The week, quarter and time for the Eurozone to implement the austerity measures are running neck in neck and time is of the essence. Following Tuesday’s selloff, largest index retracement in almost 3 months the overseas markets held their composure nicely as evidenced by the tight 7 handle Globex range last night. As the bears jumped in, traders showed their eagerness to lock in profits and ask questions later. The headlines were minimal today as opposed to Tuesday’s over coverage as little has changed and that is the problem. Eurozone and sovereign austerity measures, quarter end rebalance, earnings, warnings, downgrades and we can throw in a bit of TA. Technical analysis has caught up to the running of the bulls over the last few months. Time will tell if this move is working off an overbought condition and consolidating or is there something else in store before the next set of scheduled events?
Earnings:
9/27 – before the open (DFS, MKC); earnings after the close (ACN, GPN, MU, NKE, RIMM); analyst meeting (GE, URBN, UTX)
9/28 – before the open (AM, FINL, WAG)
Economic data:
9/27 – US Q2 GDP revision, Aug durable goods (8:30amET) and pending home sales (9amCT)
Fri Sept 28 – US personal income/spending and PCE deflator (7:30amCT) and Michigan Confidence (8:55amCT)
9/28 – Eurozone CPI estimate (4amCT)
9/28 – ECB’s Asmussen speaks in Berlin (6:30amCT)
9/28 – Spanish bank stress tests due on either 9/27 or 9/28.
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 (4amET) and unemployment rate (4amCT)
10/1 – US manufacturing ISM and construction spending (9amCT)
Big European dates:
9/27 – Eurozone M3 for Aug (3amCT) and Eurozone confidence (4amCT)
Note: Full Spanish bank audit due, details of Spanish “bad bank”. Spanish cabinet due to approve 2013 budget; Spanish budget due to be presented to parliament. Spanish bank stress tests due on either 9/27 or 9/28. Spain may publish a new economic reform package too… Also, chatter Spain ratings change from Moody’s? From JPM’s P Wadhwa: “we expect Moody’s to resolve its negative watch on Spain by mid- September (it first put Spain on negative watch on 13 June). Historically speaking there is a high probability of follow-through after a negative watch listing, in the vicinity of 70-80%. Impact would be material, as Moody’s currently has Spain at Baa3. Greek, Irish and Portuguese 10Y yields rose an average of nearly 300bp after their first downgrade to sub-IG”.
Wednesday started with 285k ESZ and 1.3k SPZ traded on Globex, ESZ trading range 1439.75 – 1432.50 / Tuesday’s RTH’s, pit range was 1456.70 – 1435.00, settled at 1437.20 down 14.2 handles. Today’s RTH’s gapped 2 handles lower to 1434.50 – 1435.50 marking the early high before trading 1431.50 8:42, testing 50% FIB 1468-1349.25 at 1431.25 and then cash 20 day sma as the SPY breached it. After trading 1430.50 the spoos tested 1432.50 area, but pulled back and double bottomed following the new homes data and the bulls stood pat. The bears took control as the buyers did not defend the 1431/32 area and sell programs ran the sell stops down the 1424.50 by 9:31CT wiping out much of the September gains. Stanton_Analytics (10:38:38): By David Marino Sept. 26 (Bloomberg) — An explosion was reported at Irving Oil Corp.’s Saint John refinery in New Brunswick. The reason rbob is up another 10 cents today / that is up 30 cents this week / Can you say fill ‘er up? So much for imminent relief at the pump…During the midday the volume dropped off as the spoos stepped quietly high to 1433.50 at 12:27. After some sideways trade, the bid dried up mid-afternoon and retested 1428 area before bouncing back to 1430 area by 2:27. After the lille bump up the SPZ sold back off down to 1426.50 just after the 2:45 imbalance showed 18 of the DOW 30 (small) and the broader market MOC showed SELL 400mil. On the 3:00 cash close the SPZ traded 1427.73 before settling at 1427.00 down 10 handles on the day.
MTS Chart: “I GOTTA CASE OF THE BOLLINGERS! ESZ 1425 / CL $89 / BONDS ZB $144!”
