are a few options for the head and shoulders but in general, the head is at 3.00% and neckline at 2.55%-2.60%, targeting the 2.10%-2.20% level if the 2.30%-2.40% level is violated to the downside.

The current print on yield is 2.52%. Projection is for a bounce to occur to the 2.55%-2.65% level which would be in concert with testing the 20-day MA resistance and the top rail of the channel as it descends. Then yield should leak lower again to allow time for the RSI to set up with positive divergence for another bounce from the 2.40% area. In general, lower lows for yield are anticipated moving forward for the weeks ahead with the 2.10%-2.20% target achievable by the end of the year. Lots of sideways is likely in store for the currencies, euro, dollar and Treasuries for the months and perhaps years ahead. 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.

Keystone's Key Events and Market Movers for Trading the Week of 10/28/13

Key Dates and Times for the Trading Week Ahead:

----------------------------------------------------------------------

           

Monday, 10/28/13: Industrial Production 9:15 AM. Pending Home Sales Index 10 AM. Dallas Fed Mfg Survey 10:30 AM. Bradley turn window opens for a strong market move to occur (Bradley model does not predict direction only the time of an event) between now and 11/10/13. Earnings: AAPL, BALT, BIIB, BKW, LNG, CGNX, EW, FMC, GNK, GGP, GERN, HIG, HLF, HTZ, IDIX, LINE, MAS, MELI, MRK, NVAX, OII, PCL, RTI, STX, SIGA, SOHU, TARO, VPHM, XNPT, YRCW.

Tuesday, 10/29/13: PPI and Retail Sales 8:30 AM.  FOMC 2-day meeting begins. S&P Case-Shiller House Price Index 9 AM. Business Inventories and Consumer Confidence 10 AM—market pivot point. 5-Year Note Auction 1 PM. Earnings: ACPW, APD, AMP, ADM, BXP, CBT, CERS, CBI, CRUS, DDD, DWA, EIX, EA, FDP, GNW, HRS, HUN, IACI, JBLU, JCI, LLL, LNKD, LYB, MSO, NANO, OXY, KWR, QCOR, RRC, RYL, SCHN, GT, TRW, UTHR, UHS, VLO, VRTX, VSH, WM, WTS, XYL, X, XCO, YELP.

Wednesday, 10/30/13: Mortgage Applications 7 AM. ADP Employment Report 8:15 AM. CPI 8:30 AM. Oil Inventories 10:30 AM. 7-Year Note Auction 1 PM. FOMC Meeting Announcement 2 PM—market pivot point. No one expects QE tapering to begin since the economic data is delayed due to the government shutdown. Earnings: ADP, AMT, BAH, BWA, CAR, CROX, DBD, EXC, EXPE, FB, GLW, GM, GRMN, GLUU, HBI, HTS, HEP, H, ITMN, ISIL, ITRI, JDSU, KS, LFUS, MAR, MOH, MUR, NANX, OI, PSX, SKUL, SO, SBUX, TASR, THOR, V, WLT, WMB, WTW.

Thursday, 10/31/13: Happy Halloween. EOM. Challenger Job Report 7:30 AM. Jobless Claims 8:30 AM. Chicago PMI 9:45 AM. Natty Gas Inventories 10:30 AM. Farm Prices 3 PM. Earnings: AIG, AVP, BBG, BYD, CRR, CAH, CI, CLX, COR, COP, EL, FLR, GBX, GTLS, KOG, MPC, MOD, NEM, NI, NILE, NU, ONNN, OSK, PRGO, PPC, PPL, PSA, PWR, SPF, TDC, WNR, XOM.

Friday, 11/1/13: All Saints Day. China and Asia PMI’s.  European PMI’s. Motor Vehicle Sales. Fed’s Bullard speaks 8 AM. ISM Mfg Index 10 AM—market pivot point. Fed’s Kocherlakota speaks 11:15 AM. Earnings: AXL, BPL, CBOE, CTB, HPOL, OSIR, RUTH, UPL.

------------------------------------------------------------------

Sunday, 11/3/13: Major Bradley Turn date—markets would be expected to move violently up, or violently down, within +/- 7 days of today, especially +/- 3 days.

Monday, 11/4/13: Factory Orders 10 AM. Earnings:

Tuesday, 11/5/13: ISM Non-Mfg Index 10 AM. Fed’s Lacker speaks 12:30 PM. Earnings:

Wednesday, 11/6/13: Mortgage Applications 7 AM. Oil Inventories 10:30 AM. Earnings:

Thursday, 11/7/13: Chain Store Sales. Jobless Claims and GDP 8:30 AM. Fed’s Stein speaks 9:10 AM. Natty Gas Inventories 10:30 AM. Consumer Credit 3 PM. Earnings:

Friday, 11/8/13: Personal Income and Outlays and Monthly Jobs Report 8:30 AM. Consumer Sentiment 9:55 AM—market pivot point. JOLTS Job Openings Report 10 AM. Earnings:

----------------------------------------------------------------

Monday, 11/11/13: Veteran’s Day.  Markets are Open. Banks are Closed.  Earnings:

Tuesday, 11/12/13: NFIB Small Business Optimism Index 7:30 AM. Chicago Fed National Activity Index 8:30 AM. 3-Year Note Auction 1 PM. Fed’s Kocherlakota speaks 1 PM. Keystone’s Eclipse Indicator targets 11/12/13 through 12/10/13 as having potential for a major market selloff. Earnings:

Wednesday, 11/13/13: Mortgage Applications 7 AM. Import and Export Prices 8:30 AM. Atlanta Fed Business Inflation Expectations 10 AM. 10-Year Note Auction 1 PM. Treasury Budget 2 PM. Chairman Bernanke speaks 7 PM.  Earnings:

Thursday, 11/14/13: Jobless Claims, Productivity and Costs, International Trade 8:30 AM. Fed’s Plosser speaks 9 AM. Natty Gas Inventories 10:30 AM. Oil Inventories 11 AM. 30-Year Bond Auction 1 PM. Earnings:

Friday, 11/15/13: Empire State Mfg Survey 8:30 AM. Industrial Production 9:15 AM. Wholesale Trade 10 AM—market pivot point. Twitter IPO begins trading on the NYSE. Earnings:

---------------------------------------------------------------

Wednesday, 11/20/13: BOJ 2-day meeting begins.

Thursday, 11/21/13: BOJ rate and policy decision. BOJ must deliver more QE to weaken the yen and send the Nikkei and U.S. equities higher moving into early 2014.

--------------------------------------------------------------

In Q4, European bank stress tests begin and will be dragged out over one year’s time. About 10% of the 128 banks are likely undercapitalized with no clear way on how to recapitalize these troubled institutions. Germany’s high court must decide if the ECB’s OMT program is constitutional.  Europe must finalize all plans for the new banking union.

----------------------------------------------------------------

Friday, 12/13/13: Congress provides a detailed road map to handle the U.S. budget crisis moving forward.  Earnings:

-----------------------------------------------------------------

Sunday, 12/15/13: Today is the deadline to sign up for the Affordable Health Care Act which begins 1/1/14. 7 million people are needed to sign up for Obamacare, otherwise, the program will start bleeding money and require a future bailout by the taxpayers.

Thursday, 12/19/13: BOJ 2-day meeting begins.

Friday, 12/20/13: BOJ rate and policy decision.

----------------------------  2014  ---------------------------

Tuesday, 1/1/14: Major Bradley Turn date—markets would be expected to move violently up, or violently down, within +/- 7 days, especially +/- 3 days.

Wednesday, 1/9/14: Major Bradley Turn date—markets would be expected to move violently up, or violently down, within +/- 7 days, especially +/- 3 days.

Wednesday, 1/15/14: A Continuing Resolution (CR) is needed to fund and keep the U.S. government open.

Wednesday, 1/29/14: Chairman Bernanke conducts his last official two-day meeting (1/28 and 1/29) as Chair of the FOMC.

Friday, 1/31/14: Chairman Bernanke’s term ends at the Fed. Yellen takes over.

Friday, 2/7/14: The Debt Ceiling Limit is hit where the U.S. may default on obligations. Treasury Secretary Lew will use extraordinary measures to extend this time forward so late February or early March is a likelier deadline.  Winter Olympics begin in Sochi, Russia, through 2/23/14. Watch $RTSI and RSX.

Wednesday, 3/19/14: new Fed Chair Yellen talks at the conclusion of her first FOMC meeting (3/18 and 3/19).

February/March: Fed Chair Yellen testifies before Congress.

March: ESM is officially ‘fully operational’. The Euro banking union is in place after delays from January 2013 to January 2014 and now to March 2014.

April: MSFT no longer supports Windows XP.

Keystone's Trading Week in Review and Path Ahead for Markets 10/26/13

On Friday, 10/18/13, China economic data is much better than expected with a strong 7.8% growth rate. Recent stimulus packages (targeted QE-type easy money) are creating the activity. Copper moves higher.  GOOG is up +10% pre-market setting a positive mood. MS earnings beat. Markets leap higher at the opening bell with the SPX now above 1740. Leading Indicators data is cancelled due to the shutdown. GOOG hits the 1000 price level (PCLN punched through 1K one month ago). The broad indexes move flat in the afternoon and start to leak lower but the bulls crush volatility in the last fifteen minutes of trading to finish the week with an upward market thrust. The bulls are running. Fed’s Evans says that the FOMC meeting in 11 days does not have enough data to consider tapering QE so the bulls run higher off this happy news that the Fed booze will flow forever. The SPX ends up 11 points, +0.7%, to a new all-time closing high at 1744.50 and new all-time high at 1745.31. The Dow is up only 28 points, +0.2%, to 15400. The Nasdaq explodes higher due to GOOG (up +13%), up 51 points, +1.3%, to a 13-year closing high at 3914.28 and new 13-year high at 3914.93. Traders are abuzz as to when the Nasdaq 4K level will be achieved only 86 points away. The RUT is up 13 points, +1.1%, to a new all-time closing high at 1114.77 and new all-time high at 1115.04. The 10-year yield drops to 2.59%. Interestingly, money is not moving from stocks to bonds but rather both stocks and bonds are moving higher.  In a pure risk-on environment, and after the political clowns came to an agreement this week, the expectation would be for the 10-year yield to creep higher (prices down yields up). Instead, folks continue to seek the perceived safety of notes and bonds (prices remain high yields drop). Gold is 1317 well off the lows a couple days earlier. Utilities are breaking up and out of a long-term sideways symmetrical triangle which will help the market bulls moving forward, as long as it is not a false breakout. Health insurance companies are complaining that the information they are receiving from the Obamacare websites are riddled with mistakes. The U.S. debt moves up over $17 trillion but the politicians kick the can down the road and do nothing. This encourages the Fed to continue the reckless QE program. The Washington, D.C. clown circus is whistling past the graveyard. BART (Bay Area Transit System) union workers go on strike crippling travel in San Francisco.

On Saturday, 10/19/13, a ruling by a Milan court prevents Berlusconi from holding public office for 2 years but in Italy, decisions and appeals continue indefinitely. A Senate vote on Berlusconi’s fate takes place in November and may dramatically affect Italy’s politics and government stability. More and more detractors slap the Obamacare websites holding it up as a shining example of government incompetence. The fine print on the Affordable Healthcare websites says the government can use your personal information however they see fit. The Whitehouse is scrambling to find a solution to the debacle deciding to either pull the Obamacare websites off line to fix the problems, or, continue to try and fix the car while it is moving. Two BART workers are killed in a train accident as they inspect the tracks. The CPC and CPCE put/call ratio’s print multi-year lows verifying the uber complacency and lack of fear in markets. Nearly all traders expect stocks to go up into next year and are giddy with excitement. It is likely that equities are printing a significant market top over the coming days perhaps a la 2000 and 2007.

-----------------------------------------------------------

On Sunday, 10/20/13, the Whitehouse says 476K applications were filed on the Obamacare web sites but refuses to say how many actually signed up. Independent estimates say that only a paltry 36K have signed up so far for this $500 million debacle. The Whitehouse needs 7 million people to sign up within the next 8 weeks.  JPM racks up the legal fees nearing a $13 billion settlement on a civil action concerning mortgage-backed securities but remains open to further criminal charges. Congress plans on holding hearings this week on the Obamacare debacle but Health and Human Services Secretary Kathleen Sebelius, spear-heading the roll-out of Obamacare, says she will not attend.  Australia wild fires continue to burn out of control.

On Monday, 10/21/13, Asia markets move higher to begin the week with the Shanghai Index up 1.6%. Japan’s export growth surprisingly slowed. Dollar/yen is 98.05. EDF will build the first nuclear plant in the U.K. since 1995 with Areva receiving the contract. Anti-austerity protestors clash violently with police in Rome.  ECB’s Draghi warns about the trend with bank bail-ins (where bank deposits can now be confiscated to cover the debt of a bad bank) since it will destroy confidence in the banking system. Merkel is nearing completion of a coalition government after her successful election. The euro is well above 1.36.  WTIC oil briefly drops under 100. The 10-year yield is 2.59%. GOOG and FB join forces to increase ad revenue. One-quarter of the S&P 500 stocks report earnings this week. MCD misses on earnings. Fed’s Evans keeps promising QE indefinitely. The broad indexes are flat to begin the day. Existing Home Sales drop for the first time in 3 months. President Obama speaks about the Obamacare web sites debacle but will not provide details on the problems or the number of folks that have signed up. He provides a toll-free telephone number to use instead of the web site but operators say sensitive personal information cannot be transferred over the telephone and others seeking healthcare are told to visit the web site, but comically, the failed web site is why they are using the telephone. Markets are flat all day long in dull trading. After the bell, NFLX quadruples its earnings hitting a grand slam of earnings. Netflix is the best performing stock in the market this year and increases +11% AH’s. HHS Secretary Sebelius, in charge of implementing Obamacare, agrees to testify before the House next week.

On Tuesday, 10/22/13, house prices in China continue to climb higher in 69 out of 70 cities surveyed. When the China housing bubble pops, anytime, it will make the U.S. housing bubble look like child’s play. The Monthly Jobs Report is 148K jobs well under the 180K consensus. The unemployment rate drops a tick to 7.2% but this is due to folks simply giving up at finding a job. Average hourly earnings are up a touch at +0.1% with average weekly hours flat.  Thus, there is no pressure for employers to add jobs; the current work force appears adequate. The labor participation rate is flat but remains at multi-year lows verifying the ongoing structural unemployment problem. There are over 6 million idle American youth between 16 and 24 years of age, about 50% of this demographic. The U.S. is adopting European socialism moving forward so it is no surprise to see the same affects develop. The bad job news is great news for equities since traders assume the Fed will supply more easy money QE as far as the eye can see. The S&P futures pop from flat to +6.  The 10-year yield drops to 2.55%. NANEX reports unusual trading action in the euro futures one-half second before the jobs report release at 8:30 AM. The euro bounces with the dollar moving lower and Treasury yields lower so it is easy to make money via HFT (high-frequency trading) if you know the answer milliseconds ahead of time. Nowadays, whoever has the fastest algo wins.  DD beats on EPS earnings but top line is flat. Chemicals and resins are a key indicator of economic health; DD hints at lackluster activity. WHR earnings beat so the stock pops +6% and is encouraging for the housing sector. UTX earnings beat by a penny on EPS but misses on top line revenue and it drops one percent pre-market. One-half of the companies reporting this morning missed on top line revenue. The broad indexes jump higher at the opening bell fueled by hopes of QE Infinity forever. The SPX pops to 1754 printing more new all-time highs.  Construction Spending numbers are better than expected. Good news is good news and bad news is good news.  NFLX drops -4% as traders sell all the high-flyers like FB, LNKD and AAPL after the opening bell.  The SPX prints a new all-time high at 1759.33.  Equities fall on their sword moving into lunch time with the Dow dropping almost 100 points off the top. The SPX drops from 1759 to 1748 and then moves sideways. UTIL moves above 500 as utilities gain on the lower Treasury yields.  COH pukes -7%. Economist David Rosenberg, typically known as a bearish-leaning strategist, throws in the towel and becomes bullish and constructive on the markets. Banks and analysts say QE tapering will likely not occur until March 2014 or later since the political drama is not over in Washington, D.C.  The easy money bull fuel for equity markets will continue.  AAPL unveils a thinner iPad with retina display and faster processor, as expected, but thinner, faster and lighter equates to Apple stock selling on the news. The session ends with the SPX printing a new all-time closing high at 1754.67 and new all-time high at 1759.33. The SPX gains +0.6%, Dow +0.5%, Nasdaq +0.2% and RUT +0.3%. Tech and small caps are not leading the broad market higher. The euro prints a 2-year high at 1.3782. The talk of delaying the QE tapering slaps the dollar lower and sends the euro higher. After the bell, AMGN blows the cover off the ball with earnings. The biotech and pharma sectors are hot this year. AMGN was up over 2% in today’s trading and another 1% AH’s. PNRA misses on earnings and it is slapped -5% lower. Troubled SAC (Cohen) shuts down its London unit.

On Wednesday, 10/23/13, bad loans are rising in China. China and Japan markets are selling off. AAPL’s Asian suppliers trade lower overnight down from -0.5% to 6.0%. The dollar/yen drops to 97.30. ST Micro drops -7% on weaker Asia demand for chips. Copper is weak. Spain grew at +0.1%, a hair positive, technically ending the prolonged 2-year recession. Rabobank faces a $1 billion fine to settle the Libor rate fixing scandal. Heineken drops -5% as sales forecasts are cut. ECB announces stress test guidelines for 128 banks that will shamefully take one year to complete. European banks are trading lower. The stress tests can be performed in a matter of 2 or 3 months so this is more gamesmanship to keep stretching time out in the hope that the global economy recovers improving the troubled banks’ positions. Peugeot misses on earnings which now jeopardizes its GM alliance. The euro is at a lofty 1.3760 nearing 1.38.  GS joins the chorus of banks not expecting the Fed to taper until March 2014 or later. The banks want to keep stock prices elevated so they can distribute stock to Joe Sucka now chasing the upside. Futures are weak overnight with S&P -11, Dow -80 and Nasdaq -22.  The 10-year yield is 2.49%. WTIC oil drops to 97.20. JPM nears a $6 billion dollar settlement with other banks over the bad mortgage paper from the financial crisis. JPM legal costs continue to rise. The Detroit courts will determine the legality of the Chapter 9 bankruptcy. This is important since it will set precedent for all the other U.S. cities in financial trouble.  HHS Secretary Sebelius says President Obama did not know anything about the problems with Obamacare until the first day of the roll out. She is running cover to help the president avoid embarrassment on his signature legislation but it is worrisome that he can be so detached from any negative news events that occur, even events fully under his control. A television ad runs that promotes Obamacare and says the web site is easy to use when the site is actually becoming more of a joke as details surface. Insurance companies meet at the Whitehouse to discuss the mess. LLY earnings beat. CAT earning miss and guidance is lowered for this key global bellwether. CAT dumps -4% pre-market. BA beats and the stock jumps +5% higher. LL beats and it moves +7% higher reinforcing WHR’s happy talk about the housing sector yesterday. Retired Chairman Greenspan says stock prices are ‘relatively low’ and heading upwards. The broad indexes drop like a stone at the opening bell.  Copper collapses. The semiconductors collapse with the SOX dropping -3.3%. Equities move flat in the afternoon with the SPX closing at 1746 losing -0.5%.  The Dow is down -0.4%, Nasdaq -0.6% and RUT -0.4%. The weak semi’s and tech stocks lead equities lower.  After the bell T beats on EPS but misses on top line revenue. AKAM beats but reduces guidance and it is thwacked -7%. FIO pukes -11%. Merkel telephones Obama with suspicions that the U.S. is spying on her telephone calls. The Whitehouse says Merkel’s communications are not monitored now nor would be in the future but would not deny spying on her telephone conversations in the past. BSX cuts 1200 jobs.

On Thursday, 10/24/13, China PMI is better than expected. Credit Suisse reports weak earnings and guidance and is hit -3%. Unilever reports the weakest sales in 4 years highlighting softness in North America and Europe. Daimler sales are better than expected and gains +2%. Eurozone, Germany and France PMI’s are above 50 showing expansion but a touch weaker than expected. The euro pops above 1.38 overnight but drops to 1.3770 after the PMI data. Draghi says tough action will be taken against any bank that fails the bank stress tests which are ongoing through next year. BAC’s Countrywide unit is found liable for mortgage fraud. The Obamacare web site disaster continues and an easy fix is not readily apparent. The Whitehouse is not providing information or clarity which creates confusion and angst over the program. F and MMM beat on earnings. S&P futures are +10. The Whitehouse says the Obamacare penalty for not signing up for health insurance may be delayed 6 weeks as democrats, that once supported the program, begin speaking negatively. The House begins hearings on the Obamacare debacle. Representative Ryan says he has requested testimony from HHS Secretary Sebelius for weeks but she will not cooperate and the Whitehouse would not provide any replacement for the hearings. The principal contractors that developed the Obamacare web sites and the Obama administration are blaming each other for the debacle. Apparently, a last minute decision was made by the Obama administration to not provide price data for the health plans on the web sites until the user gives up extensive personal information and this change created the problems. Chemical company DOW, a key economic bellwether, misses on earnings. Futures leak lower off the highs with the S&P’s +3 before the opening bell. Equities float sideways to sideways higher as the session begins. The House hearings on the Obmacare debacle results in finger-pointing with each company representative blaming the other; you can smell the lawsuits coming. XRX reduces guidance and is crushed -9%. Snowden, the NSA whistleblower, released the information concerning the U.S. spying on Brazil, Mexico and now Germany’s communications. Everything you do electronically on computers and cell phones is monitored and archived forever. Merkel says “spying on friends is never acceptable.” The SPX moves higher all day long and closes at 1752. The broad indexes finish up about 0.5% on the day. After the bell, four earnings beats catapult the following stocks higher; AMZN +8%, MSFT +6%, OUTR +6% and ZNGA +11%. DD jumps higher after it announces a plan to split several units into a stand-alone company.  The American Association of Individual Investors’ (AAII) Sentiment Survey reports continuing high market bullishness now at 10-month highs while pessimism on the markets is at 21-month lows.  Traders do not expect markets to ever go down since the Fed and other central bankers keep printing money to keep stock prices elevated and their rich friends wealthy. The broad indexes are well elevated above their moving averages indicating that a reversion to the mean is required. Tread carefully in the equity markets since AAII serves as a contrarian indicator. Twitter IPO will price at $17 to $20 with a road show beginning and perhaps a first day of trading in about 2 weeks. Elon Musk says TSLA stock is probably overpriced—and the stock creeps higher, not lower, on his words of caution. 49% of Americans are now on some form of government assistance up strongly in recent years so the U.S.’s move towards European socialism continues.

On Friday, 10/25/13, the Nikkei dumps -3% and the Shangha Index loses -1.5%. Copper is weak on worries that the China and Japan economies are slumping and China may tighten credit. Samsung reports record profits as consumers prefer the lower-cost electronics. German IFO business confidence is 107.4 slightly below expectations.  The euro remains elevated at 1.3820 with a high today at 1.3833. The euro strength is hurting earnings for European stocks. Renault misses earnings estimates and drops -4%. Volvo misses and is punished -7%. Both are negatively affected by Indian, Russian and Swiss currency exchange rates. BBVA (Spanish bank) eliminates its dividend to help clean up the balance sheet and lower the bad loan ratio. Gucci, a Kering brand, reports the worst sales in 4 years. High-end consumers now prefer more subtle-looking bags and accessories rather than logo-riddled products. The higher euro decreases Asian tourism and takes a bite out of luxury sales.  U.K. GDP is +0.8% as expected. Merkel says trust with the U.S. must be rebuilt. France’s Hollande voices concern over the U.S. spying on friendly governments.  WTIC oil is 97.27 well off the recent highs with Brent oil at 106.75. PG earnings are on in line. Global shipping bellwether UPS earnings beat by a penny showing stronger domestic growth and expects another record holiday package-shipping season. AMZN is up +9% despite reporting a 9 cent loss. In these bizarre markets, just think how far AMZN would bounce if even more money was lost. The broad indexes move higher after the opening bell with the SPX testing the recent all-time highs at 1758-1759. Durable Goods Orders are up on aircraft orders but business spending on office equipment is weak. Consumer Sentiment is weaker than expected but traders ignore any bad news. Representative Rand Paul (son of the legendary libertarian Ron Paul), threatens to block the Yellen nomination as a means to receive an audit of the Federal Reserve. Equities soften for a few minutes but quickly recover since everyone knows the Federal Reserve books will always be kept secret and hidden from the American people, and Yellen will be confirmed. The broad indexes stumble sideways during the session and receive a late-day push higher for the SPX to print a new all-time intraday high at 1759.82 and new all-time closing high at 1759.77. The Dow is at 15570 moving through a sideways range of 14700-15700 for the last 6 months. The Dow Industrials, representing 30 large blue-chip stocks, are lagging the other major indexes not able to print new all-time highs. The RUT small caps printed a new all-time intraday high by pennies but could not print a new all-time closing high. For the week, the SPX is up +0.9%, Dow up 1.1%, Nasdaq +0.7% and RUT +0.3%. In strong bull markets, tech and small caps should be leading not lagging. The S&P 500 is now trading over 16.5 times earnings which is above the historical market average at 15.8. The high-flying momentum stocks such as NFLX and TSLA were hit this week. The 10-year yield is 2.51%.  Margin debt jumps 5% over the last month as traders take on more and more leverage chasing the stock market higher just like the 2000 and 2007 market tops. Equity prices for the major indexes are extended above their moving averages across monthly, weekly and daily charts, as well as tagging the upper standard deviation boundaries, indicating that a reversion to the mean (lower prices) is desperately needed. The low CPC and CPCE put/call ratio’s and low volatility (VIX) verify the complacency and fearlessness of traders. Everyone expects easy money QE to continue to March and later so why worry and instead, everyone is ‘partying like its 1999’, as Prince says. Snowden, the NSA whistleblower, now exiled in Russia, provided the documents that verify the U.S. spying on 35 world leaders and how senior officials were told to share their cell phone contacts so foreign politicians could be monitored by the NSA surveillance systems. U.S. foreign relations are damaged. All your communications and actions on computers and cell phones are continuously monitored, recorded and archived a la 1984 (George Orwell).

----------------------------------------------------------

On Monday, 10/28/13, Industrial Production.

On Tuesday, 10/29/13, FOMC Meeting begins. PPI. Retail Sales. Business Inventories. Consumer Confidence. 5-Year Note Auction.

On Wednesday, 10/30/13, ADP Employment Report. CPI. 7-Year Note Auction. FOMC Meeting Announcement.

On Thursday, 10/31/13, EOM. Jobless Claims. Chicago PMI. Farm Prices.

On Friday, 11/1/13, Fed’s Bullard speaks. PMI’s. ISM Mfg Index. Fed’s Kocherlakota speaks.

----------------------------------------------------------

On Friday, 11/15/13, Twitter IPO begins trading on the NYSE.

In Q4, European bank stress tests will begin and take one year to complete (there are likely 10% of the 128 banks undercapitalized  with no clear way on how to recapitalize these troubled institutions), Germany’s high court must decide if the ECB’s OMT program is constitutional, and Europe must finalize all plans for the new banking union.

-----------------------------------------------------------

On Friday, 12/13/13, Congress provides a detailed road map to handle the U.S. budget crisis moving forward.

-----------------------------------------------------------

On Sunday, 12/15/13, the sign-up period for Obamacare ends; Whitehouse needs 7 million people, otherwise, the program will start bleeding money and require a future bailout by the taxpayers.

----------------------------- 2014 ----------------------

On Wednesday, 1/15/14, a Continuing Resolution (CR) is needed to fund and keep the U.S. government open.

On Wednesday, 1/29/14, Chairman Bernanke conducts his last official two-day meeting (1/28 and 1/29) as Chair of the FOMC.

On Friday, 1/31/14, Chairman Bernanke’s term ends at the Fed. Yellen takes over.

On Friday, 2/7/14, the Debt Ceiling Limit is hit where the U.S. may default on obligations. Treasury Secretary Lew will use extraordinary measures to extend this time forward so late February or early March is a likelier deadline. Winter Olympics begin in Sochi, Russia, through 2/23/14.

On Wednesday, 3/19/14, new Fed Chair Yellen talks at the conclusion of her first FOMC meeting (3/18 and 3/19).

In February/March 2014, the Fed Chair Yellen testifies before Congress.

In March 2014, the ESM is officially “fully operational.” The Euro banking union is in place after delays from January 2013 to January 2014 and now to March 2014.

In April, MSFT no longer supports Windows XP.

---------------------------

© The Keystone Speculator. All Rights Reserved. 2012. 2013.