Brian's Monday recap: Cyprus stop runs, AAPL call

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By Brian Shepard    And the Oscar for the most … asinine moves by a government goes to … Cyprus. They announced they were taking (stealing) 10 percent of banking deposits for those holding more than €100.000 there. For those accounts with less than the cutoff mark will be taken for a 5 percent haircut. They have since come out and reduced the level of the percentage moves, but that is immaterial. This is the single most harmful action of a European country for the euro. It removes the rule of law from the system. Moreover, Russia, which has huge deposits there has their ire raised. Vladimir Putin has issued a stern denunciation of the action. Many oligarchs and Russian mafia have hidden money there over the years. The Cypriot government may find out it is not nice to fool with Russians and their money.   Although the news above trumps all else, Iran has launched a destroyer into the Caspian Sea. This is the first such action. It gives rise to the notion that Iran is asserting territorial claim to some of the oil riches there. While the situation needs to be monitored it is not an immediate threat to anyone. China has ridiculed the U.S. for wanting to increase the missile shield for North Korea. The Chinese feel this will be needless provocation when cooler heads are needed to prevail. This is another situation along with the enmity between Japan and China that will be a potential hotspot in 2013. Posted by Stanton Analytics.   Collective Intelligence! Chatter - fast money acct out of Barclays - generally good on directional play - bot 1k wk4 1555c on Friday - we believe still in trade at this point. Also, I feel [AAPL] has built a bottom. MTS, MrTopStep, posted one of my Apple charts last week in the chat room and on their website. The three buy signals were indicating to me a bottom was being built. Apple broke out higher on Friday and is following through higher this morning. If Apple and the NQ take up the leadership role higher, by next week people will be saying "Cyprus Who" - posted by Tony LaPorta. http://bit.ly/115dZDY    Deposit flight shouldn’t occur in other countries –“there are suggestions the Cyprus deal will lead to depositor flight in other countries but, realistically, the only ones at risk are other suspected money laundering havens and tax shelters. Latvia springs to mind. But not Portugal, Spain, Italy or Ireland” (London Telegraph http://goo.gl/EC2rX).    US TSYs: Treasuries still underpinned by Cyprus worries, though off the session highs amid mixed flows. "According to the Bank of Cyprus, in January 2013, total bank deposits amounted to EUR68.4bn, including EUR25.6bn held by foreigners (37.5%) of which EUR4.7bn 'only' by Eurozone residents," said David Keeble, global head of rate research at Credit Agricole. "A lot of the remainder comes from Russia and UK. The issue is not the 800k residents of Cyprus but this deal has let a genie out of the bottle. Before now, depositors were protected in order to prevent bank runs in the event of a need for bailout. If this is not the last bailout, the next will be far more difficult. As it is, Cypriot default/exit of EMU are now scenarios with significant probabilities."   Don’t miss this guy > @princetontrader aka Mike V posted his Pivots http://t.co/nyRzMhkzat Webcast http://t.co/uWXnkSk9DA  If Bulls get back inside the gap over 44 it'll be like this never happened. I'd love to get excited about us going to the lower band but the Bears need to show me something, until they do I remain very very skeptical. the 1529.50 move was a 38% retrace of the 1481.75 to 1558.75 move and a zip code move to middle band. (1527.95), bulls have conceded zero. That said the bulls better watch out because bad news is going to be dealt with harshly. Much more 2 sided from here on out. At (08:49CT) Mike posted his vol windows ES: 1547.00 x 1534.25 and NQ: 2783.75 x 2752.75.     Kathy has had some very good calls too! Charts posted by Kathy Garber @tbg4321. Harmonic rotations  ES requires a pb to form the next leg, 1540.5 is important sup test, updated chart: http://screencast.com/t/RZ8qgaua   Updated 6E chart (as long as holds below 1.2985, keeps emerging Gartley in play, completion tgt 1.2912) http://screencast.com/t/Tm9FcruPG700   The Fed will debate the risks and efficacy of continuous stimulus. However, the chairman has already made known his feelings. His stance is that doing nothing has the greater risk. The two-day meeting concluding Wednesday will provide some insight into the continuation of the experiment. Many board members see the risks of removing the largesse, which amounts to $2 trillion, as creating other risks to the economy. This will be a closely watched meeting as oil has become more negatively correlated to the dollar of late - posted by Stanton Analytics.   During the Globex session 520k ESM and 2.4k SPM traded on Globex, trading range was 1529.50–1544. Friday’s regular trading hours (RTH’s), pit session trading range was 1556.50 – 1549.30 before settling at 1533.60 down 2.4 handles. The ESM sold off hard overnight, down 24 handles on oversized Globex volumes, over 520k traded pre 8:30 open. This tells us there was a rush to sell and it’s our guess most of the selling was done at or near the lows. With this in mind, the sellers placed buy stops and the algos chased the closest cluster of buy stops, thus the early buy program. The opening imbalance showed an overall $86.44M x $1,084.75M, yes that was $1Bil to sell on the opening which was consumed by the aggressive buyers.   Today’s SPM regular trading hours not only gapped 5 handles lower at 1539.00-1538.20, but it was also the first time in 2013 that the opening range gapped open below the previous day's low. Quirk or portends something more "macro"? The SPM traded 1538.00 and stepped higher. By 8:59CT the SPM was retesting the Globex high when at 9:00 the disappointing NAHB housing data checked in at 44 vs exp of 47. The SPM held 1543.50 following the data, once again indicating ALL THE SELLING WAS DONE PRE-OPEN. The S&P was printing new highs of 1549 at 11:00 and on to 1552.20 at 11:17. On the pullback 1547.50 area held as the sideways trade set in.   By 2:15 the bears were converting the 1547.50 area in light volume and pressed the index down to the Globex high, 1544 area. At (14:18CT) CYPRIOT LEADER TO SAY HE LACKS VOTES TO PASS LEVY, ANTENNA SAYS The SPM was trading 1544 area when the 2:45 closing imbalance showed the broader market with a very small $70Mil to buy. The VIX was trading a new daily high of 13.64 going into the cash close. On the 3:00 cash close the SPM traded 1545.50 area (15:04CT) EUROGROUP SAID TO GIVE CYPRUS MORE FLEXIBILITY ON DEPOSITOR LEVY FOLLOWING TELECONFERENCE and the SPM was trading 1548.30 area at 3:05 before settling at 1546.80, down 6.8 handles on the 3:15 futures close. Something to think about - the last 9 Tuesdays have all closed higher.   Brian Shepard is a 20-year exchange member of the CME Group.  _______________________________________________________________   YOU WANT A LOOK AT WHAT OUR TRADERS SEE EVERY DAY? 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