BGC Chart Chatter Early US Technical Brief…..Nov. 2, 2011

Yesterday's late session saw price recovery following a relatively light market on close imbalances while discounting several potential negative headlines including a US financial transaction tax (discounted as non starter) and a green light on holding Greek referendum (now targeted Dec 4/ Dec 11 saw a sentiment shift to optimistic passage).

Very short term SP 500 futures charts showed the retest of earlier session lows before pulling a complete round turn, leaving 1210-1206 area now as the short term bearish restart lines

 Short term chart reaction into yesterday's close

In the overnights, we saw an extension into very short term overbought technical readings in a 2:30am push above 1235.00 following positive price action in Shanghai Composite, which moved into positive divergence seeing its first leg of short term technical repair. Senior economists at BCC and IBC expect October's CPI to soften to 5.5%, raising hopes for PBoC to open liquidity.

Very short term oversold reaction followed sub 1223.50 following the cancelation of EFSF bond sale and weak EU manufacturing data.. Positive price action following better than expected ADP employment report with revision.

SP 500 Futures technical reactions in overnights….next VST technical extremes OB > 1242.50 ; OS < 1217.50 good until noon

On tap are 12:30 EDT when the meeting between Sarkozy, Merkel and Papandreou takes place in Cannes , FOMC meeting announcement and the Bernanke press conference. Cycle wise the shift is early month weakness begets late month strength in the best 6 month cycle. We're watching the price action from Nov/ Dec 2010 as the models.

Market on open imbalances (09:28:32) $ 1,175.65 M / -35.55 M ——————————————————————————–
Oil / Gas           : $  169.42 M
Basic Materials     : $  122.03 M
Industrials         : $  155.27 M
Consumer Goods      : $  101.38 M
Healthcare          : $   65.33 M
Consumer Services   : $  117.95 M
Telecommunications  : $   31.87 M
Utilities           : $   45.35 M
Financials          : $  272.80 M
Technology          : $   58.00 M

Quick look

Copper +2.6% in early am lending strength in commodity group/miners/basic materials.

Gold short term daily charts in consolidation. Leaves buy tail on a retest of grouped supports from 1701-1685. Technical damage would need a close sub 1669. Technical relief above 1722.00 with the top of the  range at 1755 (close) to signal fresh bullish continuation

SP 500 futures closing focus range:  inside range 1235.50/ 1217….outside range 1244 / 1213 to roll over short term technicals……a higher low for now

ND 100 futures closing focus range: inside range 2335 / 2284…..outside range 2351 for momentum repair / 2263 to bust Oct repair pattern….daily chart holding positive divergence

Crude Oil futures: DOE supply Crude +1.8M     Mogas  +1.3M      Dist   -3.5M. Flag forming with outside range 88.10 -94.90; inside range 94.20-90.70

DJ Industrials closing focus range: inside range 11806 / 11630…..outside range 11950 / 11540

DJ Transportation closing focus range: inside range 4900 / 4700…..daily chart holding positive divergence

Italian 10-yr yields: consolidating with a lower high 6.18% from 6.33% with Thursday's low of 5.705%; Yesterday high 6.33% pushed against the August high at 6.39%

Frankfurt DAX: consolidating with higher lows. Next ledge at 5700-5620 to maintain…..6110 to repair momentum

Paris CAC: in short term technical limbo. The bottom of range 2970 / top of immediate range 3190-3250 for repair

London FTSE 100: maintains short term repair pattern above 5350—5290…..momentum repair retakes5580

Shanghai Composite: now in positive divergence with close above 2475. Upside accelerator is 2575. The top of the current range is 2675- 2745. Daily chart below

Early chart views:

EURUSD (1.3810 last) higher low forming in dailies at 1.3608-1.3636 leaves a consolidation. Scaled up resistance looms from 1.3900-1.3920 (for momentum repair). Daily chart support reforms at 1.3680-1.3660. Negative restart sub 1.3630. Weekly support 1.3800, 1.3600, 1.3520,  1.3470 exposes an air pocket to 1.3260. Weekly chart resistance reforms at 1.3800, 1.3950. Major resistance at the Nov 2010 high at 1.4282 held last week's test.

EURUSD Daily Chart Model….377 day SMA holding day 2 test at 1.3630. Immediate resist 1.3838, 1.3878, 1.3880-1.3900. 1.3935 to sound all clear

SP 500 Futures Daily Chart Model…..higher low forming against the rising 21-day SMA (light blue) has closing support lifted from 1206 to 1213. So far a try at the falling 3 day SMA at 1235.25 needed to signal relief. The top of the current range at 1244 to 1247 moves into retest of high mode

SP 500 Futures Daily Chart

Next resistance ledges (multiple levels): 1234-1235.25, 1244-1247 for repair, 1257, 1272-1277… ..1284….1288.70…..1291 (7/18 low)…..1297

Multiple supports: 1220, 1215-1213……1208-1206……..1198……..1188-1186-1182 major

SP 500 Futures Weekly Chart:

multiple resistances: 1229.50…1243, 1249, .1259 for repair……..1279….……1287-1291

Multiple supports: 1225, 1220, 1207-1203…..1196-1191, 1188-1183 to bust

SP 500 Futures Monthly Chart:

Multiple resistances: 1235, 1246, 1268-1274-1279 major…..1289……1303

Multiple supports: 1218, 1210…1194-1189 major…..1163-1161….1134, 1128, 1116

Economics Calendar – Daily View

·         Wednesday, November 2^nd : US (ADP Employment, FOMC Rate Decision); EuroZone (GermanyUnemployment Rate, UK Construction PMI)

·         Thursday, November 3^rd : US (Initial Jobless Claims, ISM Non-Manufacturing, Factory Orders);EuroZone (ECB Rate decision);Other (China Non-manufacturing PMI)

·         Friday, November 4^th: US (Nonfarm Payrolls, Unemployment Rate); EuroZone (Euro PPI, GermanyFactory Orders)

Corporate Events Calendar

·         Wed Nov 2: earnings before the open (AOL, BDX, CLX, CMCSA, CTSH, EIX, GRMN, H, HNT, HUN, ICE, LVLT, MA, MHP, MMC, OZM, TDW, TWX); earnings after the close (CLWR, CTL, FBHS, HIG, KFT, KIM, MUR, NWS'a, PL, PRU, QCOM, RLD, TSO, WFM, WFR, Z, ZIP); analyst meetings (CAH)

·         Thurs Nov 3: earnings before the open (Adidas, ANR, BNP Paribas earnings, BR, BT, Cable & Wireless, CBB, CI, CVS, DIN, DTV, EL, FIG, IACI, ITG, K, LXP, Man Group, MFC, MGM, MT, NYX, SNY, STRA, Swiss Re, TDC, TEL, Unilever); earnings after the close (AIG, CBS, FSLR, GNW, N, POWI, PRO, QSFT, SBUX, SWKS); sales (retailers report monthly sales)

·         Fri Nov 4: earnings before the open (G, Hermes, KKR, THS, MSG, RBS, WPO); analyst meeting(EFII)

Corporate Events Calendar – Week of Mon Nov 7 

·         Mon Nov 7: earnings before the open (DISH, L'Oreal, JCDecaux, SYY); earnings after the close(CFN, PLCM, RAX); analyst meetings (ALTR)

·         Tues Nov 8: earnings before the open (Cap Gemini, Intesa Sanpaolo, Lloyds Banking Group, SMG, SocGen, VOD); earnings after the close (ATVI, RBCN, ROVI); sales (MCD); analyst meetings (SWI)

·         Wed Nov 9: earnings before the open (ASH, CSC, DF, GGP, HSBC, M, RL, WEN); earnings after the close (CSCO); analyst meetings (ADBE, CY, ERIC, HAS, LOGI)

·         Thurs Nov 10: earnings before the open (Deutsche Telecom, Siemens, VIA); earnings after the close(DIS, MCP); analyst meetings (AVID, MCD, MON, MRK)

·         Fri Nov 11: earnings before the open (Allianz, DHI, Rolls Royce); sales (GWW)

Events for the week of Mon Oct 31 – the focus stays on the “macro” w/a slew of CBs (RBA, ECB, FOMC), major Oct eco data (PMIs/ISMs, jobs), and the G20 leaders summit.  Retailers and auto companies report their Oct sales also.  On the earnings front, we are in the final stages of the Q3 reporting period w/the focus this week on US insurance (PRU, AIG, HIG, LNC), media (TWX, CMCSA), and Eurozone banks (Barclays, RBS, BNP). 

Catalysts/thoughts for next week and the rest of 2011

·         Oct eco data needs to continue the recent trend of beating expectations (PMIs/ISMs on Tues 11/1 and US jobs on Fri 11/4) – the last couple weeks of eco data has surprised on the upside and investor sentiment no longer views a recession as being inevitable (which was getting to be the case back in Sept and Oct). 

·         Fed – how will Bernanke address recent chatter around a potential MBS QE3? - the FOMC is holding a two day meeting 11/1-11/2 w/a decision and Bernanke press conf scheduled for Wed 11/2 (note that this Fed decision will hit at 12:30pmET Wed afternoon).  This will be the last FOMC/Bernanke press conf for 2011 ·         ECB - meeting on Thurs 11/3 (press conf 7:45amET and press conf 8:30amET) - will they wind up cutting rates?  It seems like the market is 50/50 at this  Perhaps more important than a rate decision will be Draghi's remarks re the SMP - will he pledge to keep it open and continue buying sov debt?  Draghi intimated he would make such a commitment during recent remarks (Wed 10/26) although formally doing so during the ECB press conf would be helpful.

·         G20 Leaders Summit - 11/3-4 (the final communique will prob. wind up hitting late on Fri after the NY close although the wires will likely have updates during trading).  This isn't a huge event and the markets aren't looking for anything too specific. .

·         Europe details - the 10/26 left a lot of questions for investors that officials have promised to answer during Nov.  Among them: 1) what will the participation rate of the 50% Greek PSI haircuts be?  This has to be "voluntary" so as to not trigger CDS payments; 2) what are the specifics of the EFSF leveraging techniques?  When will the first-loss insurer option first be made available?  When will the SPV be up and running?  We may get the answer to some of these questions at the 11/7-8 Eurozone Finance Ministers Meeting.

·         Italy - the next few months could wind up being pretty important for Italy.  Berlusconi's government has promised to deliver specifics on the latest reform/austerity plans by Nov 15. . 

·         Spain - note that the country holds elections on Nov 20 after which a new PM will take office. 

·         European short bans – will Europe decide to lift its short sale bans now that its debt problems are ostensibly fixed? 

·         China monetary policy – the market increasingly is of the view that China has placed its tightening campaign on hold and many think it could start easing (bank RRRs could be tweaked lower during 2011 while policy rates may be reduced sometime in Q1:2012). 

·         US government – will the Supercommittee wind up being successful?  The committee faces a deadline of Nov 23 by which they need to strike a deal on deficit reduction or else ~$1.2T of automatic cuts kick in.  If no deal is reached by 11/23, we could wind up seeing more ratings agencies downgrade the US.  Keep in mind that beyond this Supercommittee, the US gov't's present spending resolution lasts through Nov 18 after which Congress will have to pass another bill (are we heading for another shutdown battle just like '10?). 

·         US debt Supercommittee and its Nov 23 deadline – could a failure to secure a deficit deal have implications for France's AAA?   ·         US Mortgages - the FHFA has said it will publish specifics on the recent HARP expansion by Nov 15. 

Major macro events to watch  

·         Mon Oct 31 - Trichet retires on Oct. 31

·         Mon Oct 31 – France is expected to unveil further austerity measures during the week of 10/31.  France is expected to tweak its VAT (DJ) 

·         Mon Oct 31 – China PMI hits after the close. 

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·         Tues Nov 1 – Draghi takes over at the ECB 

·         Tues Nov 1 – US manufacturing PMI gets reported.  

·         Tues Nov 1 – auto sales globally get reported for Oct. 

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·         Wed Nov 2.  FOMC decision.  Berananke will be holding a press conf after this event. 

·         Wed Nov 2 – US jobs numbers – Challenger's job cuts update and the ADP employment report. 

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·         Thurs Nov 3 – ECB meeting.  This will be Draghi's first meeting as ECB president.  7:45amET decision and 8:30amET press conf. 

·         Thurs Nov 3 – hearing in the BAC $8.5B repurchase case  

·         Thurs Nov 3-Fri Nov 4: G20 Annual Summit in Cannes, France

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·         Mon Nov 7 – Eurogroup fin min meetings.

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·         Tues Nov 8 – meeting of European finance ministers

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·         Thurs Nov 10 - Asia-Pacific Economic Cooperation (APEC) Finance Ministers Meeting November 10

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·         Sat Nov 12 - APEC Leaders Meeting November 12-13, 2011

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·         Sun Nov 13 - APEC Leaders Meeting November 12-13, 2011

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·         Tues Nov 15 – FHFA expected to deliver further guidance to banks re HARP expansion. 

·         Tues Nov 15 – Italy will present new growth plan by Nov 15. 

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·         Wed Nov 16 – BAC court case re its $8.5B mortgage repurchase settlement.

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·         Thurs Nov 17 – UBS analyst meeting

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·         Fri Nov 18 – current US spending resolution ends Nov 18.

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·         Sun Nov 20 – Spanish elections

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·         Wed Nov 23 - deadline for Joint Committee recommendations

·         Wed  Nov 23 – bankruptcy hearing in Harrisburg case.

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·         Tues Nov 29 – meeting of Eurogroup finance ministers

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·         Wed Nov 30 – meeting of European finance ministers

______________________________________________________________

Roger Volz

Director

BGC FINANCIAL L.P.

Cash Equities

646-346-7412

1-866-323-1585

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