Wednesday 17 October 2012

Morning Call: October 17, 2012

Futures: The markets are digesting the huge gains of last two days and it is normal for the markets to give back a little gain before it start with the journey again.

Overnight, Dow futures are down 20+ points, Nasdaq futures are down about 6 points while S&P is up about 3 points. The four hourly chart of /ES (SPX futures) are overbought and will most likely turn down. While that is the logical course of action, market does not always behave logically. Therefore, if I am a day trader (which I am not), I would not jump to short the market just because RSI has reached overbought. Rather I would see how low the correction goes and buy in new long positions.

Reasons being, the up momentum for the last two days is very strong and cycles are up.

Commodities: Natural Gas has started its downward journey which I wrote in the weekly report. Hopefully it will reach around $3.25 or lower to allow a good entry. Crude is modestly up along with Euro but the cycle is down and those who control the speculators will ensure that crude does not go up till election. Gold and silver consolidating at yesterday’s level.

Earnings & Economic data: The earning season is upon us. Today's economic calendar features the MBA mortgage index, new housing starts and building permits, as well as the weekly update on crude inventories. Meanwhile, earnings are due out from American Express (AXP), Abbott Laboratories (ABT), Align Technology (ALGN), Bank of America (BAC), Bank of New York Mellon (BK), BlackRock (BLK), Check Point Software Technologies (CHKP), Comerica (CMA), eBay (EBAY), Halliburton (HAL), Kinder Morgan Energy Partners (KMP), Knight Capital Group (KCG), PepsiCo (PEP), Quest Diagnostics (DGX), St. Jude Medical (STJ), SLM Corp (SLM), Stanley Black & Decker (SWK), Steel Dynamics (STLD), U.S. Bancorp (USB), and Xilinx (XLNX).(H/T Schaeffersresearch).

I expect most of these companies will beat the forecast.

Yesterday’s price action indicates that QE3 or QEI (whatever you call it) has started its action. And that was exactly what they had in mind. Maximum impact just before election.  Once we know which direction they are leaning, we can play accordingly.

Conclusion: Look for the market to seek lower levels today but no reason to be a bear.


  1. Nice to have a morning cup of BB.

  2. I encourage readers of this blog to read Ryan Detrick of Schaeffers for different perspective of the long term trend of the market. He outlines 11 reasons to be bullish! He has also been "dead on the money" regarding the summer rally and many have made large sums of money by following his advice.

    I guess it takes 2 to make a horse race!

  3. BB, appreciate your hard work day by day

    for the SP 500, do you think think a pull back can be happened within these 2 days before going up? or according to your cycle, move up until 28-29 of Oct?

    1. Hello Mikey,
      How are you doing my friend. I just wrote in the evening post " mixed bag Wednesday" It will be very unnatural for the market to continue higher and higher from here till October 24th/25th. I was expecting the market to seek lower level today but that did not happen. It may happen tomorrow. Knowing how these manipulators work, most likely we will find futures down 10 points when we get up in the morning tomorrow. It will be perfectly normal for SPX to spend a day or two at 1445-1450 level before starting the journey up."
      So you see, I am expecting a pullback tomorrow.Let us see how it plays out.

    2. i am pretty well and looking to get into the SP500 car so a pull back is always welcome. thursday is the Euro summit, and it may bring some news ? who knows

  4. real estate

    The quality of your blogs and articles and worth appreciating.