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Brian’s Observations from the CME Floor–Spain, the Election and Market Action

Brian Shepard

Spain’s downgrade was no surprise, but it sent the Globex session to a new low of 1421.50. Hindsight shows there were ready buyers on the discount and no conviction on the part of the bears to apply continued pressure on the Eurozone news. Viva La ECB Backstop! Now, if they could backstop the tech’s and the transports we might have a chance... The spoos rallied sharply preopen on the initial technical setup, as back and fill ran some weaker stops, but the equities only advanced modestly in the early morning RTH’s session. We have been reporting that this weeks erosion has only seen moderate volume as we head closer to the debates/election, earnings season and regurgitated headlines as the clock ticks away on the Eurozone and the fiscal cliff resolution - of sorts. In other words, the equities have not capitulated on the downside which would generally signal a turning point. Again, Rome was not built in a day, but we will get a peek into JPM and WFC, earnings tomorrow as the equities area trying to shake off the rotation that blew in last Friday. Also, the latest Rasmussen telephone survey reports; of Likely Ohio voters shows President Obama with 48% support to Mitt Romney’s 47%. Two percent (2%) prefer some other candidate, and three percent (3%) are undecided  http://bit.ly/Hs9UPV

Morning observations: Today's jobless claims showed a surprise 28k decline to 339k. Reports state, the number may have been influenced by the “seasonal adjustment” factor.
Conspiracy theorists are leaning away from the seasonal factor and more into the administration factor as word quickly spread…Roger (07:45:00): chatter a large state in US did not submit numbers for the jobless data , hence the lower than expected result... unable to confirm this at this stage. It was later reported: California purposely did not file re-certification process for claims benefits...as a result, they did not file the increase in claims. Thus, making claims drop huge...this is from BLS official...Chatter followed adding about 25k, bringing the number back to 364k area. Now, even more are ready to stoke the fireplace, with a glass of wine nearby and the big screen tuned into tonight’s VP debate. The Middle East continues to weigh with today's reports of a Syrian pipeline that was blown up and a Russian plane carrying munitions was stopped.

Thursday started with 278k ESZ and 1.8k  SPZ traded on Globex, trading range 1437.00 – 1421.50/ Wednesday’s RTH’s, pit range was 1425.00 – 1437.30, settled at 1426.30 down 9.6 handles. Today’s RTH’s   gapped 10 handles higher to 1436.80 – 1436.50, traded an early high of 1437.20 down to 1435.00, 34.60, 34.20 by 9:08CT. at 9:45 the buy stops/programs above 1437.50 ran the spoos to a new high of 1439.00 by 9:45. However, mts2 (10:08:43): nazzy fade as news made the rounds the appeals court allowing Samsung to start selling Galaxy Nexus and the AAPL fell just a couple of notches... and then a few more down almost $10, or 2%. The tech sector does not have the swagger it once had and is bleeding even more than the DJT’s during the tablet surge / economic slowdown. (09:21:27): Syrian Security forces blow-up an oil pipeline, followed by reports of a Russian plane carrying weapons to Syria was stopped. Shortly after these headlines the bonds were trading new highs, up about half a point and crude was testing $93, up almost $1.50. Equities made a series of lower highs and lower lows on the pullback printing a new low of 1429.00 by 12:50. Our resident technical analysis team of, william_blount (12:39:33):c = .618 of a 1430.25 -- and a=c 1427.25, @princetontrader posted aka Mike_V (12:45:47): 1428 daily and 45 dayer EUBIE (12:56:13): 1429 PUNCH / try a legg long scalp. Well, you can probably guess a rally followed...on in fact the rally held 1432 area. We like to point out if a trader is patient and the technical analysis is good - it only takes a few of these trades a day to be a successful trader. I know, you are thinking it is much easier said than done...give a chat room a trial assuming they offer a free trial period - like http://www.mrtopstep.com/free/ and see how it can help. The closing imbalances showed 25 of the Dow 30 for sale, the broader market showed a small $220M to sell. The spoos traded a new low of 1428.20 on the cash close and then 1427.50 LOD before settling at 1428.40 on the 3:15 futures close, up 2.1 handles on the day.

MrTS video: http://www.mrtopstep.com/10-11-2012-gary-sandlund/