BGC Chart Chatter US Technical Brief….Nov 7, 2011

Euro zone headlines continue to push/pull SP 500 futures with 2 way price action defining the overnights. Early price highs to 1252 greeted PM Papandreou surviving Fri night's confidence vote while creating a national unity government in a process that resulted in him stepping down from office. Concerns then shifting to Italy governmental stability to pull the plug on SP 500 futures on speculation around Berlusconi stepping down from power. Recovery phase then after France takes steps to preserve its rating with incremental spending cuts and tax increases unveiled on Mon as Paris works to bring down its budget deficit.  Additional relief in early US session after US futures exchanges temporarily relaxed margin requirements for speculators in an effort to stem any fallout from the failure of MF.  Prices then drift lower into the EU close

 

Equity index futures daily chart theme wise is seeing a defense of supports. An ascending wedge pattern is forming in SP 500 futures (using 1257.00 to 1229.00 as closing ranges for today) noting a 3 day test of 1257 is underway. ND 100 futures daily chart standing out with an head shoulder formation. We continue to view an overbought McClellan's Summation Index Indicator raises technical caution flags (chart below).

 

 

SP 500 Futures 5 Min Chart…….VST 5 min indicators show a run from OS in overnights sub 1233.50 into OB > 1255 which leaves Friday post payroll high at 1258.40 intact . Sub 1247 exposes risk of retest of the 6:00am reversal at 1237.00

 

 

 

 

Quick Look

Copper: Still a lower high stalls against resistance at 366.00 keeps a lid on a continuation. Scaled in supports from 349.00 to 343.00 to maintain the repair pattern. Continuation needs close above 366 with the top of the current technical range at 384.00.

Gold: breakout-consolidation-continuation pattern with hold above 1755.00….above 1772 opens the door to 1790/ with 1810-1825 for next major. Momentum sustained above 1746 today 1755 tomorrow.

Crude oil: bull flag upside resolution with close above 94.90. The next upside accelerator is at 96.30 with the top of the range at 99.30. Our momentum loss line is lifted to 92.30

SP 500 Futures: Series of June lows from 1257 (chart level)-1259.50 is still providing overhead cap, shifts us on watch for a momentum loss signal. Leaves a pipe top look about the daily charts. Closing focus range is now 1257 / 1229 now for technical reversal……our bearish restart line is 1215-1213

ND 100 Futures: Pattern Alert: Head shoulders forming with right shoulder in play. Shoulder line working closing resistance at 2378; momentum loss on close below 2331; neckline at 2284.

DJ Industrials: Closing focus: 12090 for continuation with11970 for momentum repair. Momentum slippage 11850. Full roll over below 11700.

DJ Transportation Index: leaves resistance in play at 4950 as the top of inside range. Momentum loss on close below 4780 to begin technical damage to up leg from October.

Italian 10-yr yields: new high pass at 6.675% pressing levels last seen in 1997 .  Chart wise working 6.62% (close)  for continuation and 6.94% for acceleration. The top of the current chart range is 7.25%. The bottom of the current daily chart range is 5.97%.  

Spanish 10yr yields: pressing the 50% retrace measuring Aug peak/trough at 5.68% as the big continuation level, last 5.59%

Frankfurt DAX: lower high forming with stall below 6260, stymies momentum repair. Turns our attention to key supports from 5770 / 5700 (for negative reversal)

Paris CAC: daily charts remain in a messy configurations. First support is 3070. Our bearish reversal is at 2980. Technical repair signal would need a close above 3250

London FTSE 100: pipe top pattern appears to be in play. Leaves closed the top of the range remains 5730. Immediate resist at 5620 for technical repair. Keeps the emphasis on key support at 5350 for a bearish restart

Shanghai Composite: getting a 3 period stall against the next ledge of resistance at 2540 (for continuation to 2615/2680 major). Supports now mass below the reversal line at 2475 / 2450 to maintain the recent repair pattern.

 

 

Chart Views

EURUSD (1.3757 last) a broad consolidation pattern bounded by  1.3830-1.3880 and multiple supports at 1.3660-1.3640. Air pockets follow. A failure below the latter confirms a bear flag formation. Our daily chart model below.

Italian 10 yr yields Weekly Chart (6.581% last)…comments above

DJ Industrials Weekly Chart Model (11957 last) Multiple groupings at 12220 still proving the overhead mark. Leaving major R at 12370-12400 unscathed. The rising 5 wk SMA is now 11920 and closed below begins momentum loss. The bottom of the intermediate term range is now 11620 now becomes critical support. Major support is at 11330 for a bearish restart. Our weekly chart model below

DJ Transports Weekly Chart Model (4869 last) turns off the next ledge of chart resistance at 5060, reopens supports grouping at 4800 leaves us in wait for resolution signal. A close below  4780 would cause the first crack in the daily technical stance. Our weekly chart model below

 

McClellan's Summation Index Indicator: Our technical measurement of the classic index. Holds in technically overbought readings as indicator extends above 80 reaching its highest level since May 2009. The last oversold signal occurred August 2011 was well represented in our commentary Reversal confirmed on 2 steps with the indicator cross below 70, moving average cross over. This leaves us on watch for patterns of lower highs to confirm a top.

 

SP 500 Daily Chart Model (1244.50 last): getting a 3 day stall against our next ledge of closing resistance at 1257 keeping upside capped. Major above at 1271 had represented the ideal measurement for a lower high. A daily ascending wedge is now forming with the 21-day SMA (light blue line currently at 1229.00). Friday's note had expected 0ur first short term technical reversal line would be lifted to 1229.  

Daily Chart Resistance: 1254-1257, 1259.50 Thursday high), 1264, 1271, 1277, 1286-1288 major ………1297 (7/28/11 failure on close)

Daily Chart Supports : 1229, 1220, 1215-1213 close for bearish restart, 1206 accelerator, 1198, 1188-1186 major

Weeklies: consolidation pattern awaiting resolution. The top of intermediate range from 1287-1291 remains intact with initial resistance at 1261 to signal a retest. Support concentrations are now 1249 (bleeding), 1223-1220, 1203, 1191-1187-1185 now major.

Monthlies: October covers the chart range from low to high. Our long term chart model has a 1273 / 1049 top to bottom chart levels. The LT chart's inside range with pinching 8-13-mth SMAs now resistance and 5/21 pincher as support at 1269 / 1218, now for full momentum loss in this time frame while a weekly close below 1188 for a bearish restart. Full chart repair needs a retake and weekly hold above 1274 (lowered)

SP 500 Futures Daily Chart Model…..

 

ND 100 Futures (2334 last) pattern alert: head shoulders with right shoulder formation sub 2378. Short term momentum loss on close below 2331 reopens a retest of neckline at 2284.   

 

Daily Chart Resistance:  2378, 2388, 2411-2416 major

Daily Chart Supports : 2331, 2291-2288-2284, 2264 key……..2190

 

 

 

 

Economics Calendar – Daily View

·         Monday, November 7^th : US (Consumer Credit)  

·         Tuesday, November 8^th: US (JOLTs Job Openings); EuroZone (UK IP);Other (China CPI & PPI, Japan Trade Balance)

·         Wednesday, November 9^th : US (Wholesale Inventories); Other (China IP & Retail Sales)

·         Thursday, November 10^th : US (Import Price Index, Trade Balance, Initial Jobless Claims, Monthly Budget Statement); EuroZone (ECB Nov. Monthly Report, UK BoE Rate Decision, German CPI);Other (China Trade Balance, Japan Consumer Confidence)

·         Friday, November 11^th: US (U. of Mich Confidence); EuroZone (UK PPI);Other (China New Yuan Loans)

 

Corporate Events Calendar

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

·         Tues Nov 8: earnings before the open (Cap Gemini, FOSL, InterContinental Hotels, Intesa Sanpaolo, Lloyds Banking Group, Prudential/PUK, ROK, SMG, SocGen, SSP, VOD); earnings after the close (ATVI, DOX, RBCN, ROVI, SINA, STEC); sales (MCD); analyst meetings (SWI)

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

·         Thurs Nov 10: earnings before the open (Agricole, Deutsche Telecom, Experian, FXCM, MPEL, Siemens, Telecom Italia, VIA); earnings after the close (BRKS, DIS, MCP, NVDA, RENN, TUP); analyst meetings (AVID, BX, MCD, MON, MRK)

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

Corporate Events Calendar – Week of Mon Nov 14

·         Mon Nov 14: earnings before the open (JCP, SolarWorld, Unicredit, URBN); analyst meeting (BK, RAI)

·         Tues Nov 15: earnings before the open (BZH, COV, HD, SKS, SPLS, TJX, WMT); earnings after the close (DELL); analyst meetings (ADVS, ASH, LNC, NBL) 

·         Wed Nov 16: earnings before the open (Infineon, TGT, TYC); analyst meetings (AMP, Diageo, OMX, QCOM)

·         Thurs Nov 17: earnings before the open (GME, GPS, SABMiller); earnings after the close (BCSI, CRM, INTU, MRVL); analyst meetings (ROK, UBS) 

 

Macro catalysts to watch:

·         Italy – there will be an important parliamentary vote on Tues re budgetary matters – Berlusconi insists he retains a majority although various press reports suggest this might not be the case.  Meanwhile, at some point Italian yields have to narrow or else people will worry about LCH Clearnet margin actions (10yrs have to move back down <6%).  The IMF apparently is ready to extend a credit line but Rome first has to make a request (something Berlusconi has been reluctant to do).    

·         Europe – more details on the 10/26 announcements.  The Greek referendum has distracted people from the fact that Europe didn't actually announce any details on 10/26.  There is a Eurozone fin min mtng Mon/Tues 11/7-8 and officials will discuss Greek PSI haircuts (~50%) and EFSF leveraging options. 

·         EFSF debt sale – the Irish EFSF debt sale was pulled this week but officials (per Reuters/DJ) have said it will be brought back "soon". 

·         China – the co's CPI hits Tues night (11/8).  The St is looking for a pretty big deceleration (to +5.4% from the +6.1% in Sept).  Given all the recent market chatter about the PBOC turning more accomodative, this number will be closely watched (given how much the prices paid component of the recent ISM fell, people seem to be leaning towards the CPI coming in lower than the print 5.4% although even an inline print will be seen as a positive). 

·         Oct-end Earnings – the Oct-end earnings season kicks off w/a bunch of retailers and CSCO (CSCO reports after the close Wed night 11/9).  CSCO is usually a pretty big data point for tech (esp. Chambers' comments on the broader outlook for tech end market/enterprise demand).  There are a few more big US Sept-end companies (GM reports Wed morning 11/9). 

·         Eurozone financial earnings – we have a few more results, inc. Intesa 11/8, Lloyds 11/8, HSBC 11/9, Agricole 11/10, and Allianz 11/11. 

·         Fed speakers – w/the Fed meeting over, the amount of speakers will pick back up.  There are a ton scheduled over the next week.  Bernanke is due to speak Wed 11/9 at 9:30amET (this isn't expected to be a major address). 

·         Iran – the IAEA will apparently publish a report in the coming week that will contain evidence of Iran operating a secret nuclear weapons program (http://tgr.ph/vrQK9p).  This report could ratchet up int'l pressure on the country.

·         US debt Supercommittee – Boehner makes mild concession? – the 11/23 deadline looms but in reality the panel needs to produce a plan a bit before then in order to give the CBO some time to provide a “score”.  Boehner appeared to make a very mild concession this week when he said there was “room for revenue” – “I do think there's room for revenue but there clearly is a limit to the revenues that may be available.”  Boehner added that he would push for lawmakers to approve any deficit-cutting deal that the supercommittee makes, no matter what it contains.  Expectations aren't very high for the supercommittee to strike a deal.    

 

Major macro events to watch  

·         Mon Nov 7 – Eurogroup fin min meetings.

***************************************

·         Tues Nov 8 – meeting of European finance ministers

·         Tues Nov 8 – China inflation (Tues night)

·         Tues Nov 8 – budget vote on Italian parliament

***************************************

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

***************************************

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

***************************************

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

***************************************

·         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. 

***************************************

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

***************************************

·         Thurs Nov 17 – UBS analyst meeting

***************************************

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

***************************************

·         Sun Nov 20 – Spanish elections

***************************************

·         Mon Nov 21 – Eurozone insurers – the EIOPA is currently running a stress test on interest rates. This is to be based on FY10 data and the results are due to be released on 21 November

***************************************

·         Wed Nov 23 - deadline for Joint Committee recommendations

·         Wed  Nov 23 – bankruptcy hearing in Harrisburg case.

***************************************

·         Mon Nov 28 – White House hosting summit w/European leaders

***************************************

·         Tues Nov 29 – meeting of Eurogroup finance ministers

***************************************

·         Wed Nov 30 – meeting of European finance ministers

***************************************

·         Mon Dec 19 – Greece has EU1B bond payment

***************************************

·         Thurs Dec 22 – Greece has EU1B bond payment

***************************************

·         Thurs Dec 29 – Greece has EU5B bond payment

 

Barron's

·         REITs – Positive Barron's article – Barron's says that that the decline of homeownership from 69.4% of US households in 2004 to 66% in 2Q11, a 13-year low, should continue, which benefits the REIT space as more households choose to rent houses. Barron's likes AVB, EQR, CLP, and ESS. Barron's http://online.barrons.com/article/SB50001424052748704760604577011844275929010.html?mod=googlenews_wsj?mod=googlenews_barrons

·         CVC – Positive Barron's article – Barron's says that CVC's 4% dividend, declining capital intensity, and substantial free cash flow make the company a very good value after falling ~36% YTD. The article also says that analysts feel the stock could fetch at least $30 in a takeover. Barron's http://online.barrons.com/article/SB50001424052748704760604577011812860533098.html?mod=BOL_twm_fs

·         Asian LCD TV makers – Barron's says that LCD stocks such as LG Display are trading at 0.7X book value, near the trough valuation of the 0.6X during the financial crisis and half the 1.3X US electronics component stocks fetch. Analysts at HSBC feel that declining (and negative) earnings are about to see an inflection point for the companies, however, which should drive the recovery in the space. Top picks are LG Display (LPL), Au Optonics (AUO), and Sharp. Barron's http://online.barrons.com/article/SB50001424052748703340004577010233159392266.html?mod=BOL_twm_mw

·         Platinum – Barron's is positive on the commodity, negative on the miners – Barron's says that rising mining costs for the metal leave platinum no place to go but up. However, the article said that miners' cash costs are near spot prices. High cost producers like Aquarius Platinum (AQPTY) as well as lower cost producers like Impala Platinum (IMPUY) will see pressure because of the rising costs. Barron's http://online.barrons.com/article/SB50001424052748703340004577010241423922020.html?mod=BOL_twm_mw

·         Treasuries – Pos Barron's mention – Barron's talks about how a continued focus on issues in Europe as well as the MF Global bankruptcy, treasuries should continue to shine despite the US' own debt woes. Barron's http://online.barrons.com/article/SB50001424052748703340004577010243008193290.html?mod=BOL_twm_mw

·         Brazil – Positive Barron's cover story – Barron's says that Brazil's equity markets are an attractive investment, citing the huge increase in gov't spending to prepare for the 2014 World Cup and the 2016 Olympics. The article points out how interesting it is that a developing country like Brazil is healthy enough to be considering bailing out its developed counterparts in Europe. Top stocks to play the move are PBR, VALE, ABV, ITUB, and BBD. Top ETFs are EWZ and BRF. Barron's http://online.barrons.com/article/barrons_cover.html

·         Europe – Barron's discusses the issues in Europe – Nothing really “new” in the article, but says that Greece is likely to ultimately default and that Italy's rising yields pose the next big threat. Barron's http://online.barrons.com/article/SB50001424052748704270204577013793129851160.html

·         EFX – Positive Barron's mention – Barron's says that EFX's measures to find new sources of revenue help the company outperform in a soft economy. The article also says the stock is cheap at 13X 2012 earnings, well below its 10-year median of 15.2X. Barron's

·         FSLR – Barron's says that FSLR's decline has been warranted and that bankruptcies and consolidation of other companies in the space are required to bring capacity down to a more profitable level. However, the article said that given FSLR's solid execution, they could become a buy-rated stock if they manage to stick around. Barorn's http://online.barrons.com/article/SB50001424052748703631204577018040725169170.html?mod=BOL_twm_col

·         RIMM – Neg Barron's article – Barron's compares the stock to AOL in the late 1990s and 2000s. The article says that AOL went from 23M subscribers to 3.5M today. Barron's cautions investors will be very concerned what RIMM's value would be if their own subscriber base begins a decline. Barron's http://online.barrons.com/article/SB50001424052748703631204577018040725169170.html?mod=BOL_twm_col

·         NVS – Positive Barron's article – Barron's says that despite Euro zone debt woes, a strong Swiss franc, and a need for add'l trials for its lung drug NVA237, the company's diverse product base and cost cutting measures should help the company generate robust profit growth in the coming years. While it isn't the cheapest big pharma name, its growth forecasts and 4% div make it a solid opportunity. Barron's

·         DMND – Negative Barron's article – Barron's says that the recent slide in DMND's stock could continue after accounting scrutiny from its walnut accounting policies. Customers have also said that Diamond has become less and less competitive with other handlers since their IPO. Barron's http://online.barrons.com/article/SB50001424052748704270204577013933878950486.html?mod=googlenews_wsj?mod=googlenews_barrons

 

 

 

 

 

______________________________________________________________

 

Roger Volz

Director

BGC FINANCIAL L.P.

Cash Equities

646-346-7412

1-866-323-1585

 

 

The information contained herein is for informational purposes only and is not to be construed as an offer or solicitation for the sale of securities. While the accuracy or completeness of the information contained can not be guaranteed by the author or BGC Financial L.P., it is believed to be accurate and reliable at the time of publication and care was taken in its preparation. The opinions expressed are those of the author and not necessarily those of BGC Financial L.P., and/or officers, directors, employees or its affiliates. This information is not intended to be a research report nor an analysis of any company. It should not be relied upon for making investment decisions.  BGC Financial L.P. is a member of the Financial Industry Regulatory Authority (FINRA).