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.