Brian's Wednesday recap: Putin as savior, Fed shocker (not), MTS contribs in spotlight

Brian Shepard
mts-marketrecap-330
mts-marketrecap-330

By Brian Shepard

S&P 500 Defies Strategist Calls in 3-Day Slump: By David Wilson March 20 (Bloomberg) -- Wall Street strategists predicted the Standard & Poor’s 500 Index will exceed the current record just in time for its first three-day decline of the year. The CHART OF THE DAY shows how strategists’ average year-end estimate in a Bloomberg survey compares with the S&P 500’s current value and the index’s closing high of 1,565.15, set on Oct. 9, 2007. After rising to within 0.1 percent of the peak on March 14, the S&P 500 dropped 1 percent through yesterday. Strategists at Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley have raised year-end estimates in the past week. “It is hard to see what causes a major market correction,” Adam Parker, chief U.S. equity strategist at Morgan Stanley, wrote in a report two days ago. Parker, based in New York, called for the S&P 500 to finish the year at 1,600. He raised his forecast by 12 percent, the biggest percentage among the four firms. Strategists’ average year-end figure is 1,571, six points higher than the closing record, according to the survey of 16 securities firms. The projection rose this week for the first time since Jan. 31. The most optimistic view belongs to Sean Darby, Jefferies Group LLC’s chief global equity strategist, whose year-end call is at 1,673 after a 6.9 percent increase on March 12. Darby, based in Hong Kong, was added to the survey this week.

Collective Intelligence! The Fed said spending advanced and housing strengthened, but it added "fiscal policy has become somewhat more restrictive." The statement also edited out the phrase on global financial strains, and merely indicated it continues to see downside risks to the economic outlook. They reiterated that it will "continue to take appropriate account of the likely efficacy and costs of [QE] purchases as well as the extent of progress toward its economic objectives." KC's George dissented.

Russia could lend Cyprus the money needed. The Russians have been cool to the notion in the past. However, with the prospects of a 10 percent haircut on their investments, the motivation is more acute. This will make Putin the “savior of Europe.” There will no doubt be a deal for some of the anticipated oil and gas wealth surrounding the Cypriot territorial waters. The vote rejecting the negotiated deal with the troika, which would levy, “steal” the deposits held by the island’s banks. It is a fluid situation and a headline mine field. It will be watched for its turbulence financial implications - posted by Stanton Analytics.

Here's the link for Henry's (Stanton Analytics) interview with professional trading magazine: http://bit.ly/YGmNga Also, another MrTopStep contributor, Carley Garner, was featured on Mad Money. She posted: Jim Cramer used our Treasury analysis on Mad Money last night: http://bit.ly/YTzUxM

Pre-market, an uptick in volume on screen - exp Friday 1530p trades 13k today - prior to today open interest 9k. Also, by (10:45CT): J 149 SPY puts trades a total of 40k.

Expect more rumours of a UK downgrade in the next 48hrs, Fitch due to review UK rating following the budget following the U.K. GDP FORECAST TO RISE 0.6% IN 2013 VS PREVIOUS EST. 1.2%. Osborne: growth forecast for 2014 revised down by 0.2 pct to 1.8 pct, for 2013 revised down by %0.6 to %0.6.

In a blow to what many consider the best run back, JP Morgan received a downgrade from government regulators. They cited the management and the board for concerns over the management of the financial institution. [JPM] trades modestly lower as the [BKX] was trading up about 0.5%.

MOSCOW (WSJ, 10:36CT): Cyprus's attempt to secure much-needed financial aid from Russia showed little sign of progress Wednesday, as the embattled island nation's finance minister came away apparently empty-handed from meetings here with Russian ministers. Cyprus turned to Russia after its parliament Tuesday rejected a euro-zone bailout that would have required around billions of euros to be seized from Cypriot bank accounts. Cypriot Finance Minister Michalis Sarris said his meeting Wednesday with Russian counterpart Anton Siluanov was "very constructive," but that there had been no decision on potential loans. He said talks would continue "for as long as it takes." A later meeting with First Deputy Prime Minister Igor Shuvalov also appeared to yield no deal.

Don’t miss this guy > @princetontrader aka Mike V posted his Pivots http://t.co/uZeAbHdD9r Webcast http://t.co/F8yIWMCEV9 At (08:50CT) Mike posted his vol windows ES: 1556.75 x 1546.25; NQ: 2813.50 x 2786.25.

Kathy has had some very good calls too! Charts posted by Kathy Garber @tbg4321. Harmonic rotations ES http://screencast.com/t/1HvR0EsVzz02 NQ http://screencast.com/t/80DWGNlWJ 6E http://screencast.com/t/1iuAOwFXHB CL http://screencast.com/t/Bq0rQcnSV8u1 CL attempting to b/d trendline, important if 92.76 can hold or not, premkt chart http://screencast.com/t/Bq0rQcnSV8u1

RealTradersWebinar is hosting a MEGA WEBINAR this Saturday (March 23) -- Click here for more information and reserve your spot today: http://tiny.cc/pf7ztw

During the Globex session 388k ESM and 1.3k SPM traded on Globex, trading range was 1552.50–1536.90. Tuesday’s regular trading hours (RTH’s), pit session trading range was 1550.80 – 1532.00 before settling at 1542.20, down 4.6 handles. Pre-market headlines add support to global equities. Cyprus banks could reopen Thursday. A preliminary deal to sell Cyprus Popular Bank to Russian investors has been reached, Kathimerini Cyprus reports, without citing anyone. --> Deal would reduce Cyprus finance needs by EU4b. Cyprus denial follows shortly after... Also, the broader market opening imbalance showed an overall $518.45M x $117.02M.

Today’s SPM regular trading hours gapped 10 handles higher to 1551.00-1552.70 with only one Dow stock trading lower in the early going. The SPM traded up to 1553.20 at 8:40CT before fading back to 1548.80 by 9:41. The balance of the morning and the early afternoon the SPM was trading in the mid to lower end of that tight 4.4 handle range. However, just before 12:00 Merrill Lynch sold 2.5k SPM in the pit over a several minute span between 1552-1550 area.

At 1:00CT the 1549.50 area was trading when the Fed shocked everyone (not really) by leaving rates and QE intact. They stand by their plan to keep short-term rates at record lows at least until unemployment falls to 6.5%, as long as the inflation outlook remains mild. And it says it will continue buying $85 billion a month in bonds indefinitely to keep long-term borrowing costs down. At 1:30 Ben Bernanke played his cards close to his chest and didn’t divulge any real insights on an exit strategy given the markets hypersensitivity to any changes to forward guidance. By 1:50 a new daily high of 1555.20 traded before fading back to retest the opening range and one last surge took the SPM up to a new daily high of 1555.50. The SPM was trading 1554.50 area when the 2:45 closing imbalance showed the broader market with a modest $350mil to buy. Going into the cash close Fimat sold 2.5k SPM in the pit, but there was a buyer of near equal size. On the 3:00 cash close the SPM traded 1552.80 area before taking out sell stops below the opening range and settling at 1549.10, up 6.9 handles on the 3:15 futures close.

Brian Shepard is a 20-year exchange member of the CME Group.
_______________________________________________________________

YOU WANT A LOOK AT WHAT OUR TRADERS SEE EVERY DAY? SIGN UP FOR THE IM TRIAL AT http://mrtopstep.com/free/ IT’S THE REAL DEAL!
_____________________________________________________
Follow us on Twitter @MrTopStep http://twitter.com/mrtopstep
Sign up for our free mailing list at http://mrtopstep.com/ for full report.
DISCLAIMER: The information and data in the above report were obtained from sources considered reliable. Opinions, market data, and recommendations are subject to change at any time. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any commodities or securities. MrTopStep, its officers, directors and its contributors may, in the normal course of business, have position(s) which may or may not agree with the opinions expressed in this report.


{jathumbnailoff}