Topping Pattern Confirmed?

Volatility appears to reign supreme as September comes to a close....Nervousness is permeating the tone of the mkts around the world......daily 1+% moves in both directions - are now the norm - this after such a quiet summer......The Dow -0.9%, the S&P - 0.86% and the Russell lower by 1% and Nasdaq lower by 0.9%. 
 
Yesterday's action completely reversed all the recent excitement created by several of the world's largest central banks - specifically - The ECB, The BoJ and The FED.  Recall that the ECB did nothing but hold steady, jawboning about what they could do if need be, the BoJ - while they tweaked their position, did disappoint some investors by not doing more and finally the FED - as expected did nothing about rates but they did roll back expectations for future rate rises in both 2017 and 2018......so while mkts rallied on the news last week - is that really what should have happened?  I mean what does that REALLY say about the state of affairs around the world?  It does not scream healthy and robust...so why the rally - other than there is no place else to go....Is that really a reason to just buy stocks with abandon?  Was yesterday's selloff now a realization that the central banks are in trouble?
 
Or was it the latest OPEC drama that has now become a really hot topic - considering that the Saudi's are now potentially bowing to the Iranians? I mean who would have ever thought that?  A Bloomberg story this morning details how the Saudi's have been burning thru cash - as oil prices tumbled and they tried hard to 'kill' the competition....but are now being forced to re-evaluate that plan......News that they are cutting bonus payments to state employees while they also cut various ministers salaries by 20% in an attempt to shore up the balance sheet.  In addition they are 'suspending wage increases for the new lunar year and curbing allowances for public sector employees.  Saudi stocks took it on the chin - tumbling on fears of an 'economic slowdown'.......Hmmmm - welcome to the club...
 
On Friday -oil fell hard on news that no deal was imminent and then yesterday oil rallied on talks that maybe something could be worked out...and then like clockwork - overnight the Iranians - told OPEC - 'over our dead body'....Bloomberg runs with this headline:
 
"Iran Doesn't Want a Deal in Algiers - Won't Freeze Output"
 
Iranian oil minister - Bijan Namdar Zanganeh had this to say:
 
"It's not our agenda to reach agreement in these two days.  We are here for the IEF (Int'l Energy Forum) and to have a consultative informal meeting in OPEC to exchange views - Not more."
 
The story goes onto say that Iran has no intention of 'forging an agreement with other major oil producers' at talks in Algiers this week. -  In fact Iran wants to INCREASE output by 500k barrels a day to pre-sanction levels of 4 mil/day.....while the Saudi's want to cut production by 500k barrels/day.......Oil is now trading lower by 1.3% at $45.29/barrel in early morning trade as the mkt digests this latest news.....This leaves oil bouncing off of long term support at $44.64 and what is now resistance at $45.64.  A break below support will send oil tumbling towards $40/barrel......At this point why would oil rally with any conviction? 
 
Certainly the news out of Deutsche Bank did not help the tone at all...in fact all the chatter is only raising the pressure on the German banking giant and shining the spotlight on Europe's weakening financial system - raising concerns about another banking crisis...  Angie (Merkel) came out fighting saying that 'there would be NO gov't rescue'.....Never say Never because if it hits the fan - will Germany allow it's star bank to implode?  Is Angie willing to put herself and her gov't in a position to circle the drain as well? 
 
Is mkt action now suggesting a topping pattern is in place?    Stocks went negative the minute the bell rang - but this was expected as futures were pointing lower all morning......and then  traded persistently lower as the clock ticked.  This latest action confirms an intermediate topping pattern.  Take a look at the chart - see how prices remained in a tight, upper range pattern all summer...... (2145/2185).....only to sell off hard in early September and then only to be saved by the 'no action' response by the FED last week - sending the mkt back above its 50 dma which has been a level of resistance.......But alas - the story does not end there.....Yesterday's selling wiped the latest Fed move off the map......So are we now in a new and lower trading range - one that has the 50-day moving average now acting as resistance?  It does feel like it....but remember - we are in the final week of the qtr...and you should expect a fair amount of window dressing as PM's rotate positions and put new money to work...but will that really stop the bleed?

Can all this window dressing change the mentality?   With increasing volatility and increasing pressure to the downside -  a test of the long term 200 dma is not out of the question as we move into earnings season.  (Remember - it is expected to be another weak reporting season - but the mkt is expecting that - so will the weak reports be a reason to BUY?)   Look - we will test intermediate support at 2127, but if we fail - then 2061 could come fast.......
 
European stocks which were up in early trading have now turned lower once again...Deutsche Bank continues to plummet - hitting a new record low....FTSE - 0.21%, CAC 40 - 0.51%, DAX - 0.27%, EUROSTOXX - 0.50%, SPAIN -0.3% and Italy - 0.9%. 
 
US Futures are up 5 pts but that is down from an earlier spike of 9 pts.....as the mkt continues to gyrate looking for real direction.....as noted - there is no real reason for the mkt to push higher right now....so I would expect to see the mkt attempt to rally and then fail.....last night's debate was a bit of a disappointment really - while the media is crowning Hillary the winner, it is hard to disagree....She was (as expected) well prepared and tried to tackle the issues and answer the questions....Trump - while he did not bomb - did nothing to impress.....He did not knock Hillary off her soapbox and in fact appeared to be on the defense all night.  
 
Eco data today includes Market US Services PMI -exp of 51.2 and Richmond Fed Survey of -2. 
 
In other news - The CBOE confirms that it is in agreement to buy BATS for $3.2 bil....and Chris Concannon wins again - (it's like he has a horseshoe stuffed up his....)  This deal will create a new global exchange that is sure to disrupt the current exchange space..... Stay tuned....
 

Take Good Care
KP

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London Broil

London Broil is a great cut of beef - easy to marinate, easy to grill and when sliced – goes along way.  Can be topped with sautéed red/green/yellow bell peppers, onions and sliced mushrooms.

For the marinade you need:

8 large garlic cloves – smashed and rough chopped, salt and pepper, 3/4 cup dry red wine, 1/2 cup balsamic vinegar, 1/2 cup soy sauce, 2 tablespoon honey,  a splash of Worcestershire sauce.

For the meal you need – a 1 ½ - 2 lb London broil, Bell peppers 2 large onions and some fresh sliced mushrooms.  

In a bowl – mix all of the ingredients together – whisk to dissolve the salt.  In  a large Ziploc bag – place the London broil and add in the marinade.  Zip the bag shut – leaving just a ½ inch open – now squeeze any remaining air out of bag and finish sealing.  Place in the fridge and marinade for at least 5 hrs.  (you can easily let this marinate overnight and use it the next day). 

Remove the bag from the fridge 1 hr prior to cooking so that it warms up to room temp. 

In a large sauté pan – add some olive oil, slice garlic clove – heat and sauté the garlic for a couple of mins.  Now add the sliced peppers, mushrooms and onion – sauté until soft – season with salt and pepper.  

Light the grill – when ready – brush clean with a wire brush and then place the marinated London broil on the grill – turning the heat to med.  10 – 12 mins /per side should give you a perfectly cooked medium steak.  Remove the steak from the grill and place on the cutting board – covered with tin foil for about 10 mins – before you carve.  When you carve it – you can slice into 1/8 in slices and arrange of a platter.  You can now add the peppers,  onions and mushrooms either on top of the steak or all around the steak.  Serve with a  large mixed green salad with red onion, cucumber, tomatoes and feta cheese.  Toss with a red wine vinegar dressing.


 
Buon Appetito.