There is no shortage of market drama. This circus lives up to the billing as the Greatest 'Show' on Earth. Global markets are in a happy mood following along from the strong recovery rally in the U.S. yesterday. The euro is almost at 1.30. Up euro means up markets and the S&P futures are elevated overnight and up about eight points. As highlighted in this morning's chart, the SPX bounced 15 points off of the euro goose and Boehner optimistic comments, 10 points off President Obama's promise for a fiscal cliff solution before Christmas (about three weeks away), and 8 points on the WSJ article discussing upcoming Fed money-pumping likely to be announced at the FOMC meeting on 12/12/12. Traders are addicted to the quantitative easing crack cocaine so any hint of this candy and the bulls run. Markets may now shift into a mode of pricing in the upcoming Fed happy talk in December when they should replace Operation Twist with an even grander scheme. Early December is the heightened activity for tax-loss selling in the markets. Traders will throw losers overboard so they can write the losses off against this year's gains. At the same time this year, the worries of capital gains taxes jumping from 15% to perhaps 40% has traders running to the exits to take the money now and receive the lower tax rate. Thus, oddly, juxstaposed against a now bullish rally is a double whammy of potential selling over the next couple weeks. Simply group this with the other ongoing mixed market signals.The run-up yesterday was about 0.8% for the broad indexes, with the Nasdaq and RUT lagging. Tech and small caps should be leading if a rally is real with long legs. Watch the BPSPX chart to see if the bulls can create a maket buy signal. Scroll back a few pages to study the last BPSPX chart or type 'BPSPX' in the search box above to find the chart. The BPSPX placed a near term bottom at 58.4, so a six percentage point reversal buy signal is 58.4+6 = 64.4. The BPSPX is 63.00 only 1.40 away; check this tonight after the close to see if the bulls will place a large feather in their caps, or not. The TICK did not become overdone to the downside yesterday but excessive bullish prints over +1000 did occur. The TRIN was well-behaved for the selling yesterday at 1.0-1.3 but the bullish move resulted in an uber low excessively-bullish TRIN in the 0.5's. The NYAD did not become overdone to the downside yesterday before the rally started. These three musketeers tell you that the market drop yesterday morning did not end as a panic low as you would expect for such a dramatic comeback. Quite the contrary, the selling was steady-eddy, and the rally move actually created overdone upside bullish orgy action. Also of interest is the 10-year yield at 1.61-1.63% not wanting to fully jump on board with the equities rally, yet. The yield should have jumped much higher, at least 1.65% or more. The yield is at 1.63% at this writing not showing enthusiasm for the bull rally.AAPL was down a couple bucks yesterday. The CPC and VIX continue to remain low, both these fear gauges indicate that all is well with the trading world, no worries at all, markets will stay elevated forever. Remember, the fear gauge is a contrarian indicator, when no one is worried, that is when you should worry. The SPX 50-day MA is 1423.37. The 20-week MA is 1414.68. The SPX is above the 200 EMA on the 60-minute chart and the 8 MA is above the 34 MA on the 30-minute chart so the bulls rule for the hours and days ahead.Watch SOX 372.42, XLF 15.65 and VIX 15.85, all three contributing bullishly to markets. If any of these three flip sides, the markets will weaken, however, the strong futures this morning will assure that all three of these parameters likely remain bull friendly for now. Therefore, the next parameter the bulls need to launch to create more market upside is copper, JJC 44.85. The JJC is twenty cents below contributing bearishly but copper is up a huge 1.6% this morning. This action will launch JJC thru the 44.85 and send the bulls to strongly higher numbers in the SPX such as 1419, 1429 and 1433. Watch JJC 44.85 this morning since it is a useful tool when considering the short side. If copper runs up, then the SPX has another ten handles after the cross would occur, thus, the bear side may not be prudently considered for adds or new shorts until the SPX is at 1424 (50-day MA), 1429, 1433 or 1435.Refernce Keystone's Key Events and Market Movers missive posted on the weekends to see what is on tap schedule-wise each day for the markets. GDP was just released showing a jump to 2.7% likely on the election year spending. Pending Home Sales are 10 AM so markets may take a slight stutter step, Natty Gas Inventories are 10:30 AM, Kansas City Manufacturing Index at 11 AM. The oddball 7-Year Note Auction is at 1 PM. Watch the interplay with Geithner and Boehner today. The full moon and lunar eclipse occurred last night. The cosmic effects must have manifested in the market behavior yesterday and perhaps this continues a day or two more. TIF earnings took the pipe this morning, the poster child of luxury spending, and a key global indicator since half their sales are international. This bellwether says caution ahead but the stock market is only looking for crack cocaine stimulus that will keep it happy one day at a time, just like a junkie. In a nutshell, watch JJC 44.85, XLF 15.65, SOX 372.42 and VIX 15.85, also the key resistance levels that offer potential shorting opportunities at 1419, 1424 (50-day), 1429, 1433 and 1435.Note Added 11/29/12 at 9:38 AM: JJC explodes higher; copper sends equities another leg higher. The 10-year yield remains a paltry 1.63% not wanting to follow equities higher. The SPX punched up thru the 20-week MA at 1415.03 and is shy of the 50-day MA at 1422.49. Price will set its sights on 1419 and the 50-day. Keystone took profits on HPQ exiting the trade. HPQ remains attractive moving forward, it was beaten badly and is in the recovery room and should continually improve moving forward and move higher, Meg is a very capable manager. Also bot ZSL, a double X inverse ETF, opening a new long position, a very dangerous speculative trade that moves opposite to silver price.Note Added 11/29/12 at 9:57 AM: The four parameters of interest today (XLF, SOX, VIX, JJC) are all bullish and considering that copper was shot out of a cannon today, and semi's leaped as well, focus on XLF 15.65 and VIX 15.85 as the two key signals for broad index movement. Both are bullish and markets will remain bullish unless one of those two characters turns bearish. The day is settling in waiting to see if Geithner and Boehner are skipping hand-and-hand along the Whitehouse sidewalk, or, if they are at each other's throat's like pit bulls. The euro just moved over 1.3000 (reference this morning's chart). The euro topping at 1.3030-ish and the SPX at the 50-day MA may prove to be an inflection point on deck. Keystone added more ZSL.Note Added 11/29/12 at 10:51 AM: The euro punched up thru 1.3000 and then promptly fell on its sword, now down to 1.2975, thus, the SPX moved up to a HOD at 1419.70, less than three points away from the 50-day MA), and has now pulled back to 1416. The Nasdaq is up 0.7% and the SPX is up 0.5%, thus, tech is leading the broad markets higher providing bull street cred for today. This is probably just a lull in the action. Once Geithner and Boehner are shown arm and arm dancing the Last Waltz together, the markets should pop higher. The Fed manufacturing data is a few minutes away.Note Added 11/29/12 at 11:47 AM: Speaker Boehner steps up to the microphone and proceeds to fire a missile at the fiscal cliff negotiations blowing all the 'happy talk' sky-high. Boehner says the meeting with Geithner was cordial but direct. He said that there has been "no progress with the talks over the last two weeks and that the democrats need to get serious." The SPX immediately drops five handles and the Dow Industrials drop over 50 points in a heartbeat. The 10-year yield is 1.62%. The euro is 1.2957 far from 1.3000. The VIX, XLF, SOX and JJC remain bullish so the markets will remain elevated. The markets are a treacherous road to drive with the politicians dropping tape bombs (news bites) from above. Right now, traders are watching Geithner to see if he coughs, or Reid to see if he picks his nose.Note Added 11/29/12 at 12:28 PM: Harry "Happy Talk" Reid steps up to the podium dishing out his same schpeal. Senator Schumer grabs the microphone and tells everyone that progress is being made so the markets recover. He must have an app on his cell phone and wanted to reverse the negative market action. One side says no progress is being made while the other says there is progress. Who do you believe? Probably neither. The old political joke comes to mind. How do you tell if a politician is lying? His lips are moving. The XLF and VIX stays in the bull camp so markets recovered. If one of them would have turned bearish, then the broad indexes would have weakened. The euro is 1.2968. The 10-year is 1.62%, yields are not moving up. During the excitement and drama at 11:40 AM, the semi's, SOX came down to test the important 372.42 level, and bounced. Watch SOX 372.42 since this will create broad market weakness should it fail. The sideshow continues.Note Added 11/29/12 at 2:27 PM: Status quo. Traders need a rest after yesterday's excitement. The 10-year yield is 1.61%, very interesting. The SPX is 1417. The 20-week is 1415.02 and 50-day is 1422.48. The 1419, 1416 and 1413 are strong support levels. Resistance is 1422, 1424, 1427 and 1429.
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