Keystone's Morning Wake-Up and Midday Market Action 10/3/13; Shutdown Continues

The political baby talk continues with the president, Senate and House all talking past each other with no one listening. The CR continuing resolution debate, resulting in the current government shutdown, will likely flow into the debt ceiling limit talks where both are handled in one package. Therefore, this daily theatre may continue for a couple weeks. S&P futures are below fair value all night long but are recovering into the opening bell. Keybot the Quant is short but wants to flip long and if the SPX prints above 1694 and higher, and stays above today, the algo will likely flip to the long side. The broad market direction is most influenced by XLF 20.01, JJC 20.13, UTIL 483.53 and GTX 4889 currently. Financials, copper and utes are creating market bullishness while commodities are creating bearishness, respectively. Thus, the bears need to attain either XLF 20.01, JJC 40.13 and/or UTIL 483.53 to stop the upside, if not, they will fold like a cheap suit and the bulls will start running the SPX over 1700. GTX 4889 would supply more bull fuel.

SPX begins at 1693.87. The 20-day MA is 1691.97. The 200 EMA on the 60-minute is 1685.59 and the SPX is above signaling bullish markets for the hours ahead. The 50-day MA is 1679.99. The 8 MA is above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. VIX is 16.60 and remains above the 200-day MA at 14.45 which is a very market bearish signal. CPC put/call ratio drops to 0.77 verifying the ongoing rampant trader complacency. ISM Non-Mfg Index and Factory Orders hit at 10 AM which will create a market pivot point. Natty Gas Inventories are 10:30 AM. Fed's Fisher, a hawk, speaks at 12:30 PM and Fed's Powell speaks at 12:45 PM. Markets are typically bullish from the last day of the month through the first four days of the new month. Markets are typically bearish through the new moon which occurs tomorrow. Markets are in a Bradley turn window where a major market directional move should occur over the coming days. Keystone's Eclipse Indicator continues to point to this time period as having potential for a large market sell off.

Equities remain a coin-flip. Watch XLF 20.01, JJC 40.13, UTIL 483.53, GTX 4889, SPX 1694, and the 200 EMA and 8/34 MA cross, as described above, to determine market direction today.

Note Added 9:58 AM:  Flip-flop day. XLF drops under 20.01 now helping bears. Ditto UTIL collapsing under 483.53. But the bulls flex muscles and take GTX above 4889. What a circus. Markets are erratic and unstable unable to choose a firm direction. JJC remains above 40.13 helping bulls.

Note Added 10:01 AM:  Factory Orders data is cancelled due to the government shutdown. The ISM Non-Mfg (Services) data is weaker than expected. Stocks drift a touch lower. Use XLF 20.01, JJC 40.13 and GTX 4889 as the equity directional guides for today. Equities will weaken significantly if JJC loses 40.13. If XLF moves above 20.01 and the SPX above 1694, Keybot the Quant will likely flip long, but the SPX is currently printing 1683 and financials are weak. TRIN is 0.93 favoring bulls today. The SPX drops under the 200 EMA on the 60-minute at 1685.56 signaling bearish markets for the hours and days ahead. Perhaps the SPX 1671-1674 gap will come into play today? Watch the 50-day MA at 1679.92.

Note Added 10:33 AM:  The 8 MA stabs under the 34 MA on the SPX 30-minute chart signlaing bearish markets for the hours ahead. The SPX loses the 50-day MA. XLF is 19.84. JJC is 40.07 and lost the 40.13 bull-bear danger line. UTIL 478 and serious market downside will occur if UTIL loses the 472-ish level. GTX is 4871 losing the 4889. The bears are pushing hard with the bulls off balance and starting to fall down the steps. The 50-day MA is at 1679.86 and is likely the major battle zone for today. Bad things will happen to equities under 1680. The 1671-1674 gap is in play. The SPX is currently printing 1679.44. TRIN 0.59.