Market Recon Friday

Good Morning,
                        I’ve got to tell you, I really….I mean …. I really, really didn’t like the way the SPX 2047 support level broke late in yesterday’s trading session.  That spot had been like a rock through almost two complete sessions.  The technical impact of that move close could now be either wiped out, or exacerbated by the high volume impact of the quadruple witching expiration that we’ll see today.  From the early look in the futures markets, the move is lower, but like I said… this note is written quite early.
                        A couple of folks asked me last night to explain what had happened to the market just one day after it apparently had experienced a relief rally based on the Fed lift-off.  This one’s really for the home-gamers, so if you are more advanced than that, skip, down, or say a prayer for somebody.  We’ll catch up.  You see, kids, the whole thing is kind of like your nervous system.  Pinch a nerve in your shoulder, and your elbow hurts, right?  OK, so the US dollar has a massive move to the upside.  What hurts?  Commodities priced in US dollars, right?. Gold & Oil are your headliners.  What gets whacked at 11 Wall St.?  The Energy Sector….Metals & Miners…. Those Transports that move Crude.  The powers that be also bought Treasuries.  That compresses yields.  Where do investors go when yields are low?  Dividend stocks.  Poof…Utilities lead.  Remember, everything impacts something else, and the whole ball of wax is much, much more complex than this.  Heck, I’m old, and I learn stuff all the time, but if you’re new, and struggling, I hope this lays out the framework for learning.  Only go as fast as you are comfortable with.  There is no race here, and as long as I stand, you do not stand alone.
                      Everybody here?  OK, let’s move out.  Today, on top of the usual tug of war, as already mentioned, is not only an expirations Friday, but there are also some rebalances in the mix. Volume will be high, in fact volume will be very high, and will also be bell-centric.  What that means is that you’ll likely see a sharp move on the chart at closing time, and it will have less meaning, going forward than it might on a more normal day.  Oh, and those of you hanging on to options with dwindling premiums will be frustrated by the end of the day pinning.  Promise.
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09:45 ET
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Markit Service Sector Flash PMI (December): You remember Flash, right ??  He did save every one of us.  Ahhhahhh…service sector data, our economy’s bright spot, along with auto sales.  Markit’s final services PMI for November printed at 56.1, and we think that December should flash very close to that, possibly hanging onto that 56 handle.  There is virtually no range for this item.  No matter, there will not likely be a noticeable market reaction.
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10:00 ET
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Kansas City Fed Manufacturing Index (December):  We all know the tale of woe that is the US Manufacturing biz.  KC printed above zero last month, breaking the all-Fed regional multi-month losing streak…along with Philly.  Well, Philly, along with the Empire State fell back into that abyss this month, and hopes for KC are not at all optimistic.  Hey, didn’t these guys just sign Dillon Gee ??
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12:30 ET
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Fed Speaker:  Richmond Fed Pres. Jeffrey Lacker speaks on the economy from Charlotte, North Carolina.   FYI, Lacker just voted as a member of the FOMC, and will not vote again for quite some time, if ever.  Richmond does not vote in either 2016, nor 2017.
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13:00 ET
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Baker-Hughes Rig Count (Weekly):  With the state of Oil, and the Energy sector being what it is, if you haven’t already, you better start paying attention in this space.  Last week, the US Oil Rig Count dropped for a fourth consecutive week, by 21 rigs, leaving 524 in operation.
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Friday’s Earnings Highlights
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Before the Open: BBRY (-.16), KMX (.68), CCL (.41), DRI (.42), LEN (1.12)
After the Close:  Nachos, and beverages.
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Note:  As of yesterday, the options market was pricing in an approximate $2.50 worth of volatility for KMX, and close to two bucks for CCL.