In the early going the month, quarter end was a mixed bag. The DJT’s continued it’s downward trajectory, US dollar was firm, treasuries were choppy, gold consolidating, crude was dormant and AAPL was slipping as traders awaited the results of the Spanish bank stress tests. Mainstream media; the tests will reveal an aggregate capital hole in the EU60B range while Rajoy was expected to ask for EU40B from the EFSF. Late morning headline SPAIN RELEASES RESULTS OF BANKING STRESS TEST: BANKING SYSTEM NEEDS €59.3B UNDER STRESSED SCENARIO. BAM!!! All is good, at least through the midday. As those in the know waited for – The WalkAway Trade is still a force to be reckoned with. Scroll down, but take your time and checkout the other interesting trading observations at http://www.mrtopstep.com/trading-101/ These guys got an early start; Italian unions strike against Monti, close Colosseum; up to 30,000 march to protest austerity cuts.
Wacky world of crude: Henry, is holding 92 today critical to crude…for the week, month, quarter…or is 90 then 87 more important?
Stanton Analytics: Brent: the important support for this pattern is 111.50 to 111.30. We favor the latter for the stronger support. The minor downside pivot is 111.10. For the week, if Nov is to recover more to the upside next week, it will need to hold the 90.00 area. 93.20 is the important upside pivot for the day. 94.50 to 94.65 will be a huge number next week. Note: Chatter about a hedge fund that was long heat and short rb in oct. That is why they call it the WidowMaker!
Morning observations: Since 1930, down 2H Septembers have been followed by positive Octobers. Since 1930, following a “down” September, October gains averaged +0.5%, ahead of the +0.1% for all Octobers. Returns have been even better when we consider years: (i) in a “bull” market; (ii) in an expansion (not recession); and (iii) in a Presidential election year and meeting the other two criteria, which resulted in a positive October 80% of the time with an average gain of 1%. Crude fluctuating near unch following the 10% break and nearly 2% pop. Cyrus
Morgan Stanley: The S&P will finish the 3rd quarter with gains in each of the three months within the quarter. in the “for what it’s worth” category, that has only happened 13 times since 1928. Of those, the 4th quarter was an up quarter 12 times. The exception was a very modest 0.75% loss in 1940. Source
Economic data:
9/28 – France to publish ’13 budget
9/28 – China HSBC manufacturing PMI (Fri night)
Sun 9/30 – China manufacturing PMI (Sun night)
10/1 – Eurozone PMI manufacturing (4am ET) and unemployment rate (4am CT)
10/1 – US manufacturing ISM and construction spen
Friday started with 312k ESZ and 1.3k SPZ traded on Globex, trading range 1443.50 – 1432.00. Thursday’s RTH’s, pit range was 1430.00 – 1444.00, settled at 1441.10 up 14.2 handles. ettled at 1426.90 do 6 handles lower to 1435.50 – 1435.20 marking the early high and chopped around in the 1433.70 back up to 1435.80. At 8:45, earlier for some ;) Chicago PMI check in at 49.7, below 50 ain’t so good either is going back to Sept 2009 levels. Oh yea, the prices paid 63.2, up from 57 is marking the third consecutive month of inflation. Oh, wait, Didn’t the Fed say they are not too worried about inflation? Is it under control with smoke, mirrors and/or their data? 1430.60 traded at 8:47 and then 1429.80 at 8:54 as Michigan sentiment checked in at 78.3 vs exp 79, highest level since May produced a pop to 1433.50 area. Transports were down 60ish points by 9:02 and held as the spoos popped, but made a lower high. mts2 (09:26:39): sell pgm (09:27:39): AAPL, GOOG lows as spoos posted 1429.30 LOD. Scott posted (09:37:27): UVOL/DVOL ratio appears to be stabilizing, now oscillating around -4 to 1 and back to 1433.50 area. Following the Spanish news the shorts covered as the buy stops elected the programs fueling the ride up to 1439.80 HOD at 12:47. What happened next? The WalkAway trade began to run it’s course – right down the bulls throat! BAM!!!! The closing imbalance showed 25 of the DOW 30 to the buy side and the broader market showed a huge$1.4Bil to buy. On the 3:00 cash close 1444.00 was trading, settlement was at 1434.20, down 6.9 handles. EOM fixed at 1433.79.
MTS video: http://www.mrtopstep.com/9-28-12-rich-canlione/
MTS Chart: +45 TOTAL HANDLE TRADE IN 1 DAY —>tinyurl.com/9wx6phc
