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December 16, 2011
3:28PM EST
Very choppy range bound trade as we head into the close, no real direction, everyone keeping a close eye on Euro for next shoe to drop as weakness in the currency even after hitting oversold levels signals Eurozone issues still not over...moreover, inability of any sector to show leadership heading into year end (tech would typically lead here into year, but not this year) has everyone sidelined here near-term...really just not much to excited about in equities right now, and lack of big Santa Claus rally has most traders a bit on the nervous side...most likely gonna be a rather quiet end to 2011 here over the next couple weeks with a slight upside bias due to mild reallocation out of emerging market and European equities and into US assets...looking ahead to next week, not a ton of economic data out except for durable goods and personal income/spending later on in the week, so should be a rather low volume slow trading week next week, we'll see if hedge funds try to squeeze a few names next week as is typical, as of now though we're not seeing any kind of typical year end manipulation as hedge funds are likely depressed over their 2011 performance numbers...this year was a very challenging year for almost every fund manager as traditional models which have worked very well for almost decades broke down bad this year due to all the chaos in financial markets and rampant central bank intervention...realistically, all macro data was rendered useless this year so all macro funds are likely closing out the year dejected and trying to figure out how markets might trade in 2012...in our opinion we believe we're likely to see a big inflation trade especially in US assets next year as massive QE is certainly on its way once this European crisis hits a head which looks like it might be in the next couple months (possibly early next year)...clearly the bet on QE before end of year did not work which is what cause this big slide in commodities over the past couple weeks, but we believe QE launches are inevitable as liquidity injections are certainly needed to shore up banks and to backstop a teetering financial system...there is no way around it in our opinion as fiscal policy is extremely limited right now due to high debt levels and weak tax revenue...as we've seen nearly all governments are implementing massive austerity measures to shore up their own debt, so increasing spending right now is a no no, which leaves the onus on monetary policy...so looking ahead to next year, believe this perception of US assets being the "least worst" relative to all other developed economies and major emerging markets in tandem with QE launches will continue to drive capital inflows into the US and produce strong outperformance in US equities...is the EU crisis over yet, absolutely not, but as we've seen, US equities have done very well in this environment ripe with daily EU rumors and the prospect of massive EU credit downgrades...note Treasuries continue to see a strong bid even with rates at historic lows...one wild card to watch out for sometime over the next few months is war with Iran or somewhere on the other side of the pond, as geopolitical tension certainly is brewing with everyone from Iran to Russia and it feels like something is about to go down soon which might produce additional uncertainty in an already fragile market...overall though, next year big themes will be tension produced by tailwinds from massive QE vs. headwinds produced by a major global slowdown with specific focus on velocity of European slowdown and China...also markets waiting to see whether or not EU will remain as is or whether Germany will cede from the union as has been rumored for some time now...more importantly, if and when the EU does breakup or is reorganized with only the highest quality sovereigns, what will come of the Euro...the abnormal strength in the Euro over the past several months is likely being produced by the likelihood that very weak countries like Greece and Portugal will be booted from the union and this may produce a firmer underpinning for the Euro which looks like it will remain a viable currency going forward...in our opinion, it would be too catastrophic to simply do away with the world's second major reserve currency so it will be defended at all costs...with respect to commodities, expect QE launches will reignite bids in Gold and Silver and as noted with this end of year shakeout, supply/demand profile is now in favor of higher prices going forward which will have new sidelined money as well as shorts on the buy side medium-term especially once Fed and ECB announce liquidity measures...with respect to Oil, expect geopolitical tension as well as QE will have Oil pressing higher, and depending on the severity of geopolitical tension we believe Oil prices can see somewhere between $110-120 on supply issues...should the Straight of Hormuz be blocked off however, no reason we can't see a super spike to $140-150....should no war be produced however, expect macro headwinds will offset QE tailwinds and Oil may be rangebound between $85-95/barrell
Very choppy range bound trade as we head into the close, no real direction, everyone keeping a close eye on Euro for next shoe to drop as weakness in the currency even after hitting oversold levels signals Eurozone issues still not over...moreover, inability of any sector to show leadership heading into year end (tech would typically lead here into year, but not this year) has everyone sidelined here near-term...really just not much to excited about in equities right now, and lack of big Santa Claus rally has most traders a bit on the nervous side...most likely gonna be a rather quiet end to 2011 here over the next couple weeks with a slight upside bias due to mild reallocation out of emerging market and European equities and into US assets...looking ahead to next week, not a ton of economic data out except for durable goods and personal income/spending later on in the week, so should be a rather low volume slow trading week next week, we'll see if hedge funds try to squeeze a few names next week as is typical, as of now though we're not seeing any kind of typical year end manipulation as hedge funds are likely depressed over their 2011 performance numbers...this year was a very challenging year for almost every fund manager as traditional models which have worked very well for almost decades broke down bad this year due to all the chaos in financial markets and rampant central bank intervention...realistically, all macro data was rendered useless this year so all macro funds are likely closing out the year dejected and trying to figure out how markets might trade in 2012...in our opinion we believe we're likely to see a big inflation trade especially in US assets next year as massive QE is certainly on its way once this European crisis hits a head which looks like it might be in the next couple months (possibly early next year)...clearly the bet on QE before end of year did not work which is what cause this big slide in commodities over the past couple weeks, but we believe QE launches are inevitable as liquidity injections are certainly needed to shore up banks and to backstop a teetering financial system...there is no way around it in our opinion as fiscal policy is extremely limited right now due to high debt levels and weak tax revenue...as we've seen nearly all governments are implementing massive austerity measures to shore up their own debt, so increasing spending right now is a no no, which leaves the onus on monetary policy...so looking ahead to next year, believe this perception of US assets being the "least worst" relative to all other developed economies and major emerging markets in tandem with QE launches will continue to drive capital inflows into the US and produce strong outperformance in US equities...is the EU crisis over yet, absolutely not, but as we've seen, US equities have done very well in this environment ripe with daily EU rumors and the prospect of massive EU credit downgrades...note Treasuries continue to see a strong bid even with rates at historic lows...one wild card to watch out for sometime over the next few months is war with Iran or somewhere on the other side of the pond, as geopolitical tension certainly is brewing with everyone from Iran to Russia and it feels like something is about to go down soon which might produce additional uncertainty in an already fragile market...overall though, next year big themes will be tension produced by tailwinds from massive QE vs. headwinds produced by a major global slowdown with specific focus on velocity of European slowdown and China...also markets waiting to see whether or not EU will remain as is or whether Germany will cede from the union as has been rumored for some time now...more importantly, if and when the EU does breakup or is reorganized with only the highest quality sovereigns, what will come of the Euro...the abnormal strength in the Euro over the past several months is likely being produced by the likelihood that very weak countries like Greece and Portugal will be booted from the union and this may produce a firmer underpinning for the Euro which looks like it will remain a viable currency going forward...in our opinion, it would be too catastrophic to simply do away with the world's second major reserve currency so it will be defended at all costs...with respect to commodities, expect QE launches will reignite bids in Gold and Silver and as noted with this end of year shakeout, supply/demand profile is now in favor of higher prices going forward which will have new sidelined money as well as shorts on the buy side medium-term especially once Fed and ECB announce liquidity measures...with respect to Oil, expect geopolitical tension as well as QE will have Oil pressing higher, and depending on the severity of geopolitical tension we believe Oil prices can see somewhere between $110-120 on supply issues...should the Straight of Hormuz be blocked off however, no reason we can't see a super spike to $140-150....should no war be produced however, expect macro headwinds will offset QE tailwinds and Oil may be rangebound between $85-95/barrell
12:56PM EST
Equities fading all morning as they remain mostly correlated to Euro which has now pushed into red, as noted this morning chatter continues to circulate of S&P downgrade of Italy and Spain possibly after the bell so tough for programs to remain long into the weekend with possible headline risk this weekend...overall volume however remains very low so again most managers just sitting on their hands near-term with many funds already closing up shop for the year...Gold and Silver continue to hold onto bounce off of oversold levels and reiterate we believe the bulk of the panic selling has concluded for precious metals and reaccumulation will commence as QE is certainly on its way sometime in the future which should drive Gold higher once again...in the meantime, rather quiet out there, expect we'll remain choppy and somewhat rangebound for the rest of the session
Equities fading all morning as they remain mostly correlated to Euro which has now pushed into red, as noted this morning chatter continues to circulate of S&P downgrade of Italy and Spain possibly after the bell so tough for programs to remain long into the weekend with possible headline risk this weekend...overall volume however remains very low so again most managers just sitting on their hands near-term with many funds already closing up shop for the year...Gold and Silver continue to hold onto bounce off of oversold levels and reiterate we believe the bulk of the panic selling has concluded for precious metals and reaccumulation will commence as QE is certainly on its way sometime in the future which should drive Gold higher once again...in the meantime, rather quiet out there, expect we'll remain choppy and somewhat rangebound for the rest of the session
10:11AM EST
Not much going on here at the open, Euro fading a bit off the minor gap higher due to possibility of debt downgrade out of S&P, lower beta megacap tech names however seeing some decent bidding on low valuations with CSCO MSFT and semis seeing decent gains, higher beta names like AAPL and BIDU still trading lethargically...whats strange today is that even though European yields are coming down today, reaction in Euro is rather muted, we'll see if Euro cant going late on in the session to produce some additional upside for US equities into the close...note Gold and Silver also seeing solid bounces today, believe break below major technical levels in Gold has flushed out ton of longs and with QE likely still on its way we should stabilize here and slowly work our way higher once again with a much better supply/demand profile in place (ie more sidelined capital, more shorts, weaker supply)
Not much going on here at the open, Euro fading a bit off the minor gap higher due to possibility of debt downgrade out of S&P, lower beta megacap tech names however seeing some decent bidding on low valuations with CSCO MSFT and semis seeing decent gains, higher beta names like AAPL and BIDU still trading lethargically...whats strange today is that even though European yields are coming down today, reaction in Euro is rather muted, we'll see if Euro cant going late on in the session to produce some additional upside for US equities into the close...note Gold and Silver also seeing solid bounces today, believe break below major technical levels in Gold has flushed out ton of longs and with QE likely still on its way we should stabilize here and slowly work our way higher once again with a much better supply/demand profile in place (ie more sidelined capital, more shorts, weaker supply)
9:16AM EST
US futures higher ahead of the open as European debt is rallying today sending yields lower across the board and the Euro higher which is offsetting Fitch IDR ratings downgrade of 7 of the top US banks, US CPI also coming in slightly higher than expected at .2% vs. expectations of .1%....US dollar slightly lower while Treasuries higher, cylical commodities along with Gold/Silver catching an oversold bounce following several days of sell pressure...in terms of trading today, expect a rather slow trading session as we close out the week with funds likely continuing to sit on their hands for the most part into year end...while tech weakness may continue to cap rallies a bit, rally in European debt today and Congressional agreement on $1 trillion spending bill to avert shutdown of US government should keep minor upside bias in tact for the day...wild card for today however is chatter of S&P downgrading Spain and Italy some time today
US futures higher ahead of the open as European debt is rallying today sending yields lower across the board and the Euro higher which is offsetting Fitch IDR ratings downgrade of 7 of the top US banks, US CPI also coming in slightly higher than expected at .2% vs. expectations of .1%....US dollar slightly lower while Treasuries higher, cylical commodities along with Gold/Silver catching an oversold bounce following several days of sell pressure...in terms of trading today, expect a rather slow trading session as we close out the week with funds likely continuing to sit on their hands for the most part into year end...while tech weakness may continue to cap rallies a bit, rally in European debt today and Congressional agreement on $1 trillion spending bill to avert shutdown of US government should keep minor upside bias in tact for the day...wild card for today however is chatter of S&P downgrading Spain and Italy some time today
December 15, 2011
3:15PM EST
Slow grind lower continues here as we enter final hour, most managers really just sitting on their hand here into year end in order to simply match performance of S&P, some however forced to liquidate positions due to outsized losses in commodities which have been hammered due to unwinding of a big bet placed on QE by year end 2011...overall though, very quiet out there with general mode one of anxious anticipation over what will come out of EU next...most waiting for some sort of headline on European credit downgrade as well as possible Greece bankruptcy and here in the US everyone waiting to see if congress will pass another spending bill to allow government operation to remain open for business for at least a few more months...as noted tech remains rather weak here into year end which is rather strange as no one placing any major bets on any big must have tech gadgets for christmas, feels like its going to be a very lackluster christmas, note no AAPL run this year which is something we usually see from late November into Christmas...clearly economic data signaling major global slowdown in the works weighing on sentiment and this negative sentiment could dive even further as central banks thus far refuse to provide any accommodative liquidity at this time and therefore any negative headlines pose major systemic risk to financial system...many now believe central banks waiting for European crisis to hit a climax before stepping in, however in our opinion this is a major mistake as we believe some of the consequences allowing EU to crater will be irreversible...ultimately, markets simply waiting for next rumor to hit to move one way or another which makes it tough to predict short-term swings as any little piece of chatter can now move markets markedly due to extreme illiquidity...VIX weakness however signaling that US market likely to continue outperforming
Slow grind lower continues here as we enter final hour, most managers really just sitting on their hand here into year end in order to simply match performance of S&P, some however forced to liquidate positions due to outsized losses in commodities which have been hammered due to unwinding of a big bet placed on QE by year end 2011...overall though, very quiet out there with general mode one of anxious anticipation over what will come out of EU next...most waiting for some sort of headline on European credit downgrade as well as possible Greece bankruptcy and here in the US everyone waiting to see if congress will pass another spending bill to allow government operation to remain open for business for at least a few more months...as noted tech remains rather weak here into year end which is rather strange as no one placing any major bets on any big must have tech gadgets for christmas, feels like its going to be a very lackluster christmas, note no AAPL run this year which is something we usually see from late November into Christmas...clearly economic data signaling major global slowdown in the works weighing on sentiment and this negative sentiment could dive even further as central banks thus far refuse to provide any accommodative liquidity at this time and therefore any negative headlines pose major systemic risk to financial system...many now believe central banks waiting for European crisis to hit a climax before stepping in, however in our opinion this is a major mistake as we believe some of the consequences allowing EU to crater will be irreversible...ultimately, markets simply waiting for next rumor to hit to move one way or another which makes it tough to predict short-term swings as any little piece of chatter can now move markets markedly due to extreme illiquidity...VIX weakness however signaling that US market likely to continue outperforming
1:25PM EST
Very slow out there with S&P trading in a tight 1215-1220 range for past few hours, tech remains very weak, note QQQ right at breakeven as AAPL BIDU IBM weak, also Euro struggling to hold onto gains even amid oversold technicals which signals trouble still mounting in EU...
Very slow out there with S&P trading in a tight 1215-1220 range for past few hours, tech remains very weak, note QQQ right at breakeven as AAPL BIDU IBM weak, also Euro struggling to hold onto gains even amid oversold technicals which signals trouble still mounting in EU...
1:25PM EST
Very slow out there with S&P trading in a tight 1215-1220 range for past few hours, tech remains very weak, note QQQ right at breakeven as AAPL BIDU IBM weak, also Euro struggling to hold onto gains even amid oversold technicals which signals trouble still mounting in EU...
Very slow out there with S&P trading in a tight 1215-1220 range for past few hours, tech remains very weak, note QQQ right at breakeven as AAPL BIDU IBM weak, also Euro struggling to hold onto gains even amid oversold technicals which signals trouble still mounting in EU...
10:00AM EST
Tech acting rather weak here in first half hour, note AAPl up just .50, BIDU down nearly $4, may see some tech-led weakness here midday...also note Euro seeing a very weak bounce off oversold levels so keep an eye on it, EU remains a big source of concern especially with chatter over French downgrade and Greek bankruptcy gaining momentum this week
Tech acting rather weak here in first half hour, note AAPl up just .50, BIDU down nearly $4, may see some tech-led weakness here midday...also note Euro seeing a very weak bounce off oversold levels so keep an eye on it, EU remains a big source of concern especially with chatter over French downgrade and Greek bankruptcy gaining momentum this week
9:51AM EST
Weak volume here at the open, equities holding up fairly well, note VIX down almost 7% after yesterday's lethargic 1.5% push higher, challenge for equities right now is to find some leadership in addition to DOW Industrials...note retailers and tech continue to trade rather lethargically along with Oil names due to strong macro headwinds, so tough for equities to scream higher just yet, VIX price action however says we may see a very slow and methodical move higher over the next few weeks...with respect to Gold, this break below the 200-day SMA feels a bit premature and feels like just the type of shakeout we need to really get going on the upside medium-term...important thing to note is that currency printing is not a matter of if but when, so while markets are disappointed that we didn't see QE sooner, we are 95% certain it is coming at some point and this will certainly resurrect the bid in precious metals and now force a slew of shorts who've come in on this technical breakdown to cover...so we ultimately believe this technical break is producing a more favorable supply/demand profile for Gold going forward where net longs are reduced a bit and shorts are increased a bit and therefore going forward on a medium-term basis (2-3 months) we'll now have much more sidelined money and chasers on the upside along with stronger short covering...near-term expect we'll stabilize here at these levels as margin call selling winds down
Weak volume here at the open, equities holding up fairly well, note VIX down almost 7% after yesterday's lethargic 1.5% push higher, challenge for equities right now is to find some leadership in addition to DOW Industrials...note retailers and tech continue to trade rather lethargically along with Oil names due to strong macro headwinds, so tough for equities to scream higher just yet, VIX price action however says we may see a very slow and methodical move higher over the next few weeks...with respect to Gold, this break below the 200-day SMA feels a bit premature and feels like just the type of shakeout we need to really get going on the upside medium-term...important thing to note is that currency printing is not a matter of if but when, so while markets are disappointed that we didn't see QE sooner, we are 95% certain it is coming at some point and this will certainly resurrect the bid in precious metals and now force a slew of shorts who've come in on this technical breakdown to cover...so we ultimately believe this technical break is producing a more favorable supply/demand profile for Gold going forward where net longs are reduced a bit and shorts are increased a bit and therefore going forward on a medium-term basis (2-3 months) we'll now have much more sidelined money and chasers on the upside along with stronger short covering...near-term expect we'll stabilize here at these levels as margin call selling winds down
9:23AM EST
US futures gapping higher ahead of the open as initial jobless claims crush expectations coming in at 366K vs. expectations of 390K, Empire Manufacturing also rising to 9.53 up from last month's reading of .61, and China PMI upticks to 49.0 from 47.7 last month, US Industrial Production however missing expectations coming in at -.2% vs. expectations of +.2%...US dollar and Treasuries lower as risk appetite increases a bit, cyclical commodities along with Gold/Silver bouncing slightly on dollar weakness and equity strength...in terms of trading today, while we closed under those November 1st lows at 1215.42 yesterday, VIX weakness amid equity sell-off signaled there was something a bit off about yesterday's pullback and that we were likely to see some sort of bounce...and while we're getting that bounce today, market still very uneasy about situation in Europe so we certainly do have headline risk here and will likely continue to trade on any rumors/chatter coming out of Europe which in most cases remains on the negative side so tough to say its gonna be a smooth ride up today...also note tomorrow is the deadline for Congress to pass another short-term/final spending bill before government shut down, so watch for chatter here to move markets as well, at this point Democrats and Republicans have yet to come to an agreement on spending so government shut down is a possibility
US futures gapping higher ahead of the open as initial jobless claims crush expectations coming in at 366K vs. expectations of 390K, Empire Manufacturing also rising to 9.53 up from last month's reading of .61, and China PMI upticks to 49.0 from 47.7 last month, US Industrial Production however missing expectations coming in at -.2% vs. expectations of +.2%...US dollar and Treasuries lower as risk appetite increases a bit, cyclical commodities along with Gold/Silver bouncing slightly on dollar weakness and equity strength...in terms of trading today, while we closed under those November 1st lows at 1215.42 yesterday, VIX weakness amid equity sell-off signaled there was something a bit off about yesterday's pullback and that we were likely to see some sort of bounce...and while we're getting that bounce today, market still very uneasy about situation in Europe so we certainly do have headline risk here and will likely continue to trade on any rumors/chatter coming out of Europe which in most cases remains on the negative side so tough to say its gonna be a smooth ride up today...also note tomorrow is the deadline for Congress to pass another short-term/final spending bill before government shut down, so watch for chatter here to move markets as well, at this point Democrats and Republicans have yet to come to an agreement on spending so government shut down is a possibility
December 14, 2011
3:06PM EST
Equities and commodities remain very weak heading into the close as chatter now of imminent Greek bankruptcy working its way into markets...what's very strange is VIX has hardly seen any major uptick over the past few sessions even with Euro and commodities tanking hard, note today VIX is only up 1.5% so no major fear bets being placed which is very suspicious...heading into the bell here, we'll see if S&P can close above that 1215.42 November 1st low which is important technically, at this point its tough to call as no one knows what the next show to drop is and with VIX acting abnormally weak the data is all over the place...yet continue to note DOW is holding up fairly well so there is that relative strength in US assets bid still somewhat in place...
Equities and commodities remain very weak heading into the close as chatter now of imminent Greek bankruptcy working its way into markets...what's very strange is VIX has hardly seen any major uptick over the past few sessions even with Euro and commodities tanking hard, note today VIX is only up 1.5% so no major fear bets being placed which is very suspicious...heading into the bell here, we'll see if S&P can close above that 1215.42 November 1st low which is important technically, at this point its tough to call as no one knows what the next show to drop is and with VIX acting abnormally weak the data is all over the place...yet continue to note DOW is holding up fairly well so there is that relative strength in US assets bid still somewhat in place...
12:15PM EST
Equities and commodities still can't find any footing as markets fearful that there is no lender of last resort out there thanks to central banks who refuse to step in and provide liquidity...this is exactly like watching a bad car crash in slow motion and we're hoping the air bags will deploy and there'll be some survivors... feels like almost everyone had expected the printing presses to be turned on by now, and now this big "QE by year end" trade is being forced to unwind as without QE we're simply left with a rapidly slowing global economy, a EU crisis which is far from under control and seeing very little progress coming to any type of resolution, prospect of war with Iran, the Euro becoming extinct, and banks under severe pressure...in other words you're now dealing with slow growth, major headline risk within a rather illiquid market...really still can't wrap my head around the idea that central banks are going to continue to ignore all these major systemic risk and refuse to print, it is clear as day that all markets and economies need liquidity right now and if we don't get it the system is going to collapse...in any case, only somewhat bright spot right now remains the outperformance in the DOW and that possible inverted head and shoulders on the S&P...of course in looking at everything that surrounds these two glimmers of hope we see nothing but bearishness but we can't ignore these two data points as we all know we've seen some strange reversals in markets at times when there was little to no hope out there, and moreover a mere rumor can send this market soaring very quickly...in terms of Gold, one big panic sell off occurring on a break in both the 150-day SMA and 200-day SMA as well as the late September lows, and while technically bearish this is the kind of flush out we may have needed to reduce long speculation a bit to move higher, we'll see
Equities and commodities still can't find any footing as markets fearful that there is no lender of last resort out there thanks to central banks who refuse to step in and provide liquidity...this is exactly like watching a bad car crash in slow motion and we're hoping the air bags will deploy and there'll be some survivors... feels like almost everyone had expected the printing presses to be turned on by now, and now this big "QE by year end" trade is being forced to unwind as without QE we're simply left with a rapidly slowing global economy, a EU crisis which is far from under control and seeing very little progress coming to any type of resolution, prospect of war with Iran, the Euro becoming extinct, and banks under severe pressure...in other words you're now dealing with slow growth, major headline risk within a rather illiquid market...really still can't wrap my head around the idea that central banks are going to continue to ignore all these major systemic risk and refuse to print, it is clear as day that all markets and economies need liquidity right now and if we don't get it the system is going to collapse...in any case, only somewhat bright spot right now remains the outperformance in the DOW and that possible inverted head and shoulders on the S&P...of course in looking at everything that surrounds these two glimmers of hope we see nothing but bearishness but we can't ignore these two data points as we all know we've seen some strange reversals in markets at times when there was little to no hope out there, and moreover a mere rumor can send this market soaring very quickly...in terms of Gold, one big panic sell off occurring on a break in both the 150-day SMA and 200-day SMA as well as the late September lows, and while technically bearish this is the kind of flush out we may have needed to reduce long speculation a bit to move higher, we'll see
10:02AM EST
Keep an eye on 1215.42 level on S&P which is the November 1st low, need to see a bounce off this level to keep possible inverted head and shoulders formation a possibility, close below that level today would be bearish and take us down to late November lows of roughly 1160
Keep an eye on 1215.42 level on S&P which is the November 1st low, need to see a bounce off this level to keep possible inverted head and shoulders formation a possibility, close below that level today would be bearish and take us down to late November lows of roughly 1160
9:51AM EST
IMF says team to visit Italy next week, market getting more nervous over Italy here especially after weak bond auction this morning
IMF says team to visit Italy next week, market getting more nervous over Italy here especially after weak bond auction this morning
9:44AM EST
Markets trying to push higher off this gap down however not much for longs to hang their hat on at this point except for possible inverted head and shoulders on S&P and continued DOW outperformance...with no QE, markets now so illiquid that they're being swung heavily by rumors which has traders even more nervous...we'll see what happens, but technically we do have possible upside from here so we'll see if those technical buy programs kick in...no reason we can't see a "positive" rumor out of EU to solidify that right shoulder formation on S&P...moreover, keep a close eye on Euro as equities highly correlated with Euro price action at this time, if Euro begins to rally a bit off thes oversold levels equities will be headed higher as well
Markets trying to push higher off this gap down however not much for longs to hang their hat on at this point except for possible inverted head and shoulders on S&P and continued DOW outperformance...with no QE, markets now so illiquid that they're being swung heavily by rumors which has traders even more nervous...we'll see what happens, but technically we do have possible upside from here so we'll see if those technical buy programs kick in...no reason we can't see a "positive" rumor out of EU to solidify that right shoulder formation on S&P...moreover, keep a close eye on Euro as equities highly correlated with Euro price action at this time, if Euro begins to rally a bit off thes oversold levels equities will be headed higher as well
9:17AM EST
US futures lower ahead of the open as Italy paid Euro-era high yield of 6.47% in Italian 5-year bond auction which consequently sent Euro below the 1.30 level, moreover market chatter of imminent France downgrade continues to linger...US dollar and Treasuries ticking higher as Euro breakdown has flight to safety bid firm, cyclical commodities as well as Gold and Silver weak on dollar strength and continued disappointment that central banks refuse to turn on printing presses and provide much needed liquidity to fuel growth and contain ongoing crisis...in terms of trading today, markets remain in a funk due to continued disappointment over lack of central bank action even as economic data continues to worsen and financial markets continue to get more illiquid by the day...at this point, velocity of Euro move has most on edge here as it is signaling stresses are intensifying throughout the EU and adding validity to chatter of France downgrade...as noted yesterday however, S&P is showing possible 2-month inverted head and shoulders with right shoulder appearing to be in the works here, so we'll see if we can see some buy interest at this 1220-1225 level based on technicals alone...overall, just very disappointing that central banks are failing to provide any support to economies and markets at this time, sure QE may be unleashed early next year, however might be a little too late as damage will have been done, liquidity is needed now
US futures lower ahead of the open as Italy paid Euro-era high yield of 6.47% in Italian 5-year bond auction which consequently sent Euro below the 1.30 level, moreover market chatter of imminent France downgrade continues to linger...US dollar and Treasuries ticking higher as Euro breakdown has flight to safety bid firm, cyclical commodities as well as Gold and Silver weak on dollar strength and continued disappointment that central banks refuse to turn on printing presses and provide much needed liquidity to fuel growth and contain ongoing crisis...in terms of trading today, markets remain in a funk due to continued disappointment over lack of central bank action even as economic data continues to worsen and financial markets continue to get more illiquid by the day...at this point, velocity of Euro move has most on edge here as it is signaling stresses are intensifying throughout the EU and adding validity to chatter of France downgrade...as noted yesterday however, S&P is showing possible 2-month inverted head and shoulders with right shoulder appearing to be in the works here, so we'll see if we can see some buy interest at this 1220-1225 level based on technicals alone...overall, just very disappointing that central banks are failing to provide any support to economies and markets at this time, sure QE may be unleashed early next year, however might be a little too late as damage will have been done, liquidity is needed now
December 13, 2011
3:38PM EST
Market falling apart here clearly signaling they are in desperate need of liquidity, looks like they will kick and scream their way downward until they get exactly what they want....why central banks want to see financial markets crater first before launching is beyond me at this point, clearly feels like a mistake to me
Market falling apart here clearly signaling they are in desperate need of liquidity, looks like they will kick and scream their way downward until they get exactly what they want....why central banks want to see financial markets crater first before launching is beyond me at this point, clearly feels like a mistake to me
3:23PM EST
So game of chicken with respect to currency printing remains in play here with every central bank waiting for its neighbor to start printing...really have no idea what these central banks are waiting for as financial system is clearly in dire need of liquidity and global growth is in serious need of stimulation...not sure if central banks are well aware that debt markets are in critical condition and they don't want to be caught holding bad debt when there is some sort of collapse...very tough to figure out what's holding central banks back, but very clear that the entire system is extremely fragile...we'll see how this transpires near-term but if there isn't something done soon the Euro is going to completely fall apart which will trigger some chaotic sell pressure in both European debt and of course equities...very hard to believe central banks have decided to just leave this system on its own with no safety net, we know they certainly don't want to print money but they really have no other choice right now...we'll have to see what these morons do, but this is "no one wants to pull the trigger" issue feels like a massive mistake where the consequences will be extremely significant...note S&P has broken below 1230 here heading into close, for high risk traders, a long position at 1225 is not a bad idea on possible inverted head and shoulders
So game of chicken with respect to currency printing remains in play here with every central bank waiting for its neighbor to start printing...really have no idea what these central banks are waiting for as financial system is clearly in dire need of liquidity and global growth is in serious need of stimulation...not sure if central banks are well aware that debt markets are in critical condition and they don't want to be caught holding bad debt when there is some sort of collapse...very tough to figure out what's holding central banks back, but very clear that the entire system is extremely fragile...we'll see how this transpires near-term but if there isn't something done soon the Euro is going to completely fall apart which will trigger some chaotic sell pressure in both European debt and of course equities...very hard to believe central banks have decided to just leave this system on its own with no safety net, we know they certainly don't want to print money but they really have no other choice right now...we'll have to see what these morons do, but this is "no one wants to pull the trigger" issue feels like a massive mistake where the consequences will be extremely significant...note S&P has broken below 1230 here heading into close, for high risk traders, a long position at 1225 is not a bad idea on possible inverted head and shoulders
2:56PM EST
Euro really falling apart, feels like chatter that big credit downgrade in Europe is on its way may have some validity, DOW also now negative...one thing to watch out for is possible inverted head and shoulders on S&P, where head was formed on late November downleg to 1160, left shoulder push down to just under 1225, neckline at roughly 1275 and right shoulder being formed here...with DOW continuing to show some remarkable strength feels like we have enough leadership to reverse higher near-term, so would be a buyer of equities on any push down to roughly 1225 ahead of a possible breakout move over 1275 neckline
Euro really falling apart, feels like chatter that big credit downgrade in Europe is on its way may have some validity, DOW also now negative...one thing to watch out for is possible inverted head and shoulders on S&P, where head was formed on late November downleg to 1160, left shoulder push down to just under 1225, neckline at roughly 1275 and right shoulder being formed here...with DOW continuing to show some remarkable strength feels like we have enough leadership to reverse higher near-term, so would be a buyer of equities on any push down to roughly 1225 ahead of a possible breakout move over 1275 neckline
2:20PM EST
Pretty much the same exact statement as last meeting, downside risks to economy and Fed remains ready to employ tools to promote recovery and price stability, equities pulling back a bit with DOW holding strongly in green so expect we'll likely bounce off this pullback...big standout remains Euro which continues to sell-off, many attributing it to a possible overnight downgrade of European credit
Pretty much the same exact statement as last meeting, downside risks to economy and Fed remains ready to employ tools to promote recovery and price stability, equities pulling back a bit with DOW holding strongly in green so expect we'll likely bounce off this pullback...big standout remains Euro which continues to sell-off, many attributing it to a possible overnight downgrade of European credit
2:09PM EST
Equities holding up very well ahead of Fed meeting even after a move down to breakeven earlier in the session, strength signals the possibility of Fed alluding to QE in FOMC statement...its just a possibility right now, but equities acting suspiciously strong in the face of a weak Euro...we'll see, but feels like even if there is no QE allusion, equities should hold up fairly well
Equities holding up very well ahead of Fed meeting even after a move down to breakeven earlier in the session, strength signals the possibility of Fed alluding to QE in FOMC statement...its just a possibility right now, but equities acting suspiciously strong in the face of a weak Euro...we'll see, but feels like even if there is no QE allusion, equities should hold up fairly well
12:14PM EST
Equities trading all over the place during first half of the session on everything from rumors of Iran closing Straight of Hormuz for military action which spiked Oil back over $100 to Merkel rejecting idea of raising upper limit on ESM bailout, Euro has gone deeply red which has the dollar solidly green once again and putting pressure on equities commodities (except for Oil which is trading off Iran headlines)...overall volume remains rather low with SPYs just now over 80M mark, traders remain focused on FOMC later today however they now have one eye on Iran headlines which appear to be rather fluid and signal escalating tension between US and Iran and producing the possibility of all out war...war of course would spell Oil prices well north of $110/barrel which would be yet another thing markets would have to deal with in addition to the ongoing disaster in Europe...big question right now is will Bernanke pull out the surprise QE3 today and somewhat shield US assets from some of these global distresses? tough to say, but note equities rebounded sharply back into green off the morning gap fill on Merkel headlines and still managing to hold onto gains even with Euro down again, Oil over $100, and retailers weak, feels a bit suspicious
Equities trading all over the place during first half of the session on everything from rumors of Iran closing Straight of Hormuz for military action which spiked Oil back over $100 to Merkel rejecting idea of raising upper limit on ESM bailout, Euro has gone deeply red which has the dollar solidly green once again and putting pressure on equities commodities (except for Oil which is trading off Iran headlines)...overall volume remains rather low with SPYs just now over 80M mark, traders remain focused on FOMC later today however they now have one eye on Iran headlines which appear to be rather fluid and signal escalating tension between US and Iran and producing the possibility of all out war...war of course would spell Oil prices well north of $110/barrel which would be yet another thing markets would have to deal with in addition to the ongoing disaster in Europe...big question right now is will Bernanke pull out the surprise QE3 today and somewhat shield US assets from some of these global distresses? tough to say, but note equities rebounded sharply back into green off the morning gap fill on Merkel headlines and still managing to hold onto gains even with Euro down again, Oil over $100, and retailers weak, feels a bit suspicious
9:48AM EST
Very weak volume here at the open, equities however seeing a very solid upside bias, might this be due to a QE3 announcement out of Fed later on today? we'll have to wait and see...overall though, high quality megacap tech names like AAPL IBM GOOG seeing strong upside bias and offsetting weakness coming off of retailers due to weak retail sales number this morning (note RTH is red)...Gold and Silver also solidly green now, no reason we can't see a good $20-30 point up day in Gold today as central banks have clearly been supporting Gold prices at the 150-day SMA for 3 years now, no reason to believe they'll stop now
Very weak volume here at the open, equities however seeing a very solid upside bias, might this be due to a QE3 announcement out of Fed later on today? we'll have to wait and see...overall though, high quality megacap tech names like AAPL IBM GOOG seeing strong upside bias and offsetting weakness coming off of retailers due to weak retail sales number this morning (note RTH is red)...Gold and Silver also solidly green now, no reason we can't see a good $20-30 point up day in Gold today as central banks have clearly been supporting Gold prices at the 150-day SMA for 3 years now, no reason to believe they'll stop now
9:20AM EST
US futures higher ahead of the open as Spain sees strong demand in 12 and 18-month Treasury bill auctions, EFSF 3-month Treasury bill auction also successful, Euro however unable to rally as Greek discussions with bondholders failed to produce a deal on much needed haircuts, US retail sales also missing expectations coming in at +.2% vs. expectations of +.6%...US dollar flat as Euro continues to struggle to find bids, Treasuries pulling back a bit on solid European bond auctions, cyclical commodities rebounding slightly on equity strength, Gold/Silver well off overnight lows and trading flat ahead of FOMC meeting...in terms of trading today, all eyes on FOMC statement later today where markets waiting to see if Bernanke surprises market with a QE3 announcement, most likely Fed will release a very similar statement to that seen at last FOMC meeting, however there is indeed a chance Bernanke could surprise markets with a QE announcement...in any case, expect equities should remain firmly bid on either scenario, QE3 announcement of course would be much more optimal and would send equities and commodities soaring, no announcement however should see only a minor pullback as funds remain sidelined for the most part here into year-end...traders also watching Gold to see if it holds that 150-day SMA which we believe it will, so would be a buyer of any early session weakness today...overall, pre-market volume remains very light and expect rather quiet session up until FOMC later on today, near-term however continue to expect equities will continue to see an upside bias into year-end with pullbacks remaining shallow, so we remain long here with a prime target of 1300-1325 over the next few weeks
US futures higher ahead of the open as Spain sees strong demand in 12 and 18-month Treasury bill auctions, EFSF 3-month Treasury bill auction also successful, Euro however unable to rally as Greek discussions with bondholders failed to produce a deal on much needed haircuts, US retail sales also missing expectations coming in at +.2% vs. expectations of +.6%...US dollar flat as Euro continues to struggle to find bids, Treasuries pulling back a bit on solid European bond auctions, cyclical commodities rebounding slightly on equity strength, Gold/Silver well off overnight lows and trading flat ahead of FOMC meeting...in terms of trading today, all eyes on FOMC statement later today where markets waiting to see if Bernanke surprises market with a QE3 announcement, most likely Fed will release a very similar statement to that seen at last FOMC meeting, however there is indeed a chance Bernanke could surprise markets with a QE announcement...in any case, expect equities should remain firmly bid on either scenario, QE3 announcement of course would be much more optimal and would send equities and commodities soaring, no announcement however should see only a minor pullback as funds remain sidelined for the most part here into year-end...traders also watching Gold to see if it holds that 150-day SMA which we believe it will, so would be a buyer of any early session weakness today...overall, pre-market volume remains very light and expect rather quiet session up until FOMC later on today, near-term however continue to expect equities will continue to see an upside bias into year-end with pullbacks remaining shallow, so we remain long here with a prime target of 1300-1325 over the next few weeks
December 12, 2011
2:43PM EST
Very slow out there, equities somewhat stable here midday, big focal point right now is on credit ratings agencies and speculation over what their next move might be...will it be a downgrade of France which markets have been dreading, will it be a downgrade of the entire EU which would reek havoc on financial markets, or will the ECB or IMF come in with that much needed bazooka to try and avoid mass downgrades...at this point its clear that no one wants to be the first to open up their check book for fear that they'll be on the hook for the bulk of the bill, but we're getting much too close to the edge here in this game of chicken, someone has to make a move here or we're all going down this proverbial black hole and there won't be any way to fix anything at that point as much of the credit damage will have been done...with respect to US, Fed could launch QE here specifically in order to produce continued upside momentum for US assets during this time of relative weakness across the rest of the globe...and if they launch QE aimed at purchasing US securities, they can certainly use it as an excuse for Europe when Europe comes knocking at the USs door for money ("hey sorry we're already pumping $X billion into our own economy right now in order to stimulate growth, we just can't afford it)...overall though, definitely feels like Germany wishes it had made like the UK and avoided this whole Eurozone experiment and kept their own currency as now they're on the hook for bailing out their ailing counterparts...best bet is Germany is now trying to figure out how to exit the union peacefully without rocking the boat too much, however most of their debt-laden brethren are likely threatening to make sure there will be nothing peaceful about a dismantling of the EU as the Union is the only thing which has other members on the hook for bailing them out at this time
Very slow out there, equities somewhat stable here midday, big focal point right now is on credit ratings agencies and speculation over what their next move might be...will it be a downgrade of France which markets have been dreading, will it be a downgrade of the entire EU which would reek havoc on financial markets, or will the ECB or IMF come in with that much needed bazooka to try and avoid mass downgrades...at this point its clear that no one wants to be the first to open up their check book for fear that they'll be on the hook for the bulk of the bill, but we're getting much too close to the edge here in this game of chicken, someone has to make a move here or we're all going down this proverbial black hole and there won't be any way to fix anything at that point as much of the credit damage will have been done...with respect to US, Fed could launch QE here specifically in order to produce continued upside momentum for US assets during this time of relative weakness across the rest of the globe...and if they launch QE aimed at purchasing US securities, they can certainly use it as an excuse for Europe when Europe comes knocking at the USs door for money ("hey sorry we're already pumping $X billion into our own economy right now in order to stimulate growth, we just can't afford it)...overall though, definitely feels like Germany wishes it had made like the UK and avoided this whole Eurozone experiment and kept their own currency as now they're on the hook for bailing out their ailing counterparts...best bet is Germany is now trying to figure out how to exit the union peacefully without rocking the boat too much, however most of their debt-laden brethren are likely threatening to make sure there will be nothing peaceful about a dismantling of the EU as the Union is the only thing which has other members on the hook for bailing them out at this time
12:11PM EST
Equities continue to trade lower all morning with INTC now down over 5%, volume however remains very low thus far...not sure what game plan European leaders are trying to execute, but markets are screaming that they need to quit screwing around and turn on the printing presses fast otherwise things are going to get much uglier...someone, either IMF or ECB, needs to step up as lender of last resort otherwise the EU and its unifying currency are going to be extinct sometime in 2012...honestly though from what we're seeing with EU leaders, they are already playing every man for himself so maybe EU breakup is what they're gunning for...in either case however (EU breakup or not), Europe and the rest of the world will need additional amounts of liquidity to deal with this type of event as banks have significant amounts of exposure to a unified Europe and executing a smooth transition to a new Europe will need capital cushions...moreover, all these austerity measures being implemented to shore up debt and get sovereigns back on track will produce massive growth headwinds which again requires additional liquidity to keep a floor under growth levels and keep the entire world from going into a massive recession or even depression...note tomorrow we have another FOMC meeting so we'll see what king of commentary Bernanke and co. have on this mess and whether it has increased the probability of QE near-term...clearly no one wants to turn on the printing presses for fear of hyperinflation however at this point markets are saying it is absolutely essential in order to keep the financial system in tact and functioning properly
Equities continue to trade lower all morning with INTC now down over 5%, volume however remains very low thus far...not sure what game plan European leaders are trying to execute, but markets are screaming that they need to quit screwing around and turn on the printing presses fast otherwise things are going to get much uglier...someone, either IMF or ECB, needs to step up as lender of last resort otherwise the EU and its unifying currency are going to be extinct sometime in 2012...honestly though from what we're seeing with EU leaders, they are already playing every man for himself so maybe EU breakup is what they're gunning for...in either case however (EU breakup or not), Europe and the rest of the world will need additional amounts of liquidity to deal with this type of event as banks have significant amounts of exposure to a unified Europe and executing a smooth transition to a new Europe will need capital cushions...moreover, all these austerity measures being implemented to shore up debt and get sovereigns back on track will produce massive growth headwinds which again requires additional liquidity to keep a floor under growth levels and keep the entire world from going into a massive recession or even depression...note tomorrow we have another FOMC meeting so we'll see what king of commentary Bernanke and co. have on this mess and whether it has increased the probability of QE near-term...clearly no one wants to turn on the printing presses for fear of hyperinflation however at this point markets are saying it is absolutely essential in order to keep the financial system in tact and functioning properly
9:38AM EST
Added more January 170 GLD calls here at the open in $1.90s...also note DOW outperforming on this gap down, down less than 1% while S&P down 1.25% and Nasdaq down 1.5%, watch for DOW-led rally later on today
Added more January 170 GLD calls here at the open in $1.90s...also note DOW outperforming on this gap down, down less than 1% while S&P down 1.25% and Nasdaq down 1.5%, watch for DOW-led rally later on today
9:25AM EST
INTC down over 3% as it cuts revenue guidance by $1B from $14.7B down to $13.7B and cuts gross margin guidance from 66% down to 65.5% on hard disk drive supply shortage which they expect to see continue into Q1, equities however nor reacting too negatively to news. note AAPL only down $1, have a feeling we'll see DOW green in no time today
INTC down over 3% as it cuts revenue guidance by $1B from $14.7B down to $13.7B and cuts gross margin guidance from 66% down to 65.5% on hard disk drive supply shortage which they expect to see continue into Q1, equities however nor reacting too negatively to news. note AAPL only down $1, have a feeling we'll see DOW green in no time today
9:17AM EST
US futures lower ahead of the open as Moody's warns that the ratings of all EU members may be cut should decisive policy measures to tackle debt crisis continue to be delayed, moreover Bundesbank President Weidmann told German newspaper that the onus is on governments rather than ECB to tackle debt issues which is again cooling speculation of additional bond buying by ECB, meanwhile Indian industrial production fell 5.1% year over year which is increasing worries over significant global slowdown...US dollar and Treasuries markedly higher as safe haven trade being put again in the wake of a 1% drop in Euro and Italian 10-year back over 6.5%, cyclical commodities along with Gold and Silver sharply lower on strong dollar, hesitancy by ECB to turn on printing press, and global growth concerns...in terms of trading today, while equities are gapping lower by nearly 1%, pre-market volume remains rather light and price action not really showing any extreme selling, so expect while we may dip a bit during first hour or so we should begin pushing higher later on today especially once European markets close...Gold also trading back down to that 150-day SMA at $1663/oz ($161.75 GLD), expect to see support at these levels, will be adding to January 170 GLD calls today
US futures lower ahead of the open as Moody's warns that the ratings of all EU members may be cut should decisive policy measures to tackle debt crisis continue to be delayed, moreover Bundesbank President Weidmann told German newspaper that the onus is on governments rather than ECB to tackle debt issues which is again cooling speculation of additional bond buying by ECB, meanwhile Indian industrial production fell 5.1% year over year which is increasing worries over significant global slowdown...US dollar and Treasuries markedly higher as safe haven trade being put again in the wake of a 1% drop in Euro and Italian 10-year back over 6.5%, cyclical commodities along with Gold and Silver sharply lower on strong dollar, hesitancy by ECB to turn on printing press, and global growth concerns...in terms of trading today, while equities are gapping lower by nearly 1%, pre-market volume remains rather light and price action not really showing any extreme selling, so expect while we may dip a bit during first hour or so we should begin pushing higher later on today especially once European markets close...Gold also trading back down to that 150-day SMA at $1663/oz ($161.75 GLD), expect to see support at these levels, will be adding to January 170 GLD calls today
December 9, 2011
12:03PM EST
Slow grind higher in equities and commodities continues as Euro pushes its way back into positive territory...volume remains light out there so most gains likely due to short covering in response to very weak sell pressure...equities thus far remain rathe firmly bid so we should close firmly higher today, no reason we can't see some sort of bogus IMF-type funding rumor ramp stocks higher into the close...overall, feels like EU crisis was kicked down the road one more time with next major focal point the big March 2012 meeting, in the meantime however looks like we'll hav to continue dealing with rumors and headlines along the lines of EU member discord with details of the treaty...near-term we'll see what S&Ps reaction to today's fiscal pact is, highly doubt they'll be fully satisfied which means we do have a possible credit downgrade headline pending near-term...ultimately though US assets will continue to be seen as "least worst" of all assets and will likely continue to see inflows which should be supportive of prices on EU-triggered pullbacks...moreover, as noted expect Gold is technically setting up for another major breakout here near-term and we're looking for a major breakout over $170 GLD/ $1760 spot near-term
Slow grind higher in equities and commodities continues as Euro pushes its way back into positive territory...volume remains light out there so most gains likely due to short covering in response to very weak sell pressure...equities thus far remain rathe firmly bid so we should close firmly higher today, no reason we can't see some sort of bogus IMF-type funding rumor ramp stocks higher into the close...overall, feels like EU crisis was kicked down the road one more time with next major focal point the big March 2012 meeting, in the meantime however looks like we'll hav to continue dealing with rumors and headlines along the lines of EU member discord with details of the treaty...near-term we'll see what S&Ps reaction to today's fiscal pact is, highly doubt they'll be fully satisfied which means we do have a possible credit downgrade headline pending near-term...ultimately though US assets will continue to be seen as "least worst" of all assets and will likely continue to see inflows which should be supportive of prices on EU-triggered pullbacks...moreover, as noted expect Gold is technically setting up for another major breakout here near-term and we're looking for a major breakout over $170 GLD/ $1760 spot near-term
10:14AM EST
ECB's Liikanen open to central banks, IMF cooperation...ECB essentially putting ball in IMF's court in terms of next policy move
ECB's Liikanen open to central banks, IMF cooperation...ECB essentially putting ball in IMF's court in terms of next policy move
10:10AM EST
Equities working their way higher with DOW now half way to that 300-400 point gain we were looking for yesterday as Michigan Sentiment comes in a bit better than expected at 67.7 vs. expectations of 65.1...with S&P up a solid 15, risk of reversal to the red seems diminished and we should see a solid upside bias throughout the day as shorts now look to cover on dips, moreover expect we may hear one more solid rumor of EU funding as we head into the close today to really ramp things higher by days end
Equities working their way higher with DOW now half way to that 300-400 point gain we were looking for yesterday as Michigan Sentiment comes in a bit better than expected at 67.7 vs. expectations of 65.1...with S&P up a solid 15, risk of reversal to the red seems diminished and we should see a solid upside bias throughout the day as shorts now look to cover on dips, moreover expect we may hear one more solid rumor of EU funding as we head into the close today to really ramp things higher by days end
9:57AM EST
UK Prime Minister saying its in UKs best interest to remain member of EU, Irish Prime Minister saying will offer details of IMF loans in 10 days...just went long January 170 GLD calls at $3.55 (expiring January 20th) on expected breakout from 3-month bullish pennant...key breakout level is 170 on GLD which would break the upper trendline of the pennant, that level equates to roughly $1760 spot...once Gold breaks above that level expect to see very strong technical buy interest with strong upside momentum all the way up to those $1920 highs which we expect will break by January...believe consolidation period in Gold is nearing an end and will produce a strong breakout to the upside sometime over the next 2 weeks
UK Prime Minister saying its in UKs best interest to remain member of EU, Irish Prime Minister saying will offer details of IMF loans in 10 days...just went long January 170 GLD calls at $3.55 (expiring January 20th) on expected breakout from 3-month bullish pennant...key breakout level is 170 on GLD which would break the upper trendline of the pennant, that level equates to roughly $1760 spot...once Gold breaks above that level expect to see very strong technical buy interest with strong upside momentum all the way up to those $1920 highs which we expect will break by January...believe consolidation period in Gold is nearing an end and will produce a strong breakout to the upside sometime over the next 2 weeks
9:34AM EST
Mario Monti putting Eurobonds back on the table and says they will be part of March 2012 talks...Merkel and Sarkozy to head to Rome in mid-January...volume very light here a the open thus far, upside bias feels firm or the time being
Mario Monti putting Eurobonds back on the table and says they will be part of March 2012 talks...Merkel and Sarkozy to head to Rome in mid-January...volume very light here a the open thus far, upside bias feels firm or the time being
9:16AM EST
US futures rebounding a bit as some EU leaders agree to a rather tenuous fiscal union pact, UK however refused to back the treaty while Germany continued to oppose Eurobonds and ESM...US dollar and Treasuries essentially flat as Euro has little to get excited about due to significant discord within EU members, cyclical commodities and Gold/Silver trading roughly flat as well as ECB continues to drag its feet with respect to turning on the printing press...in terms of trading today, expect to see a very choppy session here as EU clearly remains in a very fragile state with many members unwilling to back new treaty...market likely now hoping IMF will step in as lender of last resort and pump massive liquidity into EU...we'll have to wait and see what next move from ECB or IMF is going to be as what we've seen today is clearly not enough to regain confidence, continued policy action is needed so expect we'll hear chatter of some new type of funding on its way...overall though, pre-market volume is actually very light and futures holding green so funds seem to be convinced that EU will be ok on some level
US futures rebounding a bit as some EU leaders agree to a rather tenuous fiscal union pact, UK however refused to back the treaty while Germany continued to oppose Eurobonds and ESM...US dollar and Treasuries essentially flat as Euro has little to get excited about due to significant discord within EU members, cyclical commodities and Gold/Silver trading roughly flat as well as ECB continues to drag its feet with respect to turning on the printing press...in terms of trading today, expect to see a very choppy session here as EU clearly remains in a very fragile state with many members unwilling to back new treaty...market likely now hoping IMF will step in as lender of last resort and pump massive liquidity into EU...we'll have to wait and see what next move from ECB or IMF is going to be as what we've seen today is clearly not enough to regain confidence, continued policy action is needed so expect we'll hear chatter of some new type of funding on its way...overall though, pre-market volume is actually very light and futures holding green so funds seem to be convinced that EU will be ok on some level
December 8, 2011
3:51PM EST
Huge price swings here into the close as details emerge on EU Plan from a reuters report, everything from expansion of EFSF to $500B Euro by July to Germany rejecting elements of EU draft, at this point all headlines are nothing more than rumors and posturing by all parties at the table to try and get their own version of bailout finalized...clearly Germany dragging its feet, ECB wants IMF to front a significant portion of the bill, we'll see what final plan looks like, believe IMF will eventually cave and become lender of last resort which is exactly what ECB wants
Huge price swings here into the close as details emerge on EU Plan from a reuters report, everything from expansion of EFSF to $500B Euro by July to Germany rejecting elements of EU draft, at this point all headlines are nothing more than rumors and posturing by all parties at the table to try and get their own version of bailout finalized...clearly Germany dragging its feet, ECB wants IMF to front a significant portion of the bill, we'll see what final plan looks like, believe IMF will eventually cave and become lender of last resort which is exactly what ECB wants
3:15PM EST
Equities and commodities remain depressed here as managers around the world await EU announcement tomorrow, volume remains rather low so everyone clearly in a wait and see mode...tomorrow will be a big pivot point for markets as this meeting is the the biggest attempt at putting together a viable plan to combat ongoing debt crisis, and if there is no acceptable plan put together tomorrow markets will come to the conclusion that this crisis is so large that it is unable to be contained and this will certainly send all risk assets into freefall mode...as noted earlier though, like many major political decisions, parties tend to wait till very final hour to cave as all parties at the table try and break each other down in the days and weeks leading up to that final hour, and once a decision needs to be made they will get something together...this debt issue is so large that it literally affects major economy and therefore all major central banks have an interest in seeing a plan gets put together which therefore allows ECB to put pressure on their foreign counterparts to add capital to the bailout effort...we'll see what happens tomorrow, but can't fathom that a major plan won't be presented tomorrow as this essentially guarantees major credit downgrade in Europe which will certainly affect nearly every debt and equity assets across the market place
Equities and commodities remain depressed here as managers around the world await EU announcement tomorrow, volume remains rather low so everyone clearly in a wait and see mode...tomorrow will be a big pivot point for markets as this meeting is the the biggest attempt at putting together a viable plan to combat ongoing debt crisis, and if there is no acceptable plan put together tomorrow markets will come to the conclusion that this crisis is so large that it is unable to be contained and this will certainly send all risk assets into freefall mode...as noted earlier though, like many major political decisions, parties tend to wait till very final hour to cave as all parties at the table try and break each other down in the days and weeks leading up to that final hour, and once a decision needs to be made they will get something together...this debt issue is so large that it literally affects major economy and therefore all major central banks have an interest in seeing a plan gets put together which therefore allows ECB to put pressure on their foreign counterparts to add capital to the bailout effort...we'll see what happens tomorrow, but can't fathom that a major plan won't be presented tomorrow as this essentially guarantees major credit downgrade in Europe which will certainly affect nearly every debt and equity assets across the market place
2:08PM EST
ECB decision today to not continue buying more bonds really highlights the game of chicken being played by ECB and IMF and other central banks...ECB essentially basically betting that IMF will be forced to come to the rescue and fund a large portion of the bailout if no one else steps in which is what ECB wants...we'll see what happens, but should be a very interesting 24 hours here ripe with rumors...in the end though we believe there will be a Plan outlined tomorrow as there is far too much at risk to should no definitive plan be produced
ECB decision today to not continue buying more bonds really highlights the game of chicken being played by ECB and IMF and other central banks...ECB essentially basically betting that IMF will be forced to come to the rescue and fund a large portion of the bailout if no one else steps in which is what ECB wants...we'll see what happens, but should be a very interesting 24 hours here ripe with rumors...in the end though we believe there will be a Plan outlined tomorrow as there is far too much at risk to should no definitive plan be produced
1:44PM EST
Gut feeling says high-risk traders can take on an overnight long position here at DOW -160 (12,035 level), good possibility we see a very strong squeeze tomorrow on EU Plan possibly to the tune of +300-400
Gut feeling says high-risk traders can take on an overnight long position here at DOW -160 (12,035 level), good possibility we see a very strong squeeze tomorrow on EU Plan possibly to the tune of +300-400
1:29PM EST
Corzine testimony beginning with him ultimately stating he has no idea where the money went which should make for a very interesting Q&A session...equities continue to worsen however volume remains rather low relative to news headlines hitting markets today...believe much of this weakness is an effort to produce pressure on EU leaders to come to a deal by tomorrow or risk having financial markets collapse...with big EU meeting just starting here about an hour or so ago, no reason we can't start to hear details leak or rumors coming out of discussions hit markets before the close so we're certainly in the red zone for heavy volatility over the next few hours until the close...
Corzine testimony beginning with him ultimately stating he has no idea where the money went which should make for a very interesting Q&A session...equities continue to worsen however volume remains rather low relative to news headlines hitting markets today...believe much of this weakness is an effort to produce pressure on EU leaders to come to a deal by tomorrow or risk having financial markets collapse...with big EU meeting just starting here about an hour or so ago, no reason we can't start to hear details leak or rumors coming out of discussions hit markets before the close so we're certainly in the red zone for heavy volatility over the next few hours until the close...
12:06PM EST
Markets remain disappointed with Draghi comments, however now that Europe has closed expect we may start to lift of these morning lows, note equities still not in bloodbath territory with DOW down a relatively modest 100 points which in this market is easily reversed in a couple hours time...also note, not producing a plan tomorrow is not an option, something viable must be produced otherwise irreversible credit damage will be done to even the highest quality European debt, so expect this threat will produce enough cooperation between leaders to get something down...what that something is remains to be seen, but you can bet every single major world leader is on the phone with EU officials making sure a plan is produced otherwise financial markets are going to crater...at this point, since the consequences of not producing a plan are so significant, we believe a grand f multilateral plan involving the IMF and possibly even the Fed will be produced...EU is almost certainly putting pressure on the IMFl, the Fed, and maybe even China to help them fund this plan as every major economy will be taken down hard if nothing is produced...so EU has a sort of card to play with the threat that if you dont help us pay, we're all going down...
Markets remain disappointed with Draghi comments, however now that Europe has closed expect we may start to lift of these morning lows, note equities still not in bloodbath territory with DOW down a relatively modest 100 points which in this market is easily reversed in a couple hours time...also note, not producing a plan tomorrow is not an option, something viable must be produced otherwise irreversible credit damage will be done to even the highest quality European debt, so expect this threat will produce enough cooperation between leaders to get something down...what that something is remains to be seen, but you can bet every single major world leader is on the phone with EU officials making sure a plan is produced otherwise financial markets are going to crater...at this point, since the consequences of not producing a plan are so significant, we believe a grand f multilateral plan involving the IMF and possibly even the Fed will be produced...EU is almost certainly putting pressure on the IMFl, the Fed, and maybe even China to help them fund this plan as every major economy will be taken down hard if nothing is produced...so EU has a sort of card to play with the threat that if you dont help us pay, we're all going down...
9:37AM EST
Draghi commentary really has all risk assets hitting the skids especially with comment of ECB unable to lend money to IMF due to EU treaty limitations, really feels like everyone trying desperately to avoid footing the bill for a bailout with everyone looking to the guy next to him to turn on the printing press to fund this thing...one thing is for certain though, the printing presses will be turned on and most looking to the IMF to foot the bill...with respect to trading today though, as mentioned expect both equities and commodities can reverse off early morning weakness to trade higher late in the session, note DOW conitnues to outperform this morning and expect it will likely lead indices higher following European close in a couple hours...also expect Gold will continue to work its way higher off this Draghi-induced reversal, note Gold was green ahead of Draghi
Draghi commentary really has all risk assets hitting the skids especially with comment of ECB unable to lend money to IMF due to EU treaty limitations, really feels like everyone trying desperately to avoid footing the bill for a bailout with everyone looking to the guy next to him to turn on the printing press to fund this thing...one thing is for certain though, the printing presses will be turned on and most looking to the IMF to foot the bill...with respect to trading today though, as mentioned expect both equities and commodities can reverse off early morning weakness to trade higher late in the session, note DOW conitnues to outperform this morning and expect it will likely lead indices higher following European close in a couple hours...also expect Gold will continue to work its way higher off this Draghi-induced reversal, note Gold was green ahead of Draghi
9:16AM EST
US futures highly volatile following ECB rate cut of 25bp (BOE held rates steady) and better than expected US initial jobless claims which came in at 381K vs. expectations of 395K, clearly very tenuous period ahead of big EU meeting tomorrow where EU leaders must come up with a comprehensive plan to contain crisis or risk debt rating cuts, Draghi commentary on possibility of no increase in bond purchases and inability of IMF to buy European bonds is putting pressure on futures ahead of the opening bell...US dollar and Treasuries roughly flat, Euro sinking to low of the day on Draghi comments, cyclical commodities and Gold/Silver pulling back off earlier gains as equities weaken...in terms of trading today, expect a highly volatile session as everything from rumors to leaked details on tomorrows EU meeting will surely emerge and have prices swinging wildly as no one really knows what sort of plan we'll see tomorrow, market simply aware that some sort of plan is needed by tomorrow or all hell is going to break loose due to S&P threat of credit rating cuts...thus far based on prices ahead of the bell, feels like morning weakness can be overcome later on in the day especially once Europe closes at 11:30AM EST...fasten your seat belts today, should be a wild one
US futures highly volatile following ECB rate cut of 25bp (BOE held rates steady) and better than expected US initial jobless claims which came in at 381K vs. expectations of 395K, clearly very tenuous period ahead of big EU meeting tomorrow where EU leaders must come up with a comprehensive plan to contain crisis or risk debt rating cuts, Draghi commentary on possibility of no increase in bond purchases and inability of IMF to buy European bonds is putting pressure on futures ahead of the opening bell...US dollar and Treasuries roughly flat, Euro sinking to low of the day on Draghi comments, cyclical commodities and Gold/Silver pulling back off earlier gains as equities weaken...in terms of trading today, expect a highly volatile session as everything from rumors to leaked details on tomorrows EU meeting will surely emerge and have prices swinging wildly as no one really knows what sort of plan we'll see tomorrow, market simply aware that some sort of plan is needed by tomorrow or all hell is going to break loose due to S&P threat of credit rating cuts...thus far based on prices ahead of the bell, feels like morning weakness can be overcome later on in the day especially once Europe closes at 11:30AM EST...fasten your seat belts today, should be a wild one
December 7, 2011
3:24PM EST
Equities well off those morning lows and rather firm heading into the close with all dips being bought as we expected...Gold also holding up very well here ahead of ECB meeting where we'll likely to see a strong rate cut possibly to the tune of 50bp with signals of further rates cuts to come...
Equities well off those morning lows and rather firm heading into the close with all dips being bought as we expected...Gold also holding up very well here ahead of ECB meeting where we'll likely to see a strong rate cut possibly to the tune of 50bp with signals of further rates cuts to come...
12:00PM EST
Equities continue to chop around on rather light volume, indices slowly working their way back to the flatline with blue chip DOW components like IBM JNJ CSCO PFE leading the charge higher...Gold also remains suspiciously firm with metal reversing strong off another attempt at going red early on in the session, someone clearly buying big here past 2 sessions, feels like some sort of monetary action on its way here...overall though, markets remain rather quiet as they await that big EU meeting friday, expect to see dips remain shallow in the meantime with slight upside bias in both equities and commodities...also no reason we can't see some details on EU Plan later on in the session
Equities continue to chop around on rather light volume, indices slowly working their way back to the flatline with blue chip DOW components like IBM JNJ CSCO PFE leading the charge higher...Gold also remains suspiciously firm with metal reversing strong off another attempt at going red early on in the session, someone clearly buying big here past 2 sessions, feels like some sort of monetary action on its way here...overall though, markets remain rather quiet as they await that big EU meeting friday, expect to see dips remain shallow in the meantime with slight upside bias in both equities and commodities...also no reason we can't see some details on EU Plan later on in the session
9:46AM EST
Decent sized sell program coming in here at the open in S&P futures, most likely coming from European funds liquidating...DOW however continues to outperform a bit while tech continues to underperform...from looks of price action though this morning weakness doesn't look like anything that can't be overcome later on in the session, or once Europe closes...continue to keep a close eye on Gold as yellow metal showing some notable strength here this morning, surprise rate cut or launch of QE possibly leaked as reversal yesterday and today's strength rather notable
Decent sized sell program coming in here at the open in S&P futures, most likely coming from European funds liquidating...DOW however continues to outperform a bit while tech continues to underperform...from looks of price action though this morning weakness doesn't look like anything that can't be overcome later on in the session, or once Europe closes...continue to keep a close eye on Gold as yellow metal showing some notable strength here this morning, surprise rate cut or launch of QE possibly leaked as reversal yesterday and today's strength rather notable
9:14AM EST
US futures lower ahead of the open as senior German official pours cold water on yesterday's FT report of EU doubling EFSF and running two funds simultaneously, strong demand in German bond auction doing little for futures...US dollar and Treasuries roughly flat while Euro trades slightly lower on German official comments, cyclical commodities mixed, Gold however adding to yesterday's reversal likely on expectations of ECB rate cut tomorrow while Silver trades slightly lower...in terms of trading today, expect to see choppy trade as rumors and reports on EFSF will likely continue to surface ahead of big EU meeting on friday...continue to expect any pullbacks will be shallow as US assets remain firmly bid by foreign funds and seeing very few sell programs by US funds heading into year end...also keep an eye on Gold here today as reversal yesterday with follow through today signaling a very nice breakout over $1760/oz coming here near-term, may also be signaling big central banks news in addition to ECB rate cut tomorrow is on its way
US futures lower ahead of the open as senior German official pours cold water on yesterday's FT report of EU doubling EFSF and running two funds simultaneously, strong demand in German bond auction doing little for futures...US dollar and Treasuries roughly flat while Euro trades slightly lower on German official comments, cyclical commodities mixed, Gold however adding to yesterday's reversal likely on expectations of ECB rate cut tomorrow while Silver trades slightly lower...in terms of trading today, expect to see choppy trade as rumors and reports on EFSF will likely continue to surface ahead of big EU meeting on friday...continue to expect any pullbacks will be shallow as US assets remain firmly bid by foreign funds and seeing very few sell programs by US funds heading into year end...also keep an eye on Gold here today as reversal yesterday with follow through today signaling a very nice breakout over $1760/oz coming here near-term, may also be signaling big central banks news in addition to ECB rate cut tomorrow is on its way
December 6, 2011
3:54PM EST
Equities remain rather firm here into the close with precious metals looking exceptionally strong while tech continues to lag...Australia interest rate cut by .25 down to 4.25% ahead of ECB rate cut likely on Thursday continues to remind fund managers that easy monetary policy will remain a solid tailwind for precious metals here over the next couple months especially as numbers start to be thrown around for EFSF...overall, extremely low volume today and expect we'll see this type of environment linger for the next couple sessions especially as US economic data is light this week...moreover, fund managers likely to remain rather hesitant at unloading anything too aggressively over the next few weeks for fear of missing a big year end rally, so expect with low overhead supply and overseas funds continuing to view US assets as "least worst" of all global assets, path of least resistance will remain to the upside for the foreseeable future...next major catalysts to the upside near-term will likely be ECB rate cut on Thursday with signal of further rate cuts to come, and this will be followed by big EU meeting on friday where we'll likely see a more definitive plan to contain ongoing EU crisis due to S&P threat of credit rating cuts yesterday
Equities remain rather firm here into the close with precious metals looking exceptionally strong while tech continues to lag...Australia interest rate cut by .25 down to 4.25% ahead of ECB rate cut likely on Thursday continues to remind fund managers that easy monetary policy will remain a solid tailwind for precious metals here over the next couple months especially as numbers start to be thrown around for EFSF...overall, extremely low volume today and expect we'll see this type of environment linger for the next couple sessions especially as US economic data is light this week...moreover, fund managers likely to remain rather hesitant at unloading anything too aggressively over the next few weeks for fear of missing a big year end rally, so expect with low overhead supply and overseas funds continuing to view US assets as "least worst" of all global assets, path of least resistance will remain to the upside for the foreseeable future...next major catalysts to the upside near-term will likely be ECB rate cut on Thursday with signal of further rate cuts to come, and this will be followed by big EU meeting on friday where we'll likely see a more definitive plan to contain ongoing EU crisis due to S&P threat of credit rating cuts yesterday
2:48PM EST
Equities and commodities taking off as Financial Times reporting that EU officials are discussing doubling EFSF firepower and EU plan could include running two separate funds...as expected some details being leaked ahead of friday meeting, and moreover looks like S&P scare tactic is working a bit...continue to believe we have further upside in both equities and commodities here near-term, and yesterday's late day pullback in both equities and commodities was simply a headfake before another push higher
Equities and commodities taking off as Financial Times reporting that EU officials are discussing doubling EFSF firepower and EU plan could include running two separate funds...as expected some details being leaked ahead of friday meeting, and moreover looks like S&P scare tactic is working a bit...continue to believe we have further upside in both equities and commodities here near-term, and yesterday's late day pullback in both equities and commodities was simply a headfake before another push higher
12:02PM EST
Volume extremely light here midday, SPYs just broke over 60M mark, no real definitive action anywhere.. tech started lagging here midday which is weighing on indices but again no real volume behind the sell pressure so feels like a headfake...note funds not doing any major selling in equities even after major run up last week, all pullbacks now on very light volume...overall continue to expect we're setting up for another strong upleg in equities and commodities later on this week, for now everyone in a wait and see mode until friday's EU meeting so sit tight here, expect choppy trading with mild upward bias near-term
Volume extremely light here midday, SPYs just broke over 60M mark, no real definitive action anywhere.. tech started lagging here midday which is weighing on indices but again no real volume behind the sell pressure so feels like a headfake...note funds not doing any major selling in equities even after major run up last week, all pullbacks now on very light volume...overall continue to expect we're setting up for another strong upleg in equities and commodities later on this week, for now everyone in a wait and see mode until friday's EU meeting so sit tight here, expect choppy trading with mild upward bias near-term
10:36AM EST
Markets firming up here after choppy first hour with S&P bumping up against 1260 once again, while volume remains very low, expect we'll continue to slowly strengthen in all markets throughout the day as sell pressure rather limited here near-term due to fear of underperformance into year-end...also note Euro just turned green, financials continue to outperform on short covering...watch for slow and steady incline here midday with volume getting even lower, no reason however we can't see another EU Plan rumor later on in the session to start squeezing shorts who came in on S&P downgrade news
Markets firming up here after choppy first hour with S&P bumping up against 1260 once again, while volume remains very low, expect we'll continue to slowly strengthen in all markets throughout the day as sell pressure rather limited here near-term due to fear of underperformance into year-end...also note Euro just turned green, financials continue to outperform on short covering...watch for slow and steady incline here midday with volume getting even lower, no reason however we can't see another EU Plan rumor later on in the session to start squeezing shorts who came in on S&P downgrade news
9:12AM EST
US futures roughly flat ahead of the open as yesterday's news of S&P placing 15 Eurozone members on credit downgrade review was mostly priced (news was leaked earlier on in the session), markets also spinning news somewhat positively as it now puts pressure on EU members to draw up a comprehensive plan at Fridays meeting...US dollar slightly higher as Euro continues to trade rathe tenuously, US Treasuries slightly lower as equities stable and risk-on trade remains trade of choice heading into year-end, cyclical commodities along with Gold/Silver slightly lower on dollar strength...in terms of trading today, as noted yesterday expect to see today's gap lower bought by funds as global fund managers continue to view US assets as most stable assets during this time of uncertainty, so should see a push higher shortly after the open...expect Gold/Silver will push higher alongside equities shortly after the open as well, moreover believe past 2 sessions pullback is a headfake to lure in shorts ahead of squeeze on Thursday triggered by ECB rate cut...overall though, pre-market volume is very low (no US economic data out today) so expect to see markets in wait and see mode
US futures roughly flat ahead of the open as yesterday's news of S&P placing 15 Eurozone members on credit downgrade review was mostly priced (news was leaked earlier on in the session), markets also spinning news somewhat positively as it now puts pressure on EU members to draw up a comprehensive plan at Fridays meeting...US dollar slightly higher as Euro continues to trade rathe tenuously, US Treasuries slightly lower as equities stable and risk-on trade remains trade of choice heading into year-end, cyclical commodities along with Gold/Silver slightly lower on dollar strength...in terms of trading today, as noted yesterday expect to see today's gap lower bought by funds as global fund managers continue to view US assets as most stable assets during this time of uncertainty, so should see a push higher shortly after the open...expect Gold/Silver will push higher alongside equities shortly after the open as well, moreover believe past 2 sessions pullback is a headfake to lure in shorts ahead of squeeze on Thursday triggered by ECB rate cut...overall though, pre-market volume is very low (no US economic data out today) so expect to see markets in wait and see mode
December 5, 2011
2:43PM EST
Equities saw a nice downtick here on report that S&P is about to put a slew of European countries on credit watch negative including France and Germany, volume however remains very low out there and US market continues to hold up fairly well even on this news...reiterate, expect US markets will continue to decouple from Europe near-term as global fund managers increasingly viewing US as the "least worst" of all economies right now and continue to reallocate into US assets on expected relative outperformance...note technically, S&P is hitting some resistance at 200-day SMA here at 1264.51, however we believe the pullback off this technical level will prove to be a headfake to lure in some shorts and will be followed quickly by a strong breakout above this technical level later on this week...believe any weakness seen on this evenings expected S&P announcement of putting European countries on credit watch negative should be bought and we expect equities will rally higher off any gap down tomorrow...next major catalyst to the upside in our opinion will be a rate cut out of ECB on Thursday along with chatter of some sort of comprehensive plan unveiled on friday to contain EU crisis...overall, continue to use dips to buy both equities and commodities here as we believe funds are not only positioning for a strong year-end rally in US equities but are also preparing for a strong inflation trade next year as the effect of massive currency printing from global central banks along with rate cuts out of the likes of ECB and China begins to produce a strong tailwind for equities and commodities
Equities saw a nice downtick here on report that S&P is about to put a slew of European countries on credit watch negative including France and Germany, volume however remains very low out there and US market continues to hold up fairly well even on this news...reiterate, expect US markets will continue to decouple from Europe near-term as global fund managers increasingly viewing US as the "least worst" of all economies right now and continue to reallocate into US assets on expected relative outperformance...note technically, S&P is hitting some resistance at 200-day SMA here at 1264.51, however we believe the pullback off this technical level will prove to be a headfake to lure in some shorts and will be followed quickly by a strong breakout above this technical level later on this week...believe any weakness seen on this evenings expected S&P announcement of putting European countries on credit watch negative should be bought and we expect equities will rally higher off any gap down tomorrow...next major catalyst to the upside in our opinion will be a rate cut out of ECB on Thursday along with chatter of some sort of comprehensive plan unveiled on friday to contain EU crisis...overall, continue to use dips to buy both equities and commodities here as we believe funds are not only positioning for a strong year-end rally in US equities but are also preparing for a strong inflation trade next year as the effect of massive currency printing from global central banks along with rate cuts out of the likes of ECB and China begins to produce a strong tailwind for equities and commodities
12:00PM EST
Very slow out there during first half of session with volume extremely low (SPY volume not even at 85M yet), S&P hovering in a 5 point range all morning trading between 1260-1265...expect we should remain on a firmly bid slow incline all day...just sit tight for now
Very slow out there during first half of session with volume extremely low (SPY volume not even at 85M yet), S&P hovering in a 5 point range all morning trading between 1260-1265...expect we should remain on a firmly bid slow incline all day...just sit tight for now
10:13AM EST
Factory Orders coming in roughly in line at -.4% vs. expectations of -.3%, ISM Services a bit weaker than expected at 52.0 vs. expectations of 53.4, equities however not paying too much attention to data as it is mostly focused on EU headlines of which latest is Sarkozy/Merkel on new treaty for EU which has equities holding positive bias...continue to expect equities will remain firmly bid all day and throughout the week here so continue to recommend holding long positions...also note Gold coming well off its morning lows as buy programs looking for anything lagging to buy up..financials also continue to outperform here as short squeeze continues and likely should continue near-term due to hedge funds looking to boost performance gains by pressing shorts...overall, volume remains rather low so sit tight and hold those longs as we continue to believe we're going higher in both equities and commodities near-term
Factory Orders coming in roughly in line at -.4% vs. expectations of -.3%, ISM Services a bit weaker than expected at 52.0 vs. expectations of 53.4, equities however not paying too much attention to data as it is mostly focused on EU headlines of which latest is Sarkozy/Merkel on new treaty for EU which has equities holding positive bias...continue to expect equities will remain firmly bid all day and throughout the week here so continue to recommend holding long positions...also note Gold coming well off its morning lows as buy programs looking for anything lagging to buy up..financials also continue to outperform here as short squeeze continues and likely should continue near-term due to hedge funds looking to boost performance gains by pressing shorts...overall, volume remains rather low so sit tight and hold those longs as we continue to believe we're going higher in both equities and commodities near-term
9:14AM EST
US futures gapping higher yet again as Italy unveils $30B Euro austerity package and Sarkozy/Merkel meet today to try and put together a new debt plan, both of which are creating optimism that Eurozone crisis may become somewhat contained...US dollar and Treasuries lower once again as risk-off trade continues to unwind, cyclical commodities pushing higher on dollar weakness and Eurozone optimism, Gold slightly lower on a bit of consolidation following recent gains, Silver however holding positive bias...in terms of trading today, S&P gapping over that 1260 level as expected last week, expect equities should remain in bull mode near-term as funds continue to chase equities higher into year-end, 1300-1325 S&P remains key target on the upside...expect any pullbacks today will remain shallow and firmly bid so remain long here, expect we may see a solid week of gains in equities as economic data remains rather scarce and Eurozone debt issues should continue to subside a bit...big EU meeting on Fridays should produce further optimism that EU debt crisis will be contained in the short-run, also ECB meeting on Thursday should produce another rate cut which should be positive for Gold, believe today's pullback is an effort to lure in shorts ahead of a squeeze over $1760/oz later this week
US futures gapping higher yet again as Italy unveils $30B Euro austerity package and Sarkozy/Merkel meet today to try and put together a new debt plan, both of which are creating optimism that Eurozone crisis may become somewhat contained...US dollar and Treasuries lower once again as risk-off trade continues to unwind, cyclical commodities pushing higher on dollar weakness and Eurozone optimism, Gold slightly lower on a bit of consolidation following recent gains, Silver however holding positive bias...in terms of trading today, S&P gapping over that 1260 level as expected last week, expect equities should remain in bull mode near-term as funds continue to chase equities higher into year-end, 1300-1325 S&P remains key target on the upside...expect any pullbacks today will remain shallow and firmly bid so remain long here, expect we may see a solid week of gains in equities as economic data remains rather scarce and Eurozone debt issues should continue to subside a bit...big EU meeting on Fridays should produce further optimism that EU debt crisis will be contained in the short-run, also ECB meeting on Thursday should produce another rate cut which should be positive for Gold, believe today's pullback is an effort to lure in shorts ahead of a squeeze over $1760/oz later this week
December 2, 2011
3:40PM EST
Equities been quiet all afternoon with equities and commodities holding up fairly well even with Euro weakening and Treasuries strengthening...looking ahead to next week, very little major economic data on US front so volumes likely to be weak again which should produce a good environment for further upside...next weeks focal point will of course be on meeting in Brussels where we should see a solid effort at least in containing the EU crisis on a short-term basis...overall, US equities continue to feel firmly bid especially in the wake of wednesday's significant rally (note we've held nearly all the gains since Wedneday)...expect as we approach year-end we'll start to see more and more short squeezes along the lines of what we're seeing in financials today....looking at all shorted sectors, financials clearly the most shorted which means they may be prime targets for squeezes into year-end...note this move will have nothing to do with fundamentals but will simply be due to traditional year-end manipulation by hedge funds targeting heavily shorted sectors in order to boost performance gains
Equities been quiet all afternoon with equities and commodities holding up fairly well even with Euro weakening and Treasuries strengthening...looking ahead to next week, very little major economic data on US front so volumes likely to be weak again which should produce a good environment for further upside...next weeks focal point will of course be on meeting in Brussels where we should see a solid effort at least in containing the EU crisis on a short-term basis...overall, US equities continue to feel firmly bid especially in the wake of wednesday's significant rally (note we've held nearly all the gains since Wedneday)...expect as we approach year-end we'll start to see more and more short squeezes along the lines of what we're seeing in financials today....looking at all shorted sectors, financials clearly the most shorted which means they may be prime targets for squeezes into year-end...note this move will have nothing to do with fundamentals but will simply be due to traditional year-end manipulation by hedge funds targeting heavily shorted sectors in order to boost performance gains
12:10PM EST
Equities been under some slight pressure all morning as European equities weakened heading into their close along with the Euro due to chatter that Republicans are looking to block IMF bailout of both Italy and Spain...as noted however, we believe US equities will start to trade much more independently from Europe due to seasonal strength into year-end and perceptions of relative economic strength compared to the rest of the world so view this weakness as nothing more than a minor pullback before another push higher likely above 1260 S&P early next week...also note volume levels rather low here midday so don't expect to see much more weakness, expect heading into the close fund chasing will recommence and press the indices higher once again...overall though, as we approach meeting in Brussels next week expect to hear a ton of rumors surface over bailout of Europe with resistance coming from all directions as no one wants to foot the bill, however in the end it will get done and expect crisis will be somewhat contained at least for the next few weeks...believe however all these Eurozone issues will start to surface again early next year
Equities been under some slight pressure all morning as European equities weakened heading into their close along with the Euro due to chatter that Republicans are looking to block IMF bailout of both Italy and Spain...as noted however, we believe US equities will start to trade much more independently from Europe due to seasonal strength into year-end and perceptions of relative economic strength compared to the rest of the world so view this weakness as nothing more than a minor pullback before another push higher likely above 1260 S&P early next week...also note volume levels rather low here midday so don't expect to see much more weakness, expect heading into the close fund chasing will recommence and press the indices higher once again...overall though, as we approach meeting in Brussels next week expect to hear a ton of rumors surface over bailout of Europe with resistance coming from all directions as no one wants to foot the bill, however in the end it will get done and expect crisis will be somewhat contained at least for the next few weeks...believe however all these Eurozone issues will start to surface again early next year
9:48AM EST
Bit of weakness coming in here at the open as dollar strengthens a bit, however don't expect this weakness to hold as funds continue to look for any dips to add to long positions, reiterate this buying on dips will likely be the trend for the foreseeable future...also note banks up nicely here this morning, may see some squeezing in financials here heading into year end as hedge funds look to squeeze this heavily shorted sector over the next few weeks...
Bit of weakness coming in here at the open as dollar strengthens a bit, however don't expect this weakness to hold as funds continue to look for any dips to add to long positions, reiterate this buying on dips will likely be the trend for the foreseeable future...also note banks up nicely here this morning, may see some squeezing in financials here heading into year end as hedge funds look to squeeze this heavily shorted sector over the next few weeks...
9:18AM EST
US futures higher by 1% as unemployment rate unexpectedly drops down to 8.6% even though nonfarm payrolls grew less than expected coming in at 120K vs. expectations of 123K, massive drop in unemployment rate ironically attributed to people leaving labor market after being unable to find a job...chatter of a massive "grand plan" to solve EU crisis also supporting equity prices with plan expected to be announced next week in Brussels...US dollar and Treasuries continue to pullback as risk-off trade continues to unwind, cyclical commodities along with Gold/Silver higher on dollar weakness and equity strength, also news of Bank of Korea increasing gold reserves by $1B in November supporting gold prices...in terms of trading today, as noted yesterday, today's unemployemnt numbers would likely be spun positively either way by markets as US equities remain in bull mode ahead heading into Christmas...unemployment rate clearly not an accurate reflection of labor market, however as we've seen over the past several weeks, government has clearly been manipulating economic data higher in order to try and produce a market bottom or at least a rally into year end...in any case, it was it is and we expect this upside bias in equities to continue near-term with prime December target of 1300-1325 on the S&P so we see no reason to unload long positions just yet....today we should see a nice slow uptrend with any dips being shallow, expect to see a nice push higher during final hour as funds likely look to get ahead of "grand plan" announcement by Eurozone leaders next week in Brussels which should be next near-term catalyst to the upside
US futures higher by 1% as unemployment rate unexpectedly drops down to 8.6% even though nonfarm payrolls grew less than expected coming in at 120K vs. expectations of 123K, massive drop in unemployment rate ironically attributed to people leaving labor market after being unable to find a job...chatter of a massive "grand plan" to solve EU crisis also supporting equity prices with plan expected to be announced next week in Brussels...US dollar and Treasuries continue to pullback as risk-off trade continues to unwind, cyclical commodities along with Gold/Silver higher on dollar weakness and equity strength, also news of Bank of Korea increasing gold reserves by $1B in November supporting gold prices...in terms of trading today, as noted yesterday, today's unemployemnt numbers would likely be spun positively either way by markets as US equities remain in bull mode ahead heading into Christmas...unemployment rate clearly not an accurate reflection of labor market, however as we've seen over the past several weeks, government has clearly been manipulating economic data higher in order to try and produce a market bottom or at least a rally into year end...in any case, it was it is and we expect this upside bias in equities to continue near-term with prime December target of 1300-1325 on the S&P so we see no reason to unload long positions just yet....today we should see a nice slow uptrend with any dips being shallow, expect to see a nice push higher during final hour as funds likely look to get ahead of "grand plan" announcement by Eurozone leaders next week in Brussels which should be next near-term catalyst to the upside
December 1, 2011
12:11PM EST
Very queit out there especialy in terms of volume, note SPYs have yet to break above 100M mark, some minor consolidation going on here midday following yesterday's, however expect we'll see another push higher during final hour as fund buy interest in equities will remain strong...looking ahead to tomorrow's jobs report, expect market will spin either good or bad unemployment number positively with good number signaling economy is improving, and weak number signaling QE3 is on its way...overall though, market is in such bullish shape that any gap down at the open will likely be bought as funds and programs just looking for any pullbacks to get long heading into Christmas...so again, weak economic data or underlying sector weakness should be somewhat overlooked near-term as trend in equities will likely be up regardless
Very queit out there especialy in terms of volume, note SPYs have yet to break above 100M mark, some minor consolidation going on here midday following yesterday's, however expect we'll see another push higher during final hour as fund buy interest in equities will remain strong...looking ahead to tomorrow's jobs report, expect market will spin either good or bad unemployment number positively with good number signaling economy is improving, and weak number signaling QE3 is on its way...overall though, market is in such bullish shape that any gap down at the open will likely be bought as funds and programs just looking for any pullbacks to get long heading into Christmas...so again, weak economic data or underlying sector weakness should be somewhat overlooked near-term as trend in equities will likely be up regardless
10:06AM EST
ISM Index comes in better than expected at 52.7 vs. expectations of 51.0 and up from last month's reading of 50.8, equities which had been firming up ever since the open pushing well into green now led by tech...note yesterday's laggards (AMZN and AAPL) now today's leaders as funds looking for any weakness to buy...while volume remains very low, expect upside bias will continue throughout the session with 1260 S&P not out of the question today
ISM Index comes in better than expected at 52.7 vs. expectations of 51.0 and up from last month's reading of 50.8, equities which had been firming up ever since the open pushing well into green now led by tech...note yesterday's laggards (AMZN and AAPL) now today's leaders as funds looking for any weakness to buy...while volume remains very low, expect upside bias will continue throughout the session with 1260 S&P not out of the question today
9:14AM EST
US futures relatively flat as weaker than expected China PMI (49.0 vs. expectations of 49.8) and higher than expected initial jobless claims (402K vs. expectations of 390K) offset by successful Spanish and French bond auctions...US dollar and Treasuries lower once again as risk-off trade continues to unwind, cyclical commodities trading mixed on weak China PMI, and Gold/Silver trading flat to slightly higher...in terms of trading today, pre-market volume very low so it will likely be a rather slow day, however expect upside bias will continue with funds using any dips as buying opportunities into year end...expect to see strong trend of reversals to the upside on any morning gap downs...overall though, should be a rather quiet day with S&P likely pushing over 1250 level by the close, Gold should break above $1750/oz
US futures relatively flat as weaker than expected China PMI (49.0 vs. expectations of 49.8) and higher than expected initial jobless claims (402K vs. expectations of 390K) offset by successful Spanish and French bond auctions...US dollar and Treasuries lower once again as risk-off trade continues to unwind, cyclical commodities trading mixed on weak China PMI, and Gold/Silver trading flat to slightly higher...in terms of trading today, pre-market volume very low so it will likely be a rather slow day, however expect upside bias will continue with funds using any dips as buying opportunities into year end...expect to see strong trend of reversals to the upside on any morning gap downs...overall though, should be a rather quiet day with S&P likely pushing over 1250 level by the close, Gold should break above $1750/oz
August 1, 2011
3:07PM EST
Here comes PPT trying to defend 200-day SMA (1285) and close market back over that critical support level to try and keep those technicals in tact and funds from running for the exits...in our opinion however, this effort will fail due to so many macro issues, lack of near-term upside catalysts, and clearly weakening technicals which has funds aggressively reducing positions...in other words keep holding those equity shorts through any and all bounces near-term
Here comes PPT trying to defend 200-day SMA (1285) and close market back over that critical support level to try and keep those technicals in tact and funds from running for the exits...in our opinion however, this effort will fail due to so many macro issues, lack of near-term upside catalysts, and clearly weakening technicals which has funds aggressively reducing positions...in other words keep holding those equity shorts through any and all bounces near-term
2:24PM EST
Market completely unable to rebound at all here intraday with S&P trading a good 8 points below that 200-day SMA (1285)...longs now extremely nervous that market has been unable to rebound on deficit deal and now with most major earnings out of the way there are really no major catalysts on the horizon to rally markets and a slew of downside risks including continued very weak economic data which is market's primary concern at the moment...note these concerns coming in tandem with European indices crashing and a still looming threat of US credit downgrade...highly recommend holding onto all equity shorts here as we continue to see a very strong critical breakdown in S&P here with funds unloading heavily on this break below that all-important 200-day SMA which has been strong support for several months now...in terms of next couple hours, everyone awaiting the deficit vote which has been pushed back (also likely spooking markets), market however not banking too much on positive outcome as there are far too many concerns now with this deficit issue coming to a tentative close...overall, close looks like its gonna be very ugly today with that technical reversal + break below 200-day SMA sending even technicians running for the exits, so hold onto those S&P shorts as well as those Gold/Silver longs here
Market completely unable to rebound at all here intraday with S&P trading a good 8 points below that 200-day SMA (1285)...longs now extremely nervous that market has been unable to rebound on deficit deal and now with most major earnings out of the way there are really no major catalysts on the horizon to rally markets and a slew of downside risks including continued very weak economic data which is market's primary concern at the moment...note these concerns coming in tandem with European indices crashing and a still looming threat of US credit downgrade...highly recommend holding onto all equity shorts here as we continue to see a very strong critical breakdown in S&P here with funds unloading heavily on this break below that all-important 200-day SMA which has been strong support for several months now...in terms of next couple hours, everyone awaiting the deficit vote which has been pushed back (also likely spooking markets), market however not banking too much on positive outcome as there are far too many concerns now with this deficit issue coming to a tentative close...overall, close looks like its gonna be very ugly today with that technical reversal + break below 200-day SMA sending even technicians running for the exits, so hold onto those S&P shorts as well as those Gold/Silver longs here
11:56AM EST
Hoarding Of Physical Gold, Voracious Global Demand To Produce Undeliverable Gold Futures, Parabolic Move to $2700-3000/oz
As we've noted several times over the past several weeks, fundamental backdrop of precious metals market remains extremely firm with plethora of global monetary and fiscal issues producing massive tailwinds for both Gold and Silver, and we continue to believe long Precious Metals remains the best bet in all financial markets at this time...what we'd like to add to this thesis now is we believe sometime over the next 6-12 months we will in fact see gold futures become undeliverable as demand for physical gold bullion far outstrips available supply (ie long gold futures holders looking to take delivery at expiration will not be able to take delivery due to insufficient supply)...we believe this scenario will take hold due to significant hoarding of physical gold bullion by literally every type of major market participant from global central banks, hedge funds, endowment funds, investment banks, all the way down to the retail investor which will in our opinion produce a massive supply shortage relative to demand...note when central banks (biggest buyers of precious metals at this time) take delivery of hundreds of tons of physical gold, this supply will not see the light of day for years as central banks are now clearly committed to diversifying out of major fiat currencies (ie this gold investment is not a trade, but a long-term investment)...secondly, with demand for gold and silver remaining extremely high due to ongoing Eurozone sovereign debt/banking issues, potential US credit downgrade, voracious demand out of China as it looks to up its gold allocation of foreign exchange reserves from 1.7% to likely 10% , and most importantly the threat of of continued dollar printing by the Fed (aka QE3) in order to stimulate an economy which has yet to show any signs of achieving sustainable growth, we expect demand for physical gold will significantly outpace supply sometime over the next 6-12 months and produce a major parabolic move in both gold and silver with gold likely to hit $2700-3000/oz, and Silver $60-65/oz...we really see no way around this thesis coming to fruition as we believe large amounts of physical gold continues to be taken off the market every single day by major long-term investors, and moreover we see demand for physical gold continuing to increase at an extremely rapid pace such that prices must invariably go significantly higher from even these elevated levels
Hoarding Of Physical Gold, Voracious Global Demand To Produce Undeliverable Gold Futures, Parabolic Move to $2700-3000/oz
As we've noted several times over the past several weeks, fundamental backdrop of precious metals market remains extremely firm with plethora of global monetary and fiscal issues producing massive tailwinds for both Gold and Silver, and we continue to believe long Precious Metals remains the best bet in all financial markets at this time...what we'd like to add to this thesis now is we believe sometime over the next 6-12 months we will in fact see gold futures become undeliverable as demand for physical gold bullion far outstrips available supply (ie long gold futures holders looking to take delivery at expiration will not be able to take delivery due to insufficient supply)...we believe this scenario will take hold due to significant hoarding of physical gold bullion by literally every type of major market participant from global central banks, hedge funds, endowment funds, investment banks, all the way down to the retail investor which will in our opinion produce a massive supply shortage relative to demand...note when central banks (biggest buyers of precious metals at this time) take delivery of hundreds of tons of physical gold, this supply will not see the light of day for years as central banks are now clearly committed to diversifying out of major fiat currencies (ie this gold investment is not a trade, but a long-term investment)...secondly, with demand for gold and silver remaining extremely high due to ongoing Eurozone sovereign debt/banking issues, potential US credit downgrade, voracious demand out of China as it looks to up its gold allocation of foreign exchange reserves from 1.7% to likely 10% , and most importantly the threat of of continued dollar printing by the Fed (aka QE3) in order to stimulate an economy which has yet to show any signs of achieving sustainable growth, we expect demand for physical gold will significantly outpace supply sometime over the next 6-12 months and produce a major parabolic move in both gold and silver with gold likely to hit $2700-3000/oz, and Silver $60-65/oz...we really see no way around this thesis coming to fruition as we believe large amounts of physical gold continues to be taken off the market every single day by major long-term investors, and moreover we see demand for physical gold continuing to increase at an extremely rapid pace such that prices must invariably go significantly higher from even these elevated levels
10:27AM EST
One important market to watch right now is Europe as Italy's stock market is plunging nearly 4%, Spain is also down roughly 3% as this morning the Bank of Cyrus said it needs a bailout from the EU sparking major contagion fears...hold those precious metals
One important market to watch right now is Europe as Italy's stock market is plunging nearly 4%, Spain is also down roughly 3% as this morning the Bank of Cyrus said it needs a bailout from the EU sparking major contagion fears...hold those precious metals
10:17AM EST
You can see the S&P has violated that critical 200-day SMA twice now on an intraday basis over the past 2 sessions while in June we never broke below that level, rather bouncing perfectly off each test...this indicates market internals are indeed weakening here, and validates our ongoing thesis that the S&P is getting ready for a major breakdown below critical support, and as noted several times last week we're looking for this breakdown to occur early this week so recommend continuing to hold onto those short equity positions here, while remaining long Gold and Silver (everything right on cue so far)
You can see the S&P has violated that critical 200-day SMA twice now on an intraday basis over the past 2 sessions while in June we never broke below that level, rather bouncing perfectly off each test...this indicates market internals are indeed weakening here, and validates our ongoing thesis that the S&P is getting ready for a major breakdown below critical support, and as noted several times last week we're looking for this breakdown to occur early this week so recommend continuing to hold onto those short equity positions here, while remaining long Gold and Silver (everything right on cue so far)
10:04AM EST
ISM weaker than expected at 50.9 vs. expectations 54.0 and down from last months reading of 55.3, equities getting hammered with all 3 indices now red, Gold just went green with Silver about to push higher just as we predicted
ISM weaker than expected at 50.9 vs. expectations 54.0 and down from last months reading of 55.3, equities getting hammered with all 3 indices now red, Gold just went green with Silver about to push higher just as we predicted
9:57AM EST
ISM Index out in a couple minutes, expect another weak print with another leg down in equities, another leg higher in precious metals
ISM Index out in a couple minutes, expect another weak print with another leg down in equities, another leg higher in precious metals
9:39AM EST
Equities fading here off the open, sell programs active, DOW seeing weakness (underperformance in highly cyclical names continues), watch for the Gold/Silver reversal into green
Equities fading here off the open, sell programs active, DOW seeing weakness (underperformance in highly cyclical names continues), watch for the Gold/Silver reversal into green
9:14AM EST
US futures gapping higher as Congress comes to a last minute agreement over deficit package and is now set to vote on the deal in the hopes of avoiding a default...US dollar and Treasuries trading lower however as markets not fully convinced deficit package will be enough to stave off US credit downgrade, cyclical commodities trading higher on short-term relief rally, gold/silver trading lower as safe haven bid unwinds a bit...in terms of trading today, as noted on friday we expect this gap higher in equities will fade throughout the day with indices closing well off these morning levels as market still concerned over US slowdown stemming from weak economic data as of late, and also concerned over possibility of US credit downgrade, moreover we expect gold and silver will reverse hard off this gap lower and close green as we believe recent rally in precious metals was not fully predicated on possibility of default but rather a plethora of global macro/fiscal concerns...therefore recommend selling S&P short while going long Gold and Silver at the open
US futures gapping higher as Congress comes to a last minute agreement over deficit package and is now set to vote on the deal in the hopes of avoiding a default...US dollar and Treasuries trading lower however as markets not fully convinced deficit package will be enough to stave off US credit downgrade, cyclical commodities trading higher on short-term relief rally, gold/silver trading lower as safe haven bid unwinds a bit...in terms of trading today, as noted on friday we expect this gap higher in equities will fade throughout the day with indices closing well off these morning levels as market still concerned over US slowdown stemming from weak economic data as of late, and also concerned over possibility of US credit downgrade, moreover we expect gold and silver will reverse hard off this gap lower and close green as we believe recent rally in precious metals was not fully predicated on possibility of default but rather a plethora of global macro/fiscal concerns...therefore recommend selling S&P short while going long Gold and Silver at the open
July 29, 2011
3:23PM EST
Market remains fairly quiet here heading into close, likely to see a nice downdraft last 20 minutes or so as risk is taken off in the face of no real update from Obama or Congress on deficit deal...big thing to remember right now though is that in our opinion most markets are not really being driven by this deficit deal but rather the prospect of QE3 which now looks very highly likely as economic data has continues to come in weak (1.3% GDP reading plus revision down to .4% for Q1 a huge data point which will force Fed to act) and moreover the fact that the fiscal position of US government precludes them from having the ability to act to stimulate the economy which leaves Fed as the only entity with the ability to try and stimulate...also note fiscal weakness of the government will actually weigh on growth even further as spending cuts will produce less government demand for good and services throughout the economy and therefore even weaker growth which further necessitates the need for stimulus...so this deficit deal and the possibility of default or most likely a credit downgrade is simply further impetus for QE3 which market is now focused on...in the very near-term however market is trying to figure out what the net effect of a credit downgrade will be, right now they're in denial over the possibility of default but realistically it probably has a good 20% chance as neither side of Congress willing to cave at this point (again this is a fight for 2012 election, whoever caves first is essentially relinquishing power to the other party and this will create momentum for the opposition into 2012)...in any case, continue to believe best bet here is Gold/Silver longs and am looking for either a major gap higher monday or a major reversal off a gap down as there are a ton of sidelined buyers who are waiting for the possible "sell the news" scenario which may come from a deficit deal being done....most naively continue to believe this entire gold move is predicated on the possibility of US default, and as noted monday (see July 25 - 12:58 entry) we believe there are a plethora of major monetary and fiscal issues behind this move which is setting up for continued upside in gold near, medium and long-term...in terms of equities, ton of economic data coming out next week which we expect will continue to show a weakening economy (which should be great for precious metals as it increased probability of QE3) and because prices in equities are still rather elevated and remain crowded on the long side (funds refuse to fully let go of equities until that 200-day SMA is broken) we continue to believe they have downside risk and will indeed break below that 200-day SMA early next week either on a gap down monday or a major reversal off a gap down monday...in terms of dollar expect it will continue to see downside pressure with a possible break below those April/May lows near-term as QE3 probability continues to increase and major market participants place their bets on another round of aggressive dollar printing by the Fed..with respect to Treasuries, they have major crosscurrents at the moment with a possible downgrade of rating waiting in the wings which should put upside pressure on rates as risk profile associated with US debt must increase, yet the prospect of aggressive buying by the Fed through POMO, funds pricing in continued low interest rates well into 2012 due to current soft patch in US economy, and lastly safe haven buying out of Europe due to ongoing European sovereign debt concerns...overall, best positioning in markets in our opinion remains long Gold/Silver, short S&P
Market remains fairly quiet here heading into close, likely to see a nice downdraft last 20 minutes or so as risk is taken off in the face of no real update from Obama or Congress on deficit deal...big thing to remember right now though is that in our opinion most markets are not really being driven by this deficit deal but rather the prospect of QE3 which now looks very highly likely as economic data has continues to come in weak (1.3% GDP reading plus revision down to .4% for Q1 a huge data point which will force Fed to act) and moreover the fact that the fiscal position of US government precludes them from having the ability to act to stimulate the economy which leaves Fed as the only entity with the ability to try and stimulate...also note fiscal weakness of the government will actually weigh on growth even further as spending cuts will produce less government demand for good and services throughout the economy and therefore even weaker growth which further necessitates the need for stimulus...so this deficit deal and the possibility of default or most likely a credit downgrade is simply further impetus for QE3 which market is now focused on...in the very near-term however market is trying to figure out what the net effect of a credit downgrade will be, right now they're in denial over the possibility of default but realistically it probably has a good 20% chance as neither side of Congress willing to cave at this point (again this is a fight for 2012 election, whoever caves first is essentially relinquishing power to the other party and this will create momentum for the opposition into 2012)...in any case, continue to believe best bet here is Gold/Silver longs and am looking for either a major gap higher monday or a major reversal off a gap down as there are a ton of sidelined buyers who are waiting for the possible "sell the news" scenario which may come from a deficit deal being done....most naively continue to believe this entire gold move is predicated on the possibility of US default, and as noted monday (see July 25 - 12:58 entry) we believe there are a plethora of major monetary and fiscal issues behind this move which is setting up for continued upside in gold near, medium and long-term...in terms of equities, ton of economic data coming out next week which we expect will continue to show a weakening economy (which should be great for precious metals as it increased probability of QE3) and because prices in equities are still rather elevated and remain crowded on the long side (funds refuse to fully let go of equities until that 200-day SMA is broken) we continue to believe they have downside risk and will indeed break below that 200-day SMA early next week either on a gap down monday or a major reversal off a gap down monday...in terms of dollar expect it will continue to see downside pressure with a possible break below those April/May lows near-term as QE3 probability continues to increase and major market participants place their bets on another round of aggressive dollar printing by the Fed..with respect to Treasuries, they have major crosscurrents at the moment with a possible downgrade of rating waiting in the wings which should put upside pressure on rates as risk profile associated with US debt must increase, yet the prospect of aggressive buying by the Fed through POMO, funds pricing in continued low interest rates well into 2012 due to current soft patch in US economy, and lastly safe haven buying out of Europe due to ongoing European sovereign debt concerns...overall, best positioning in markets in our opinion remains long Gold/Silver, short S&P
1:17PM EST
Market remains in a wait and see mode and there's a clear sense of hope on the long side that some headline will appear before the close today which points to a deal in the works, however at this point it just feels like a hope and a prayer as this debate looks like its going right to the 11th hour where we'll then see some messy deficit deal be thrown together and passed in order to avoid default...in terms of today however, expect if we don't hear anything by 3:00PM this market is going to start tanking hard again especially if no headline is produced by the close (afterhours could get very ugly)...right now we still have a couple hours of hopeful meandering, but as you can see equities are well off those early morning highs, and from what we can see we have a very good shot at heading right back down toward those lows by the close with Gold and Silver heading right back toward highs
Market remains in a wait and see mode and there's a clear sense of hope on the long side that some headline will appear before the close today which points to a deal in the works, however at this point it just feels like a hope and a prayer as this debate looks like its going right to the 11th hour where we'll then see some messy deficit deal be thrown together and passed in order to avoid default...in terms of today however, expect if we don't hear anything by 3:00PM this market is going to start tanking hard again especially if no headline is produced by the close (afterhours could get very ugly)...right now we still have a couple hours of hopeful meandering, but as you can see equities are well off those early morning highs, and from what we can see we have a very good shot at heading right back down toward those lows by the close with Gold and Silver heading right back toward highs
11:16AM EST
Market continues bounce off that 200-day SMA as Obama making hopeful statement that 2 parties are "not miles apart" and that they'll be working through the weekend to get this thing done...all these statements to be expected of course with market reaction well within expectations as shorts surely looking to cover some positions ahead of possible deal this weekend...as noted however we dont expect this midday rally to hold and based on its timing (started much too early in the day) we believe they're squeezing shorts early in the session to prepare for another slide into the close...also as noted, expect should we see a deal this weekend, any gap up monday should be sold short and moreover any gap down in precious metals should be bought...therefore continue to recommend short bias in equities, long bias in Gold/Silver here near-term, paying little attention to this midday rally as we expect it to fade by days end in preparation for a major break below 200-day SMA early next week
Market continues bounce off that 200-day SMA as Obama making hopeful statement that 2 parties are "not miles apart" and that they'll be working through the weekend to get this thing done...all these statements to be expected of course with market reaction well within expectations as shorts surely looking to cover some positions ahead of possible deal this weekend...as noted however we dont expect this midday rally to hold and based on its timing (started much too early in the day) we believe they're squeezing shorts early in the session to prepare for another slide into the close...also as noted, expect should we see a deal this weekend, any gap up monday should be sold short and moreover any gap down in precious metals should be bought...therefore continue to recommend short bias in equities, long bias in Gold/Silver here near-term, paying little attention to this midday rally as we expect it to fade by days end in preparation for a major break below 200-day SMA early next week
10:01AM EST
MIchigan Sentiment roughly in line at 63.7 vs. expectations of 63.8, market trying to catch a bounce following culmination of economic data releases this morning, however dont expect these bounces will hold as macro issues far to severe right now...expect however we'll hear rumors of debt deal being done at some point today, but would use any squeeze higher as an opportunity to short as come monday it will be apparent that any deal will likely fall well short of what is needed to avoid a US credit downgrade
MIchigan Sentiment roughly in line at 63.7 vs. expectations of 63.8, market trying to catch a bounce following culmination of economic data releases this morning, however dont expect these bounces will hold as macro issues far to severe right now...expect however we'll hear rumors of debt deal being done at some point today, but would use any squeeze higher as an opportunity to short as come monday it will be apparent that any deal will likely fall well short of what is needed to avoid a US credit downgrade
9:51AM EST
Chicago PMI slightly weaker than expected at 58.8 vs. expectations of 59.0 and down from last month's reading of 61.1, market took another dip now trying to rebound a bit, however expect all bounces to be met with heavy overhead supply today as sell programs very active (note SPYs already just under 50M in volume in first 20 minutes)
Chicago PMI slightly weaker than expected at 58.8 vs. expectations of 59.0 and down from last month's reading of 61.1, market took another dip now trying to rebound a bit, however expect all bounces to be met with heavy overhead supply today as sell programs very active (note SPYs already just under 50M in volume in first 20 minutes)
9:38AM EST
Chicago PMI and Michigan Sentiment coming out here in a few minutes (9:45, 9:55 respectively) should come in weaker than expected as well and add another leg down...everything playing out perfectly here with Gold/Silver exploding, S&P just above 200-day SMA
Chicago PMI and Michigan Sentiment coming out here in a few minutes (9:45, 9:55 respectively) should come in weaker than expected as well and add another leg down...everything playing out perfectly here with Gold/Silver exploding, S&P just above 200-day SMA
9:11AM EST
US futures markedly lower ahead of the open as Boehner deficit plan postponed due to lack of votes, reports that EFSF may not be able to loan Greece its next tranche of bailout money due to inability of Spain and Italy to contribute their share of payment, Moody;s puts Spain on review for possible credit downgrade, and Q2 GDP comes in weaker than expected at an anemic 1.3% vs. expectations of 1.7% with Q1 GDP also being revised down to .4% from 1.9%...US dollar slightly lower on default fears which are being offset by Eurozone contagion fears, US Treasuries higher on safe haven bid out of Europe, and nearly all major commodities trading lower on growth fears with Gold and Silver of course bucking the trend to push higher on massive confluence of macro concerns...in terms of trading today, markets playing out just as we expected earlier this week with S&P set to open right at 200-day SMA (1284.27) and Gold/Silver launching higher after weak GDP report, and while we had expected a break below this critical 200-day SMA support level early next week, believe we'll actually see the break today due to plethora of macro headlines this morning...while we may see a rally attempt into the bell to try and close the index back above the 200-day SMA believe downside pressure/breakdown will continue into next week as markets will continue to be concerned over US credit downgrade even if Congress is able to produce a last minute deficit deal, so long Gold/Silver, short S&P trade remains in tact
US futures markedly lower ahead of the open as Boehner deficit plan postponed due to lack of votes, reports that EFSF may not be able to loan Greece its next tranche of bailout money due to inability of Spain and Italy to contribute their share of payment, Moody;s puts Spain on review for possible credit downgrade, and Q2 GDP comes in weaker than expected at an anemic 1.3% vs. expectations of 1.7% with Q1 GDP also being revised down to .4% from 1.9%...US dollar slightly lower on default fears which are being offset by Eurozone contagion fears, US Treasuries higher on safe haven bid out of Europe, and nearly all major commodities trading lower on growth fears with Gold and Silver of course bucking the trend to push higher on massive confluence of macro concerns...in terms of trading today, markets playing out just as we expected earlier this week with S&P set to open right at 200-day SMA (1284.27) and Gold/Silver launching higher after weak GDP report, and while we had expected a break below this critical 200-day SMA support level early next week, believe we'll actually see the break today due to plethora of macro headlines this morning...while we may see a rally attempt into the bell to try and close the index back above the 200-day SMA believe downside pressure/breakdown will continue into next week as markets will continue to be concerned over US credit downgrade even if Congress is able to produce a last minute deficit deal, so long Gold/Silver, short S&P trade remains in tact
July 28, 2011
3:26PM EST
Market heading back down to low of the day here, looking ahead to tomorrow big Q2 GDP will be in prime focus along with ongoing debt ceiling drama....expectations for Q2 GDP are 1.7% however believe its going to come in much weaker than expected which will raise probability of QE3 even further and send Gold/Silver running hard (likely why we're seeing the slight shake out in precious metals here over the past 2 sessions, to prep for another breakout move tomorrow)...with respect to equities however, the prospect of a weakening economy along with a possible credit downgrade will have everyone running for the exits rather than betting on another QE driven rally and as noted we expect to see another test of that 200-day SMA on the S&P early tomorrow....likely won't break it right away as big pivot point will come over the weekend when we see what kind of deficit deal is reached to avoid default, and as noted we believe no deal will stave off a credit downgrade and as such we believe the break below the 200-day SMA on the S&P will occur early next week...should we see a gap higher on monday as a sort of relief rally on some deal being reached, we'd be selling it short as we fully expect the rally will not hold and will likely reverse hard by day's end monday...so overall, recommend remaining biased to the short side in equities near-term while holding those precious metal longs
Market heading back down to low of the day here, looking ahead to tomorrow big Q2 GDP will be in prime focus along with ongoing debt ceiling drama....expectations for Q2 GDP are 1.7% however believe its going to come in much weaker than expected which will raise probability of QE3 even further and send Gold/Silver running hard (likely why we're seeing the slight shake out in precious metals here over the past 2 sessions, to prep for another breakout move tomorrow)...with respect to equities however, the prospect of a weakening economy along with a possible credit downgrade will have everyone running for the exits rather than betting on another QE driven rally and as noted we expect to see another test of that 200-day SMA on the S&P early tomorrow....likely won't break it right away as big pivot point will come over the weekend when we see what kind of deficit deal is reached to avoid default, and as noted we believe no deal will stave off a credit downgrade and as such we believe the break below the 200-day SMA on the S&P will occur early next week...should we see a gap higher on monday as a sort of relief rally on some deal being reached, we'd be selling it short as we fully expect the rally will not hold and will likely reverse hard by day's end monday...so overall, recommend remaining biased to the short side in equities near-term while holding those precious metal longs
2:33PM EST
Equities starting to fade here as expected as Boehner's deficit plan goes to Congress for vote, most expect it will not pass due to strong opposition from Democrats...even though market fully expects it not to pass, we are getting so close to our critical August 2nd deadline with no headway being made on this debt ceiling issue that a no pass will still be an issue for markets...market still has no idea how this ongoing debate is going to end, they just expect that somehow they'll come to some conclusion which will avoid default...in our opinion, most likely conclusion will be Obama stepping in to raise the debt ceiling on his own without approval from Congress (which he has the power to do), however this action will do nothing to prevent a credit downgrade which now looks near certain...as noted, continue to believe next near-term sell-off takes us down to 200-day SMA on S&P currently at 1284, so remain biased to the short side here, avoid longs for now except for Gold/Silver which continue to find solid bids on pullbacks, note Gold roughly flat after early morning sell-off into negative territory
Equities starting to fade here as expected as Boehner's deficit plan goes to Congress for vote, most expect it will not pass due to strong opposition from Democrats...even though market fully expects it not to pass, we are getting so close to our critical August 2nd deadline with no headway being made on this debt ceiling issue that a no pass will still be an issue for markets...market still has no idea how this ongoing debate is going to end, they just expect that somehow they'll come to some conclusion which will avoid default...in our opinion, most likely conclusion will be Obama stepping in to raise the debt ceiling on his own without approval from Congress (which he has the power to do), however this action will do nothing to prevent a credit downgrade which now looks near certain...as noted, continue to believe next near-term sell-off takes us down to 200-day SMA on S&P currently at 1284, so remain biased to the short side here, avoid longs for now except for Gold/Silver which continue to find solid bids on pullbacks, note Gold roughly flat after early morning sell-off into negative territory
11:48AM EST
Not a ton of aggressive action out there, market feels highly illiquid, you can see SPYs trading much lower volume than yesterday...ask is much thinner today due to a bit of seller exhaustion after yesterday's high volume dump so not too hard to push indices higher...overall though still no real underlying strength behind this move as big DOW industrials continue to underperform, tech still seeing interest but on much lighter volume...would be wary of this rally, watch for a fade this afternoon as sellers start to come in again...prime near-term target remains that 200-day SMA on S&P currently at 1284.34 so would remain biased to the short side in equities, also continue to expect uptrend will remain in tact in Gold and Silver as immediately following any debt ceiling resolution we'll start to hear chatter of QE3 which will keep upside pressure on precious metals medium-term
Not a ton of aggressive action out there, market feels highly illiquid, you can see SPYs trading much lower volume than yesterday...ask is much thinner today due to a bit of seller exhaustion after yesterday's high volume dump so not too hard to push indices higher...overall though still no real underlying strength behind this move as big DOW industrials continue to underperform, tech still seeing interest but on much lighter volume...would be wary of this rally, watch for a fade this afternoon as sellers start to come in again...prime near-term target remains that 200-day SMA on S&P currently at 1284.34 so would remain biased to the short side in equities, also continue to expect uptrend will remain in tact in Gold and Silver as immediately following any debt ceiling resolution we'll start to hear chatter of QE3 which will keep upside pressure on precious metals medium-term
10:21AM EST
Not a lot of underlying strength behind this morning rally, industrials sluggish, AAPL struggling to push higher with indices, feels like we're gonna stall out here just above 1310...most of this push higher simply short-term short covering
Not a lot of underlying strength behind this morning rally, industrials sluggish, AAPL struggling to push higher with indices, feels like we're gonna stall out here just above 1310...most of this push higher simply short-term short covering
9:41AM EST
Tech names leading the way lower again this morning as funds scramble to reduce risk, equities continue to look very fragile, watch for the break below 1300 on S&P
Tech names leading the way lower again this morning as funds scramble to reduce risk, equities continue to look very fragile, watch for the break below 1300 on S&P
9:04AM EST
US futures slightly higher on better than expected initial jobless claims (398K vs. expectations of 415K) and slight technical bounce following yesterday's sell-off...US dollar trading higher as Eurozone contagion fears weighing on Euro as well as European indices, US Treasuries higher on safe haven trade out of Europe, most commodities trading roughly flat...in terms of trading today, expect continued downside bias in equities due to ongoing uncertainty over deficit package as well as Eurozone debt fears, expect S&P will close below 1300 level today
US futures slightly higher on better than expected initial jobless claims (398K vs. expectations of 415K) and slight technical bounce following yesterday's sell-off...US dollar trading higher as Eurozone contagion fears weighing on Euro as well as European indices, US Treasuries higher on safe haven trade out of Europe, most commodities trading roughly flat...in terms of trading today, expect continued downside bias in equities due to ongoing uncertainty over deficit package as well as Eurozone debt fears, expect S&P will close below 1300 level today
July 27, 2011
3:29PM EST
Sell programs accelerating here during final hour as expected, would recommend holding onto equity shorts into the close as tomorrows initial jobless claims likely to be ugly especially in the wake of massive layoff announcements out of CSCO LMT and Border's over the past couple weeks...obviously deficit debate remains surrounded by extreme uncertainty, everyone trying to figure out how this is going to end and most in complete denial of the possibility of the unthinkable (default) which would be disastrous to markets...either way though, downgrade of US credit rating now looks highly likely and will certainly roil global markets nonetheless....stepping back and taking a look at the plethora of macro issues out there (Eurozone debt, US debt, China slowdown, US slowdown) makes you realize that we're in Major Crash territory here, so would keep long positions in equities at bare minimums here near-term and would be highly biased to the short side...would not be surprised to see a -500-600 down day on the DOW here in the next couple sessions if Congress continues to languish, note one more hard down day would also produce a major break below the 200-day SMA and trigger major sell programs...now should we actually see some sort of last minute resolution on debt ceiling near-term would use any rally to add to/initiate short positions as any near-term resolution will likely be nothing more than a band-aid for a couple months and for short of any major resolution on the deficit...so would use any near-term pop to sell into near-term as European issue, China slowdown, and concern over US unemployment worsening will continue to weigh heavily on equities
Sell programs accelerating here during final hour as expected, would recommend holding onto equity shorts into the close as tomorrows initial jobless claims likely to be ugly especially in the wake of massive layoff announcements out of CSCO LMT and Border's over the past couple weeks...obviously deficit debate remains surrounded by extreme uncertainty, everyone trying to figure out how this is going to end and most in complete denial of the possibility of the unthinkable (default) which would be disastrous to markets...either way though, downgrade of US credit rating now looks highly likely and will certainly roil global markets nonetheless....stepping back and taking a look at the plethora of macro issues out there (Eurozone debt, US debt, China slowdown, US slowdown) makes you realize that we're in Major Crash territory here, so would keep long positions in equities at bare minimums here near-term and would be highly biased to the short side...would not be surprised to see a -500-600 down day on the DOW here in the next couple sessions if Congress continues to languish, note one more hard down day would also produce a major break below the 200-day SMA and trigger major sell programs...now should we actually see some sort of last minute resolution on debt ceiling near-term would use any rally to add to/initiate short positions as any near-term resolution will likely be nothing more than a band-aid for a couple months and for short of any major resolution on the deficit...so would use any near-term pop to sell into near-term as European issue, China slowdown, and concern over US unemployment worsening will continue to weigh heavily on equities
2:34PM EST
S&P breaking to new intraday lows here, 1345 top call on S&P last week was right on the money (see July 21 - 3:18PM + 3:58PM entries)... if no news hits here over the next hour or so, we're looking at a very ugly close here...reiterate next prime target is 200-day SMA on the S&P currently at 1283, which we should see by friday morning
S&P breaking to new intraday lows here, 1345 top call on S&P last week was right on the money (see July 21 - 3:18PM + 3:58PM entries)... if no news hits here over the next hour or so, we're looking at a very ugly close here...reiterate next prime target is 200-day SMA on the S&P currently at 1283, which we should see by friday morning
2:05PM EST
Fed Beige Book headline says it all "Pace Of Economic Growth Moderated In Many Districts"...market of course fully focused on debt ceiling right now so not too much action on headline, however sell pressure has been relentless all day so fully expect another strong downleg during final hour (barring any new headlines) as sellers clearly outweighing buyers here
Fed Beige Book headline says it all "Pace Of Economic Growth Moderated In Many Districts"...market of course fully focused on debt ceiling right now so not too much action on headline, however sell pressure has been relentless all day so fully expect another strong downleg during final hour (barring any new headlines) as sellers clearly outweighing buyers here
12:37PM EST
S&P cuts Greece deeper into junk to CC from CCC, equities remain under pressure here with volume heavy (note SPY volume already up to 125M, sell programs active)...Gold and Silver getting caught in the downdraft especially with both near overbought territory however as noted we'd be buyers of all technical pullback as uptrend will remain in tact medium-term due to continued macroeconomic tailwinds outside of debt ceiling (Eurozone issues, QE3) which will have central banks heavy on the bid on every pullback...overall, price action continues to dictate further downside in equities with possible acceleration to the downside during final hour as sell programs uptick (note inability of market to bounce signaling heavy sell side interest)
S&P cuts Greece deeper into junk to CC from CCC, equities remain under pressure here with volume heavy (note SPY volume already up to 125M, sell programs active)...Gold and Silver getting caught in the downdraft especially with both near overbought territory however as noted we'd be buyers of all technical pullback as uptrend will remain in tact medium-term due to continued macroeconomic tailwinds outside of debt ceiling (Eurozone issues, QE3) which will have central banks heavy on the bid on every pullback...overall, price action continues to dictate further downside in equities with possible acceleration to the downside during final hour as sell programs uptick (note inability of market to bounce signaling heavy sell side interest)
11:00AM EST
Sell programs have been rather aggressive throughout first hour, with most activity targeted at liquidating those tech names which had been outperformers over the past several weeks...big issue right now of course is the very high probability of US credit downgrade which looks to be just a matter of time now as major agencies and analysts now believe any last minute deficit plan will not produce nearly enough spending cuts to put this country back on solid fiscal footing...as noted, what we're ultimately seeing here is Republicans and Democrats jockey for position into the 2012 elections with Republicans attempting to 1) Put a negative mark on record of Dems by saying they want nothing more than to put this country into debt and 2) Prevent higher taxes on the wealthy to finance these deficits...Republicans highly aware they have control here, so they believe if they can get the Dems to cave on this issue, then they'll be able to maintain that control heading into November 2012 and ultimately seal a Republican win for President (a bit like Custer's Last Stand)...with respect to a US downgrade, well this is something that was inevitable as US has continued to see rapidly rising and insurmountable debt levels in tandem with weak revenue generation, so realistically US should not be at AAA rating...believe only thing that has been preventing it is the inability of markets to handle such a dramatic shock which has therefore kept ratings agencies at bay, however with central banks diversifying out the dollar and Treasuries over the past couple years due to aggressive money printing/rising debt/slow growth, it now appears major market participants are much more prepared (ie better positioned) to handle the effects of a US downgrade (ie it wont be as cataclysmic as once thought)
Sell programs have been rather aggressive throughout first hour, with most activity targeted at liquidating those tech names which had been outperformers over the past several weeks...big issue right now of course is the very high probability of US credit downgrade which looks to be just a matter of time now as major agencies and analysts now believe any last minute deficit plan will not produce nearly enough spending cuts to put this country back on solid fiscal footing...as noted, what we're ultimately seeing here is Republicans and Democrats jockey for position into the 2012 elections with Republicans attempting to 1) Put a negative mark on record of Dems by saying they want nothing more than to put this country into debt and 2) Prevent higher taxes on the wealthy to finance these deficits...Republicans highly aware they have control here, so they believe if they can get the Dems to cave on this issue, then they'll be able to maintain that control heading into November 2012 and ultimately seal a Republican win for President (a bit like Custer's Last Stand)...with respect to a US downgrade, well this is something that was inevitable as US has continued to see rapidly rising and insurmountable debt levels in tandem with weak revenue generation, so realistically US should not be at AAA rating...believe only thing that has been preventing it is the inability of markets to handle such a dramatic shock which has therefore kept ratings agencies at bay, however with central banks diversifying out the dollar and Treasuries over the past couple years due to aggressive money printing/rising debt/slow growth, it now appears major market participants are much more prepared (ie better positioned) to handle the effects of a US downgrade (ie it wont be as cataclysmic as once thought)
10:18AM EST
Equities really starting to fall apart here as expected, tech stocks really leading the way lower as risk comes out of the market, AAPL really starting to unwind which is weighing on QQQ...prime target on S&P here is that 200-day SMA at 1283.67 which have a feeling we'll see friday morning as fear levels/VIX hit highs on unresolved debt ceiling issue ahead of critical August 2nd deadline (realistically need to see a tangible plan this weekend to avoid default)...note Gold/Silver however remain firmly bid thus far, would continue to use any technical pullbacks as buying opportunities near-term
Equities really starting to fall apart here as expected, tech stocks really leading the way lower as risk comes out of the market, AAPL really starting to unwind which is weighing on QQQ...prime target on S&P here is that 200-day SMA at 1283.67 which have a feeling we'll see friday morning as fear levels/VIX hit highs on unresolved debt ceiling issue ahead of critical August 2nd deadline (realistically need to see a tangible plan this weekend to avoid default)...note Gold/Silver however remain firmly bid thus far, would continue to use any technical pullbacks as buying opportunities near-term
9:37AM EST
Short AAPL here in $402.20s stop at $410, also picked up a few August 400 Puts at $8.80...puts a bit expensive and only looking for a pullback into $380s so going heavier in the common for now...as noted monday (see July 25 - 12:24PM entry), we were waiting for a break above $400 to squeeze the last of the shorts, and now believe supply/demand imbalance favors downside (long position overcrowded, demand waning, short-term long positions should begin to unwind)
Short AAPL here in $402.20s stop at $410, also picked up a few August 400 Puts at $8.80...puts a bit expensive and only looking for a pullback into $380s so going heavier in the common for now...as noted monday (see July 25 - 12:24PM entry), we were waiting for a break above $400 to squeeze the last of the shorts, and now believe supply/demand imbalance favors downside (long position overcrowded, demand waning, short-term long positions should begin to unwind)
9:06AM EST
US futures gapping lower on much weaker than expected durable goods orders (-2.1% vs. expectations of +.5%) and ongoing stalemate over deficit plan with Boehner choosing to delay vote on his plan until Thursday, earnings also came in mixed with AMZN BA DOW posting solid numbers, while JNPR GLW produced weak results...US dollar seeing slight bounce as German Finance Minister saying Eurozone rescue should be selective in buying Eurozone bonds (Italian banks getting hammered again), US Treasuries slightly weaker on uncertainty over debt ceiling, and most commodities trading lower on growth concerns Gold and Silver however continue to buck the trend on perfect storm of monetary/fiscal concerns...in terms of trading today, debt ceiling uncertainty along with weak durable goods will keep downside pressure in equities in tact throughout the early session, while weak Fed Beige Book later on the day (2PM) likely to produce another leg lower heading into the close, expect Gold/Silver will however continue to standout with further gains throughout the day...overall however, pre-market volume levels remain light so barring any major headlines, expect midday session will be rather slow
US futures gapping lower on much weaker than expected durable goods orders (-2.1% vs. expectations of +.5%) and ongoing stalemate over deficit plan with Boehner choosing to delay vote on his plan until Thursday, earnings also came in mixed with AMZN BA DOW posting solid numbers, while JNPR GLW produced weak results...US dollar seeing slight bounce as German Finance Minister saying Eurozone rescue should be selective in buying Eurozone bonds (Italian banks getting hammered again), US Treasuries slightly weaker on uncertainty over debt ceiling, and most commodities trading lower on growth concerns Gold and Silver however continue to buck the trend on perfect storm of monetary/fiscal concerns...in terms of trading today, debt ceiling uncertainty along with weak durable goods will keep downside pressure in equities in tact throughout the early session, while weak Fed Beige Book later on the day (2PM) likely to produce another leg lower heading into the close, expect Gold/Silver will however continue to standout with further gains throughout the day...overall however, pre-market volume levels remain light so barring any major headlines, expect midday session will be rather slow
July 26, 2011
3:35PM EST
Market remains within a realm of inefficiency with techs continuing to outperform (likely on QE3 hope) while DOW industrials and S&P languish...market clearly waiting to see what resolution on debt ceiling is going to be, and right now they firmly believe some type of deficit agreement will be made...I think right now market wants to see at least an extension for 6-months however Republicans clearly gunning for an extension no longer than 3-months at this point...believe if we get an extension under that 6-month time frame market will likely sell off as we'll be back in this same predicament not again shortly which will remain an overhang on equities medium-term...right now really feels like Republicans in the drivers seat and are very unwilling to budge with likely outcome being a 3-month extension to avoid default and drag out debates a bit longer...again though, this very short-term extension with no real progress on deficit will likely trigger major reviews of US credit ratings and will almost surely produce major warnings if not actual downgrades sometime over the next few weeks, so in our opinion there's still major downside risk in equities here with most downside likely in names with heavy debt loads (note most cash rich, no debt companies like AAPL doing very well here as capital gets reallocated to most fiscally sound companies)...looking ahead to tomorrow, we'll have Durable Goods Orders out before the bell which is likely to come in weak here based on weakness in equities here heading into the close, and Feb Beige Book out at 2PM tomorrow which should also show continued weakness throuhout the economy...however big focal point will continue to be deficit package and these headlines will be biggest movers of markets near-term...thus far based on price action and rhetoric out of Congressional leaders, still looks like no real resolution in sight, with any resolution taking place likely during 11th hour later sometime this weekend
Market remains within a realm of inefficiency with techs continuing to outperform (likely on QE3 hope) while DOW industrials and S&P languish...market clearly waiting to see what resolution on debt ceiling is going to be, and right now they firmly believe some type of deficit agreement will be made...I think right now market wants to see at least an extension for 6-months however Republicans clearly gunning for an extension no longer than 3-months at this point...believe if we get an extension under that 6-month time frame market will likely sell off as we'll be back in this same predicament not again shortly which will remain an overhang on equities medium-term...right now really feels like Republicans in the drivers seat and are very unwilling to budge with likely outcome being a 3-month extension to avoid default and drag out debates a bit longer...again though, this very short-term extension with no real progress on deficit will likely trigger major reviews of US credit ratings and will almost surely produce major warnings if not actual downgrades sometime over the next few weeks, so in our opinion there's still major downside risk in equities here with most downside likely in names with heavy debt loads (note most cash rich, no debt companies like AAPL doing very well here as capital gets reallocated to most fiscally sound companies)...looking ahead to tomorrow, we'll have Durable Goods Orders out before the bell which is likely to come in weak here based on weakness in equities here heading into the close, and Feb Beige Book out at 2PM tomorrow which should also show continued weakness throuhout the economy...however big focal point will continue to be deficit package and these headlines will be biggest movers of markets near-term...thus far based on price action and rhetoric out of Congressional leaders, still looks like no real resolution in sight, with any resolution taking place likely during 11th hour later sometime this weekend
2:14PM EST
Markets Brashly Overlooking Possibility Of US Credit Downgrade, Focused On QE3
Dollar continues to get pummeled, and based on pricing throughout markets believe it has much less to do with debt ceiling issue and much more to do with increasing probability of QE3...note equities, commodities, and even Treasuries catching a bid while dollar sells off, this is typically the type of action you'd see based on expectations of increased money supply (ie more liquidity to buy risky assets like stocks and commodities) and further POMO by the Fed (ie another series of daily programs aimed at buying Treasuries)...also note Silver pushing to new weekly highs here with SLV taking out yesterdays $39.78 high, GLD also just under yesterday's $157.80 highs...complications within this trade will resurrect themselves however if/when the US credit rating is downgraded by major credit rating agencies and of course should a default get triggered as lowering of US credit rating just a single notch has massive implications for credit throughout not only the US economy but the global economy as well (ie rates across the board will need to be adjusted)...with respect to complications due to US credit downgrade believe most will exist within the realm of equities and Treasuries as companies with heavy debt loads will be forced to pay higher rates to borrow, and Treasuries of course will have to be repriced to account for higher risk levels associated with US debt...with respect to commodities, should see little effect on Precious metals except for acceleration of the move to the upside, Oil and more cyclical commodities however will likely see downside pressure as rate adjustments to the upside will likely hamper growth medium-term...lastly, dollar complications are tough to call as Euro is experiencing issues very similar to the of US which may serve to offset the negative effect on dollar associated with credit downgrade and QE3...in any case, continue to believe long Gold/Silver best bet in financial markets here as precious metals will see benefit under all outcomes here
Markets Brashly Overlooking Possibility Of US Credit Downgrade, Focused On QE3
Dollar continues to get pummeled, and based on pricing throughout markets believe it has much less to do with debt ceiling issue and much more to do with increasing probability of QE3...note equities, commodities, and even Treasuries catching a bid while dollar sells off, this is typically the type of action you'd see based on expectations of increased money supply (ie more liquidity to buy risky assets like stocks and commodities) and further POMO by the Fed (ie another series of daily programs aimed at buying Treasuries)...also note Silver pushing to new weekly highs here with SLV taking out yesterdays $39.78 high, GLD also just under yesterday's $157.80 highs...complications within this trade will resurrect themselves however if/when the US credit rating is downgraded by major credit rating agencies and of course should a default get triggered as lowering of US credit rating just a single notch has massive implications for credit throughout not only the US economy but the global economy as well (ie rates across the board will need to be adjusted)...with respect to complications due to US credit downgrade believe most will exist within the realm of equities and Treasuries as companies with heavy debt loads will be forced to pay higher rates to borrow, and Treasuries of course will have to be repriced to account for higher risk levels associated with US debt...with respect to commodities, should see little effect on Precious metals except for acceleration of the move to the upside, Oil and more cyclical commodities however will likely see downside pressure as rate adjustments to the upside will likely hamper growth medium-term...lastly, dollar complications are tough to call as Euro is experiencing issues very similar to the of US which may serve to offset the negative effect on dollar associated with credit downgrade and QE3...in any case, continue to believe long Gold/Silver best bet in financial markets here as precious metals will see benefit under all outcomes here
12:45PM EST
Market continues to languish here all morning on very low volume, SPYs at a mere 65M in volume signifying very little fund activity...covered the NFLX short here in the $256s from $291s for solid 12% gain (+$35), tough to keep holding this short with tech continuing to perform and with this name there will always be buyout chatter which should keep a decent bid in the name on large pullback...overall, just sit tight for now, not much going on
Market continues to languish here all morning on very low volume, SPYs at a mere 65M in volume signifying very little fund activity...covered the NFLX short here in the $256s from $291s for solid 12% gain (+$35), tough to keep holding this short with tech continuing to perform and with this name there will always be buyout chatter which should keep a decent bid in the name on large pullback...overall, just sit tight for now, not much going on
10:05AM EST
Consumer confidence comes in better than expected at 59.5 vs. expectations of 56.0 and up from last month's reading of 57.6...market tried to get a lift on numbers however sellers remain prevalent here as market fully focused on debt ceiling issue right now rather than economic data...also note MMM really weighing on DOW trading down nearly 4% (nearly 30 DOW points) on weak forecast...as noted yesterday, aggressive seller heading into final hour yesterday signaled we'd likely see weakness today
Consumer confidence comes in better than expected at 59.5 vs. expectations of 56.0 and up from last month's reading of 57.6...market tried to get a lift on numbers however sellers remain prevalent here as market fully focused on debt ceiling issue right now rather than economic data...also note MMM really weighing on DOW trading down nearly 4% (nearly 30 DOW points) on weak forecast...as noted yesterday, aggressive seller heading into final hour yesterday signaled we'd likely see weakness today
9:13AM EST
US futures slightly higher on solid earnings out of BRCM F and BIDU, however continued uncertainty on deficit package, 50bp rate hike out of India, as well as weak forecast out of NFLX keeping gains rather limited...US dollar getting whacked back down to April/Mat lows on ongoing Congressional rift over debt plan, US Treasuries roughly flat, commodities trading mixed with dollar weakness providing slight bid...in terms of trading today, with deficit plan still up in the air with only days left until default, expect downside bias in equities to persist, pre-market volume levels however signaling volume likely to remain rather weak so barring any major headlines expect rather lackluster midday session
US futures slightly higher on solid earnings out of BRCM F and BIDU, however continued uncertainty on deficit package, 50bp rate hike out of India, as well as weak forecast out of NFLX keeping gains rather limited...US dollar getting whacked back down to April/Mat lows on ongoing Congressional rift over debt plan, US Treasuries roughly flat, commodities trading mixed with dollar weakness providing slight bid...in terms of trading today, with deficit plan still up in the air with only days left until default, expect downside bias in equities to persist, pre-market volume levels however signaling volume likely to remain rather weak so barring any major headlines expect rather lackluster midday session
July 25, 2011
3:23PM EST
Sell program which came in here ahead of final hour a bit suspicious as it was fairly aggressive and looks very similar to the type of sell program we see ahead of another sell-off the following session...also note Gold and Silver our proxies for systemic risk remain very firmly bid so believe we still have strong risk to the downside here...last wednesday's gap at 1325.84 still our near-term target here on S&P and believe we have a good shot at seeing this level tomorrow based on today's price action...in terms of NFLX after the bell, believe big red flag is the Bloomberg report which came out last night of a deal between Dreamworks and NFLX...typically good news just before earnings is a sign that numbers are likely to be weaker than expected and company is just trying to prop the stock up to offset weak earnings, so gonna hold the short position from $291s here into the close...also TXN expected to report tonight, and semiconductors have been trading rather weak over the past several weeks so continue to hold all semiconductor shorts here...overall, best near-term positioning remains long Gold/Silver, short S&P
Sell program which came in here ahead of final hour a bit suspicious as it was fairly aggressive and looks very similar to the type of sell program we see ahead of another sell-off the following session...also note Gold and Silver our proxies for systemic risk remain very firmly bid so believe we still have strong risk to the downside here...last wednesday's gap at 1325.84 still our near-term target here on S&P and believe we have a good shot at seeing this level tomorrow based on today's price action...in terms of NFLX after the bell, believe big red flag is the Bloomberg report which came out last night of a deal between Dreamworks and NFLX...typically good news just before earnings is a sign that numbers are likely to be weaker than expected and company is just trying to prop the stock up to offset weak earnings, so gonna hold the short position from $291s here into the close...also TXN expected to report tonight, and semiconductors have been trading rather weak over the past several weeks so continue to hold all semiconductor shorts here...overall, best near-term positioning remains long Gold/Silver, short S&P
2:50PM EST
Sen Schumer saying still no long term deficit plan in place, market weakening here as we head into the close, big seller in SPYs showing up on ARCX here
Sen Schumer saying still no long term deficit plan in place, market weakening here as we head into the close, big seller in SPYs showing up on ARCX here
12:58PM EST
Convergence Of Major Global Monetary/Fiscal Issues To Push Gold Past $2,000, Silver Over $50 By January 2012
Some clarity on Gold/Silver move: note this move is not solely predicated on a US default but is being driven by a major convergence of massive tailwinds...1) Market now believes with or without a deficit deal the US credit rating is under review and has a much higher probability of being revised downward near-term on the back of continued high debt loads in tandem with weak revenue generation from taxes due to relentlessly high unemployment and a very fragile economy even following 2 years of massive stimulus 2) Eurozone issues remain prevalent and far from seeing any real resolution which means that Euro currency continues to have major concerns as a viable currency and therefore both major global currencies (US dollar and Euro) are in critical condition and capital therefore continues to flow into precious metals in order to store value 3) with US economy appearing very fragile and US credit rating now under review, QE3 probability continues to increase and this is likely the primary driver of precious metal price appreciation here near and medium-term as another round of dollar printing will do nothing more than decrease value of dollar even further and push additional capital into Gold and Silver as central banks and major funds around the world become less and less dependent on relying on fiat currencies as major reserves 4) Lastly, note that China's percentage of Gold as a foreign exchange reserve is a mere 1.7% at this point and many believe that China is looking to up their allocation to 10% over the next several years...with US credit rating now under review believe another round of China reallocation out of Treasuries and dollars and into Gold/Silver is occurring right now
Conclusion: Precious metals remain driven by a perfect storm of major global monetary/fiscal issues none of which can or will be resolved easily, and we therefore continue to believe long Gold/Silver is the best position in all financial markets at this time...moreover, due to the magnitude and convergence of these monetary/fiscal issues we are setting long-term price targets of +$2,000 on Gold and +$50 print on Silver which we expect to see by January 2012 (6 months), so would continue to hold long positions/add to positions through any minor technical pullbacks over the next several weeks and months
Convergence Of Major Global Monetary/Fiscal Issues To Push Gold Past $2,000, Silver Over $50 By January 2012
Some clarity on Gold/Silver move: note this move is not solely predicated on a US default but is being driven by a major convergence of massive tailwinds...1) Market now believes with or without a deficit deal the US credit rating is under review and has a much higher probability of being revised downward near-term on the back of continued high debt loads in tandem with weak revenue generation from taxes due to relentlessly high unemployment and a very fragile economy even following 2 years of massive stimulus 2) Eurozone issues remain prevalent and far from seeing any real resolution which means that Euro currency continues to have major concerns as a viable currency and therefore both major global currencies (US dollar and Euro) are in critical condition and capital therefore continues to flow into precious metals in order to store value 3) with US economy appearing very fragile and US credit rating now under review, QE3 probability continues to increase and this is likely the primary driver of precious metal price appreciation here near and medium-term as another round of dollar printing will do nothing more than decrease value of dollar even further and push additional capital into Gold and Silver as central banks and major funds around the world become less and less dependent on relying on fiat currencies as major reserves 4) Lastly, note that China's percentage of Gold as a foreign exchange reserve is a mere 1.7% at this point and many believe that China is looking to up their allocation to 10% over the next several years...with US credit rating now under review believe another round of China reallocation out of Treasuries and dollars and into Gold/Silver is occurring right now
Conclusion: Precious metals remain driven by a perfect storm of major global monetary/fiscal issues none of which can or will be resolved easily, and we therefore continue to believe long Gold/Silver is the best position in all financial markets at this time...moreover, due to the magnitude and convergence of these monetary/fiscal issues we are setting long-term price targets of +$2,000 on Gold and +$50 print on Silver which we expect to see by January 2012 (6 months), so would continue to hold long positions/add to positions through any minor technical pullbacks over the next several weeks and months
12:24PM EST
Volume remains very low this morning even in the face of US default as fund managers remain in denial over the possibility of Congress allowing the unthinkable...at this stage however we don't see either side budging, and continue to believe most likely outcome is Obama raising debt ceiling using his Presidential power which will still produce a credit rating downgrade (however it will avoid default scenario for now)...also note AAPL one of the only green megacaps out there as fund managers using it as a safe haven play, watching it for a possible short however as long side getting very crowded near-term and technicals clearly overbought, waiting for a push over $400 though to clear out remaining shorts and reduce risk on the short side...overall just sit tight for now as fund managers in wait and see mode
Volume remains very low this morning even in the face of US default as fund managers remain in denial over the possibility of Congress allowing the unthinkable...at this stage however we don't see either side budging, and continue to believe most likely outcome is Obama raising debt ceiling using his Presidential power which will still produce a credit rating downgrade (however it will avoid default scenario for now)...also note AAPL one of the only green megacaps out there as fund managers using it as a safe haven play, watching it for a possible short however as long side getting very crowded near-term and technicals clearly overbought, waiting for a push over $400 though to clear out remaining shorts and reduce risk on the short side...overall just sit tight for now as fund managers in wait and see mode
10:28AM EST
S&P likely to stall out here at this 1340 level and begin pushing down toward that Wednesday gap at 1325.84 which is our target here near-term...note even with equities pushing higher, Gold and Silver remain firmly bid and holding onto gains signaling continued strain in financial system, precious metals remain our main proxy for systemic risk
S&P likely to stall out here at this 1340 level and begin pushing down toward that Wednesday gap at 1325.84 which is our target here near-term...note even with equities pushing higher, Gold and Silver remain firmly bid and holding onto gains signaling continued strain in financial system, precious metals remain our main proxy for systemic risk
10:16AM EST
Took full profits on ALTI long here at $1.48-1.49 from .87 entry for solid +70% gain...keep an eye on HAUP here, this one's next to see major momentum, should see another strong upleg today as 10X average volume on friday denotes hedge funds getting involved
Took full profits on ALTI long here at $1.48-1.49 from .87 entry for solid +70% gain...keep an eye on HAUP here, this one's next to see major momentum, should see another strong upleg today as 10X average volume on friday denotes hedge funds getting involved
9:55AM EST
Volume isn't terribly heavy here at the open no really aggressive sell programs out there just yet as fund managers likely unsure of what to do in a US default scenario which has historically been seen as an impossibility...also most continue to believe that a deal will somehow get done during the 11th hour to avoid default however we dont believe that fund managers are prepared to see credit agencies lower the USs AAA credit rating even if there is a deficit deal...as noted over the past several weeks we believe even if a deal is done US will lose its AAA credit rating due to the heavy debt load relative to ongoing weak revenue generation stemming from high unemployment and an economy which is showing zero signs of producing organic growth even after 2 years of massive stimulus
Volume isn't terribly heavy here at the open no really aggressive sell programs out there just yet as fund managers likely unsure of what to do in a US default scenario which has historically been seen as an impossibility...also most continue to believe that a deal will somehow get done during the 11th hour to avoid default however we dont believe that fund managers are prepared to see credit agencies lower the USs AAA credit rating even if there is a deficit deal...as noted over the past several weeks we believe even if a deal is done US will lose its AAA credit rating due to the heavy debt load relative to ongoing weak revenue generation stemming from high unemployment and an economy which is showing zero signs of producing organic growth even after 2 years of massive stimulus
9:10AM EST
US futures gapping lower ahead of the open as deficit talks fell apart over the weekend which now makes a US default highly probable, Moody's also cutting Greece credit rating down to Ca...US dollar trading slightly lower as Eurozone dealing with its own fiscal issues which has market participants unable to move into Euros as a safe haven, US Treasuries however down over 1% on default fears, nearly all major commodities trading lower except for Gold and Silver of course which are now the only safe haven assets in the entire market (Gold trading at fresh all-time highs this morning)...in terms of trading today, expect downside pressure will remain throughout the day as Congressional leaders appear far from any kind of agreement on deficit package and chatter is that they must have an agreement done by today to have a package clear before August 2nd deadline...as noted over the past couple weeks, we expect this fiasco will end with Obama bypassing Congress and raising debt ceiling himself which however will still trigger credit agencies to downgrade USs credit rating as no real deficit plan is in place...overall continue to believe we hit a major top in equities late last week, and optimal positioning remains long Gold/Silver, short S&P near-term
US futures gapping lower ahead of the open as deficit talks fell apart over the weekend which now makes a US default highly probable, Moody's also cutting Greece credit rating down to Ca...US dollar trading slightly lower as Eurozone dealing with its own fiscal issues which has market participants unable to move into Euros as a safe haven, US Treasuries however down over 1% on default fears, nearly all major commodities trading lower except for Gold and Silver of course which are now the only safe haven assets in the entire market (Gold trading at fresh all-time highs this morning)...in terms of trading today, expect downside pressure will remain throughout the day as Congressional leaders appear far from any kind of agreement on deficit package and chatter is that they must have an agreement done by today to have a package clear before August 2nd deadline...as noted over the past couple weeks, we expect this fiasco will end with Obama bypassing Congress and raising debt ceiling himself which however will still trigger credit agencies to downgrade USs credit rating as no real deficit plan is in place...overall continue to believe we hit a major top in equities late last week, and optimal positioning remains long Gold/Silver, short S&P near-term
July 22, 2011
3:20PM EST
Low volume environment remains here heading into the close with SPYs yet to break above 100M in volume, indices clearly signaling inefficiency with Nasdaq up 27, S&P up 1, and DOW down over 40 (mostly due to CAT), everything all over the place...continue to believe we're putting in a major top here due to plethora of macro overhangs namely China weakness which was validated in CAT earnings today, US debt ceiling/credit rating uncertainty which will be in prime focus next week as August 2nd deadline approaches and debate will likely get very loud on both sides of Congress, and Eurozone debt which is still a major issue for markets...also with major tech earnings coming to a close this week, catalysts to the upside are waning here and good earnings now mostly priced in due to AAPL, GOOG, IBM surges on numbers...looking ahead to next week big economic data wont hit until midweek when we'll get durable goods orders and Fed Beige Book on wednesday, initial jobless claims on thursday which will likely be focused on in the wake of layoff announcements from CSCO and LMT, and then friday we'll get our first look at Q2 GDP along with Chicago PMI...expect more and more volatility as we move throughout the week next week as market will get more and more nervous over inability of Congress to come to a conclusion on US deficit plan heading into next weekend and moreover it will be reacting to bearish economic data along the way...overall expect short bias in equities next week, and continue to expect Gold and Silver will be pushing higher near-term due to perfect fundamental and technical backdrops...best positioning remains long Gold/Silver with more aggressive traders putting on a short S&P position to boot
Low volume environment remains here heading into the close with SPYs yet to break above 100M in volume, indices clearly signaling inefficiency with Nasdaq up 27, S&P up 1, and DOW down over 40 (mostly due to CAT), everything all over the place...continue to believe we're putting in a major top here due to plethora of macro overhangs namely China weakness which was validated in CAT earnings today, US debt ceiling/credit rating uncertainty which will be in prime focus next week as August 2nd deadline approaches and debate will likely get very loud on both sides of Congress, and Eurozone debt which is still a major issue for markets...also with major tech earnings coming to a close this week, catalysts to the upside are waning here and good earnings now mostly priced in due to AAPL, GOOG, IBM surges on numbers...looking ahead to next week big economic data wont hit until midweek when we'll get durable goods orders and Fed Beige Book on wednesday, initial jobless claims on thursday which will likely be focused on in the wake of layoff announcements from CSCO and LMT, and then friday we'll get our first look at Q2 GDP along with Chicago PMI...expect more and more volatility as we move throughout the week next week as market will get more and more nervous over inability of Congress to come to a conclusion on US deficit plan heading into next weekend and moreover it will be reacting to bearish economic data along the way...overall expect short bias in equities next week, and continue to expect Gold and Silver will be pushing higher near-term due to perfect fundamental and technical backdrops...best positioning remains long Gold/Silver with more aggressive traders putting on a short S&P position to boot
2:58PM EST
HAUP seeing volume surge here most likely as traders looking for plays off AAPL chatter of HULU buyout...also as we noted in late June (see June 30 - 1:08PM entry) company is launching Broadway which allows for streaming of live TV on IPad and IPhone in North America this month, most likely next week...with AAPL hitting new highs, PR will surely attract major momentum and will also likely have hedge funds involved here as they can easily sell the play on the way up due to AAPL affiliation along with Hulu rumor...target is low $3s possibly $4s on this momentum wave as technicals set up perfectly in tandem with AAPL leadership (perfect storm)
HAUP seeing volume surge here most likely as traders looking for plays off AAPL chatter of HULU buyout...also as we noted in late June (see June 30 - 1:08PM entry) company is launching Broadway which allows for streaming of live TV on IPad and IPhone in North America this month, most likely next week...with AAPL hitting new highs, PR will surely attract major momentum and will also likely have hedge funds involved here as they can easily sell the play on the way up due to AAPL affiliation along with Hulu rumor...target is low $3s possibly $4s on this momentum wave as technicals set up perfectly in tandem with AAPL leadership (perfect storm)
12:43AM EST
Low volume out there with market grinding higher following early morning dump as fund managers reduced risk in the morning then went home for the weekend...lot of chatter out there about CAT earnings today due to their discussion of weakness in emerging markets especially China...note China numbers have been coming in weaker then expected as of late with sub-50 China PMI yesterday the latest in this string of data...fund managers now concerned that this emerging market/China weakness may be starting to rear its ugly head within earnings reports, and its now a risk to markets as earnings forecasts may begin to be dampened here over the coming quarters especially if we see no real change in the current economic environment...also note over the past week CSCO LMT and Border's announced a combined 23,000 in job cuts which is a major red flag for the labor market, and suggests the unemployment rate is about to tick higher yet again over the coming months which should certainly weigh on economic activity and produce another round of economists lowering 2nd half GDP estimates...the flip side of this of course is that QE3 is now increasing in probability which is certainly another tailwind for Gold/Silver medium-term...will it continue to drive equities higher? as we noted early this year we believe another round of QE will not have the same effect on equities as it did in the past due to the implications that the US economy must be having significant issues producing organic demand even following 2 years of stimulus, 3rd round likely to have little effect and is nothing more than a desperate attempt to keep the economy from completely falling apart....in any case, with so many macro concerns continuing to hit markets (even though equities failing to fully acknowledge them just yet), best bet in all financial markets right now remains long Gold/Silver as all major macro concerns producing very strong tailwinds for the precious metals space and cross currents for US equities
Low volume out there with market grinding higher following early morning dump as fund managers reduced risk in the morning then went home for the weekend...lot of chatter out there about CAT earnings today due to their discussion of weakness in emerging markets especially China...note China numbers have been coming in weaker then expected as of late with sub-50 China PMI yesterday the latest in this string of data...fund managers now concerned that this emerging market/China weakness may be starting to rear its ugly head within earnings reports, and its now a risk to markets as earnings forecasts may begin to be dampened here over the coming quarters especially if we see no real change in the current economic environment...also note over the past week CSCO LMT and Border's announced a combined 23,000 in job cuts which is a major red flag for the labor market, and suggests the unemployment rate is about to tick higher yet again over the coming months which should certainly weigh on economic activity and produce another round of economists lowering 2nd half GDP estimates...the flip side of this of course is that QE3 is now increasing in probability which is certainly another tailwind for Gold/Silver medium-term...will it continue to drive equities higher? as we noted early this year we believe another round of QE will not have the same effect on equities as it did in the past due to the implications that the US economy must be having significant issues producing organic demand even following 2 years of stimulus, 3rd round likely to have little effect and is nothing more than a desperate attempt to keep the economy from completely falling apart....in any case, with so many macro concerns continuing to hit markets (even though equities failing to fully acknowledge them just yet), best bet in all financial markets right now remains long Gold/Silver as all major macro concerns producing very strong tailwinds for the precious metals space and cross currents for US equities
9:59AM EST
Equities weakening a bit here as Euro comes off that trendline resistance we highlighted yesterday (see 10:23Am entry)...note currency has continued to make a series of lower highs here over the past 3 months, a sign of large sellers/shorts in the currency and most likely signals a pending major correction here shortly...fundamentally, this currency clearly has major underlying structural issues due to the widespread concerns over Eurozone debt so technical formation is not surprising...also believe this Euro weakness and potential collapse may be one of the main driving forces behind recent gains in precious metals, as Eurozone market participants likely betting that Euro may not survive here medium-term without a serious restructuring of its underlying constituents (ie must boot debt ridden countries out of the Union)...note Gold/Silver pressing to new intraday highs here with the dollar, something we aren't used to seeing (precious metals, dollar are typically inversely correlated) and again this is a major signal of stress within the financial system...watch that $156.58 level on GLD and $39.69 level on SLV as these are the levels they're looking to breach to push to new highs and trigger additional short-covering + fund buying
Equities weakening a bit here as Euro comes off that trendline resistance we highlighted yesterday (see 10:23Am entry)...note currency has continued to make a series of lower highs here over the past 3 months, a sign of large sellers/shorts in the currency and most likely signals a pending major correction here shortly...fundamentally, this currency clearly has major underlying structural issues due to the widespread concerns over Eurozone debt so technical formation is not surprising...also believe this Euro weakness and potential collapse may be one of the main driving forces behind recent gains in precious metals, as Eurozone market participants likely betting that Euro may not survive here medium-term without a serious restructuring of its underlying constituents (ie must boot debt ridden countries out of the Union)...note Gold/Silver pressing to new intraday highs here with the dollar, something we aren't used to seeing (precious metals, dollar are typically inversely correlated) and again this is a major signal of stress within the financial system...watch that $156.58 level on GLD and $39.69 level on SLV as these are the levels they're looking to breach to push to new highs and trigger additional short-covering + fund buying
9:04AM EST
US futures flat ahead of the open as announcement of $109B Greek bailout and strong earnings out of GS and MCD were offset by weak earnings out of CAT and MSFT...dollar slightly higher as Euro reaching technical resistance, US Tresuries slightly higher on hope of deficit deal to avert default, and commodities trading mixed with Gold and Silver standing out yet again with strong gains to the upside (Gold looks ready to close at new highs today)...in terms of trading today, as noted yesterday we're seeing signs of a major top here so expect to see weakness today as most major earnings now out of the way and markets now left to deal with uncertainty over US debt ceiling and continued concerns over Eurozone debt (Greece issue has not laid these concerns to rest by any means)...also as noted, Gold/Silver price action continue to signal major stress within the system and we remain bias to the long side in precious metals looking for further gains near and medium-term, would watch for a very strong close in Gold/Silver today...overall though, with no major economic data out today and earnings winding down expect to see a sluggish midday session volumewise as most fund managers likely gone for the weekend
US futures flat ahead of the open as announcement of $109B Greek bailout and strong earnings out of GS and MCD were offset by weak earnings out of CAT and MSFT...dollar slightly higher as Euro reaching technical resistance, US Tresuries slightly higher on hope of deficit deal to avert default, and commodities trading mixed with Gold and Silver standing out yet again with strong gains to the upside (Gold looks ready to close at new highs today)...in terms of trading today, as noted yesterday we're seeing signs of a major top here so expect to see weakness today as most major earnings now out of the way and markets now left to deal with uncertainty over US debt ceiling and continued concerns over Eurozone debt (Greece issue has not laid these concerns to rest by any means)...also as noted, Gold/Silver price action continue to signal major stress within the system and we remain bias to the long side in precious metals looking for further gains near and medium-term, would watch for a very strong close in Gold/Silver today...overall though, with no major economic data out today and earnings winding down expect to see a sluggish midday session volumewise as most fund managers likely gone for the weekend
July 21, 2011
3:58PM EST
Gonna go out on a limb here and call this a major top in equities here at 1345 on the S&P....something about today's action is very off, and its reminiscent of price action we've seen at major tops....note tops are not clearly definitive in terms of using a specific set of metrics to identify them, there's usually some X factor which identifies them and we're seeing something along those lines here today
Gonna go out on a limb here and call this a major top in equities here at 1345 on the S&P....something about today's action is very off, and its reminiscent of price action we've seen at major tops....note tops are not clearly definitive in terms of using a specific set of metrics to identify them, there's usually some X factor which identifies them and we're seeing something along those lines here today
3:18PM EST
Market acting very strange today, not sure what's going exactly as NYT deficit plan news launched stocks midday yet once it was refuted buy program continued to bid up stocks...gut tells me that we're hitting some sort of significant top here as news headlines suspicious along with bearish price action in high beta tech names...also weak China PMI news will be a concern at some point as world's growth driver now appears to be contracting in terms of manufacturing, also dont believe Eurozone debt issues are over by a long shot, and moreover continue to believe the US debt ceiling issue won't be resolved until the final hour where it will be resolved in an untraditional manner, most likely with Obama bypassing Congressional approval to raise debt limit himself (which is exactly what Republicans want)...also as noted last week we believe downgrade of US credit rating is approaching near-term, and we're hearing more and more chatter of this from the likes of S&P and other credit analysts who believe even if the debt limit is raised, there's still a good chance the US will lose its AAA credit rating...this of course will make major headlines and rattle markets as so many other debt instruments tied to US having AAA rating, so this remains a major risk to markets over the next several weeks even if debt ceiling is raised here near-term...with this continued bearish outlook on several macro front we remain bullish on precious metals and would continue to hold onto Gold and Silver longs here as we believe they are simply shaking out some overcrowded longs here and setting up for another push to new highs here shortly...looking ahead to tomorrow, no economic data due out so barring any major headlines should be a rather slow session even with MSFT reporting tonight...with respect to MSFT, wall street has somewhat fallen in love with the stock again on hopes that Skype deal may spark some growth, however slower PC sales may dampen numbers a bit so rather neutral on the stock heading into earnings...may see marginal +/-1% move in the stock on numbers
Market acting very strange today, not sure what's going exactly as NYT deficit plan news launched stocks midday yet once it was refuted buy program continued to bid up stocks...gut tells me that we're hitting some sort of significant top here as news headlines suspicious along with bearish price action in high beta tech names...also weak China PMI news will be a concern at some point as world's growth driver now appears to be contracting in terms of manufacturing, also dont believe Eurozone debt issues are over by a long shot, and moreover continue to believe the US debt ceiling issue won't be resolved until the final hour where it will be resolved in an untraditional manner, most likely with Obama bypassing Congressional approval to raise debt limit himself (which is exactly what Republicans want)...also as noted last week we believe downgrade of US credit rating is approaching near-term, and we're hearing more and more chatter of this from the likes of S&P and other credit analysts who believe even if the debt limit is raised, there's still a good chance the US will lose its AAA credit rating...this of course will make major headlines and rattle markets as so many other debt instruments tied to US having AAA rating, so this remains a major risk to markets over the next several weeks even if debt ceiling is raised here near-term...with this continued bearish outlook on several macro front we remain bullish on precious metals and would continue to hold onto Gold and Silver longs here as we believe they are simply shaking out some overcrowded longs here and setting up for another push to new highs here shortly...looking ahead to tomorrow, no economic data due out so barring any major headlines should be a rather slow session even with MSFT reporting tonight...with respect to MSFT, wall street has somewhat fallen in love with the stock again on hopes that Skype deal may spark some growth, however slower PC sales may dampen numbers a bit so rather neutral on the stock heading into earnings...may see marginal +/-1% move in the stock on numbers
12:59PM EST
*DJ White House Says No Progress To Report On Deficit Deal....NYT should be investigated, this isn't the first time Ive seen this happen...have to question why they'd want to release that, in my opinion someone wants to initiate a major short position or unload major long position in equities here
*DJ White House Says No Progress To Report On Deficit Deal....NYT should be investigated, this isn't the first time Ive seen this happen...have to question why they'd want to release that, in my opinion someone wants to initiate a major short position or unload major long position in equities here
12:56PM EST
Long August 133 SPY puts at $1.85 and August 59 QQQ at $1.18 here on possible top in equities
Long August 133 SPY puts at $1.85 and August 59 QQQ at $1.18 here on possible top in equities
12:52PM EST
CNBC says Carney denies reports saying NYT report is flat out wrong, markets giving back gains...definitely something off today, lots of manipulation going on, feels likes someone trying to take a big short position in markets, suspicious price action showing signs of a major short-term top
CNBC says Carney denies reports saying NYT report is flat out wrong, markets giving back gains...definitely something off today, lots of manipulation going on, feels likes someone trying to take a big short position in markets, suspicious price action showing signs of a major short-term top
12:45PM EST
Buy program coming in here on NYT headline of "Obama, Boehner Close To Major Budget Deal Congressional Leaders Told"...we'll see if thats true or just another rumor, have seen NYT post senseless rumors before (paper surely has some connection to major players looking to manipulate markets)
Buy program coming in here on NYT headline of "Obama, Boehner Close To Major Budget Deal Congressional Leaders Told"...we'll see if thats true or just another rumor, have seen NYT post senseless rumors before (paper surely has some connection to major players looking to manipulate markets)
12:21PM EST
Slow fade here in the S&P, nothing major just yet, a lot of weakness in high betas though (BIDU AMZN NFLX, AAPL sluggish)...big reaction in Euro and equities likely due to short covering on statement in European Bailout draft which allows for ECB "to intervene in the secondary markets," which basically means additional bids in markets to keep anything from cratering (which they should be doing based on the reality of the macro situation), here's the actual excerpt from the draft aken from ZeroHedge which also has the full draft:t
"To improve the effectiveness of the EFSF and address contagion, we agree to increase the flexibility of the EFSF, allowing it to intervene in the secondary markets on the basis of an ECB analysis recognizing the existence of exceptional circumstances and a unanimous decision of the EFSF Member States."
Overall though still believe we have a strong probability of reversing today, may not get to negative territory but believe we will be closing well off these highs with possible follow through sell pressure tomorrow...note Gold only down a mere $5 here with market rallying on supposed conclusion to Greece situation...if Greece situation were truly concluded, we'd see Gold down at least $20 so precious metals market definitely signaling there's still stress in the system somewhere
Slow fade here in the S&P, nothing major just yet, a lot of weakness in high betas though (BIDU AMZN NFLX, AAPL sluggish)...big reaction in Euro and equities likely due to short covering on statement in European Bailout draft which allows for ECB "to intervene in the secondary markets," which basically means additional bids in markets to keep anything from cratering (which they should be doing based on the reality of the macro situation), here's the actual excerpt from the draft aken from ZeroHedge which also has the full draft:t
"To improve the effectiveness of the EFSF and address contagion, we agree to increase the flexibility of the EFSF, allowing it to intervene in the secondary markets on the basis of an ECB analysis recognizing the existence of exceptional circumstances and a unanimous decision of the EFSF Member States."
Overall though still believe we have a strong probability of reversing today, may not get to negative territory but believe we will be closing well off these highs with possible follow through sell pressure tomorrow...note Gold only down a mere $5 here with market rallying on supposed conclusion to Greece situation...if Greece situation were truly concluded, we'd see Gold down at least $20 so precious metals market definitely signaling there's still stress in the system somewhere
10:23AM EST
Someone unloading here just above 1340 as short stops taken out, also note Euro approaching trendline resistance here just above $1.43 on this "Greece conclusion" optimism (reality is EU issues far from over so Euro not out of the woods yet)
Someone unloading here just above 1340 as short stops taken out, also note Euro approaching trendline resistance here just above $1.43 on this "Greece conclusion" optimism (reality is EU issues far from over so Euro not out of the woods yet)
10:04AM EST
Philly Fed rebounds to +3.2 from last months -7.7 reading and slightly better than consensus of 2.0...just took some weekly July 134 SPY puts here at .55 (expiring tomorrow) for potential reversal here off 1340 resistance
Philly Fed rebounds to +3.2 from last months -7.7 reading and slightly better than consensus of 2.0...just took some weekly July 134 SPY puts here at .55 (expiring tomorrow) for potential reversal here off 1340 resistance
9:57AM EST
Believe you can get short here at this 1338-1340 range which is the early April 2011 resistance level and will likely act as some form of resistance here as well...moreover, as noted in the pre-market writeup, we believe we have above average probability of an intraday reversal to the downside today due to weak China PMI, weakness in INTC, as well as uncertainty over US deficit package...weak Philly Fed here in a few minutes may trigger the initial descent...also note Gold/Silver continue to hold up extremely well during this equity rally and supposed decline in concerns over Greece, something going on with these precious metals, believe it is signaling a downgrade of US debt here sometime over the next few weeks even if US debt ceiling is raised, in any case watch for another strong reversal to the upside today
Believe you can get short here at this 1338-1340 range which is the early April 2011 resistance level and will likely act as some form of resistance here as well...moreover, as noted in the pre-market writeup, we believe we have above average probability of an intraday reversal to the downside today due to weak China PMI, weakness in INTC, as well as uncertainty over US deficit package...weak Philly Fed here in a few minutes may trigger the initial descent...also note Gold/Silver continue to hold up extremely well during this equity rally and supposed decline in concerns over Greece, something going on with these precious metals, believe it is signaling a downgrade of US debt here sometime over the next few weeks even if US debt ceiling is raised, in any case watch for another strong reversal to the upside today
9:13AM EST
US futures higher ahead of the open as better than expected earnings out of MS and optimism over a Greek rescue package being agreed upon at a meeting in Brussels today offsetting weak earnings out of INTC and QCOM, slightly worse than expected initial jobless claims (418K vs. expectations of 411K), and weak manufacturing data out of China (China PMI came in at 48.9 indicating contraction)...dollar lower on Euro strength stemming from hope that some sort of resolution will be reached on Greece today, US Treasuries lower as safe haven bid out Europe weakens and Gang of Six spending package loses momentum which reignites concerns over potential US default, major commodities trading mixed with Copper down on weak China PMI, Oil slightly higher on dollar weakness, and Gold/Copper seeing marginal declines on Greece debt package hope...in terms of trading today, don't believe this morning rally will hold and expect we'll be seeing a strong intraday reversal to the downside today with a solid red close as very weak China PMI data, weak INTC earnings, along with uncertainty over US debt package being produced ahead of looming August 2nd deadline likely to weigh on indices, watch for another strong reversal in Gold/Silver to the upside as well
US futures higher ahead of the open as better than expected earnings out of MS and optimism over a Greek rescue package being agreed upon at a meeting in Brussels today offsetting weak earnings out of INTC and QCOM, slightly worse than expected initial jobless claims (418K vs. expectations of 411K), and weak manufacturing data out of China (China PMI came in at 48.9 indicating contraction)...dollar lower on Euro strength stemming from hope that some sort of resolution will be reached on Greece today, US Treasuries lower as safe haven bid out Europe weakens and Gang of Six spending package loses momentum which reignites concerns over potential US default, major commodities trading mixed with Copper down on weak China PMI, Oil slightly higher on dollar weakness, and Gold/Copper seeing marginal declines on Greece debt package hope...in terms of trading today, don't believe this morning rally will hold and expect we'll be seeing a strong intraday reversal to the downside today with a solid red close as very weak China PMI data, weak INTC earnings, along with uncertainty over US debt package being produced ahead of looming August 2nd deadline likely to weigh on indices, watch for another strong reversal in Gold/Silver to the upside as well
July 20, 2011
2:52PM EST
Very slow out there, SPYs have yet to break above 100M in volume and index continues to trade in a very tight range with very lethargic action across the board...INTC reporting after the bell, and if you take a look at the SMH vs. S&P performance over the past couple weeks, you can see the significant underperformance in the SMH triggered by that MCHP warning in mid-July...note SMH has really been unable to recover even with S&P rallying here so technicals signaling fundamentals of the semis are under pressure so wouldn't expect too much bullishness out of INTC tonight, risk is probably to the downside on report...heading into the close today, with Greece issue on the table tomorrow due to meeting in Brussels expect to see some sell pressure come in and with such light liquidity it may produce some magnified downside in indices...so light out there though that any little program can move price so we'll see
Very slow out there, SPYs have yet to break above 100M in volume and index continues to trade in a very tight range with very lethargic action across the board...INTC reporting after the bell, and if you take a look at the SMH vs. S&P performance over the past couple weeks, you can see the significant underperformance in the SMH triggered by that MCHP warning in mid-July...note SMH has really been unable to recover even with S&P rallying here so technicals signaling fundamentals of the semis are under pressure so wouldn't expect too much bullishness out of INTC tonight, risk is probably to the downside on report...heading into the close today, with Greece issue on the table tomorrow due to meeting in Brussels expect to see some sell pressure come in and with such light liquidity it may produce some magnified downside in indices...so light out there though that any little program can move price so we'll see
12:49PM EST
S&P been trading in a tight 3 point range for the past couple hours, still no real volume out there, big standout of course is reversal in Gold/Silver along with pullback as Gang Of Six debt ceiling deal being met with resistance from Republicans leaders and even some Democrats as expected...now that big IBM and AAPL earnings out of the way and strong tech earnings appear to be priced in, this US debt ceiling issue should take center stage in terms of market focal point with European debt issue also coming into play tomorrow during another meeting in Brussels to try and resolve Greek debt situation...solid weakness in AAPL, high betas, along with strength in Gold/Silver signaling bias in equities should be to the short side near-term (till end of the week at least)
S&P been trading in a tight 3 point range for the past couple hours, still no real volume out there, big standout of course is reversal in Gold/Silver along with pullback as Gang Of Six debt ceiling deal being met with resistance from Republicans leaders and even some Democrats as expected...now that big IBM and AAPL earnings out of the way and strong tech earnings appear to be priced in, this US debt ceiling issue should take center stage in terms of market focal point with European debt issue also coming into play tomorrow during another meeting in Brussels to try and resolve Greek debt situation...solid weakness in AAPL, high betas, along with strength in Gold/Silver signaling bias in equities should be to the short side near-term (till end of the week at least)
10:40AM EST
AAPL continues to weaken here, now almost $15 off pre-market highs, most of the high beta names also seeing weakness, most hedge funds likely loaded up ahead of expected blowout numbers from AAPL and now selling on the news...note Treasuries off solidly, as noted don't believe this US debt ceiling issue has been closed yet and expect more intense debate over tax cuts especially over next few sessions as August 2nd deadline looms...believe Republicans want to back Obama into a corner on this issue and have him raise the debt ceiling without Congressional approval in order to slam him on raising America's debt levels when November 2012 elections come around...so expect to see US debt ceiling issue come down to the wire and culminate in unexpected fashion as Republicans and Dems really fighting for Presidential power here and neither will back down too easily...also note Gold now green after opening lower this morning, Silver well off the lows and peeking its head into green as well now, watch this sector closely for a reversal here, dont believe yesterday's sell-off was the end of the current rally, just a technical breather amid an ongoing uptrend
AAPL continues to weaken here, now almost $15 off pre-market highs, most of the high beta names also seeing weakness, most hedge funds likely loaded up ahead of expected blowout numbers from AAPL and now selling on the news...note Treasuries off solidly, as noted don't believe this US debt ceiling issue has been closed yet and expect more intense debate over tax cuts especially over next few sessions as August 2nd deadline looms...believe Republicans want to back Obama into a corner on this issue and have him raise the debt ceiling without Congressional approval in order to slam him on raising America's debt levels when November 2012 elections come around...so expect to see US debt ceiling issue come down to the wire and culminate in unexpected fashion as Republicans and Dems really fighting for Presidential power here and neither will back down too easily...also note Gold now green after opening lower this morning, Silver well off the lows and peeking its head into green as well now, watch this sector closely for a reversal here, dont believe yesterday's sell-off was the end of the current rally, just a technical breather amid an ongoing uptrend
9:50AM EST
AAPL fading fast in typical post-earnings fashion, if it closes below $380 today or tomorrow it'll be a major red flag for the broader market as it signals funds are aggressively liquidating ahead of incoming weakness...also keep a close eye on those precious metals here, don't believe the rally is done just yet and am looking for a strong reversal to the upside in Gold and Silver today or tomorrow...overall, as noted yesterday S&P is sort of in no man's land technically so hard to get a read on the next 10-15 points or so, based on AAPL performance thus far though feels like next 10-15 points are down
AAPL fading fast in typical post-earnings fashion, if it closes below $380 today or tomorrow it'll be a major red flag for the broader market as it signals funds are aggressively liquidating ahead of incoming weakness...also keep a close eye on those precious metals here, don't believe the rally is done just yet and am looking for a strong reversal to the upside in Gold and Silver today or tomorrow...overall, as noted yesterday S&P is sort of in no man's land technically so hard to get a read on the next 10-15 points or so, based on AAPL performance thus far though feels like next 10-15 points are down
9:09AM EST
US futures higher ahead of the open on blowout earnings from AAPL which has the stock up nearly 6% pre-market...dollar trading lower on Euro strength stemming from chatter of new Greek bailout plan ahead of tomorrow's summit in Brussels, US Treasuries lower on downtick in safe haven bid, and major commodities mostly higher as solid tech earnings spur global growth optimism...in terms of trading today, S&P has upside to 1340 however indices looking a bit tired here pre-market so watch for slight fade in AAPL and the broader market, pre-market volume levels very low though so barring major intraday news headlines don't expect anything too dramatic
US futures higher ahead of the open on blowout earnings from AAPL which has the stock up nearly 6% pre-market...dollar trading lower on Euro strength stemming from chatter of new Greek bailout plan ahead of tomorrow's summit in Brussels, US Treasuries lower on downtick in safe haven bid, and major commodities mostly higher as solid tech earnings spur global growth optimism...in terms of trading today, S&P has upside to 1340 however indices looking a bit tired here pre-market so watch for slight fade in AAPL and the broader market, pre-market volume levels very low though so barring major intraday news headlines don't expect anything too dramatic
July 19, 2011
3:12PM EST
Clearly wrong on market hitting high of the day during first hour, obvious shift in sentiment with regard to US debt ceiling issue driven by midday statement from Obama, feels a bit manipulated though and still not sure that I believe Gang Of Six plan is set in stone just yet...also believe that raising of the debt ceiling will not put US economy back on solid footing by any means as higher debt levels coupled with lower government spending is hardly an equation for growth but rather a plan for survival...in any case, risk on clearly back on here even though volume remains low, next point of resistance on the upside should this rally continue is the early April resistance level at 1340 which looks like the next optimal short entry...with regard to Gold/Silver dont think the trade is done just yet, but feel free to take profits on the trade here as short-term weakness likely as some of this short-term froth is removed, medium-term however expect to see higher prices...in terms of AAPL, as noted tough to put on a trade here with stock looking too strong to short but too overbought to get long, numbers of course will likely be blowout as always and we'll have to watch how it trades tomorrow early tomorrow to get a feel for the next big trade...how AAPL trades tomorrow will also give us an indication for how the overall market will trade near-term ie AAPL holding onto all gains tomorrow will likely be an indication of further upside in the indices, and a strong fade in AAPL will signal that near-term weakness is on its way...sort of no man's land here with respect to S&P technicals, next 15-20 points could go either way so really just waiting to gather more data
Clearly wrong on market hitting high of the day during first hour, obvious shift in sentiment with regard to US debt ceiling issue driven by midday statement from Obama, feels a bit manipulated though and still not sure that I believe Gang Of Six plan is set in stone just yet...also believe that raising of the debt ceiling will not put US economy back on solid footing by any means as higher debt levels coupled with lower government spending is hardly an equation for growth but rather a plan for survival...in any case, risk on clearly back on here even though volume remains low, next point of resistance on the upside should this rally continue is the early April resistance level at 1340 which looks like the next optimal short entry...with regard to Gold/Silver dont think the trade is done just yet, but feel free to take profits on the trade here as short-term weakness likely as some of this short-term froth is removed, medium-term however expect to see higher prices...in terms of AAPL, as noted tough to put on a trade here with stock looking too strong to short but too overbought to get long, numbers of course will likely be blowout as always and we'll have to watch how it trades tomorrow early tomorrow to get a feel for the next big trade...how AAPL trades tomorrow will also give us an indication for how the overall market will trade near-term ie AAPL holding onto all gains tomorrow will likely be an indication of further upside in the indices, and a strong fade in AAPL will signal that near-term weakness is on its way...sort of no man's land here with respect to S&P technicals, next 15-20 points could go either way so really just waiting to gather more data
1:48PM EST
Buy program coming in here in stocks following Obama statement, volume however remains light, gold and silver also coming off while Treasuries rally...someone saying this "Gang of 6 Deal" will go through and solve the debt ceiling issue, not sure if I believe that just yet
Buy program coming in here in stocks following Obama statement, volume however remains light, gold and silver also coming off while Treasuries rally...someone saying this "Gang of 6 Deal" will go through and solve the debt ceiling issue, not sure if I believe that just yet
1:37PM EST
Obama holding press conference to update on debt ceiling talks, still sounds as if there's a ton of work to do on achieving a viable plan, Republicans clearly still dragging their feet and in my opinion likely want to lure Congress into giving Obama the power to raise the debt ceiling without Congressional approval so that Republicans can say "Obama driving the country into debt" when next year's elections come around...in the meantime however US debt issue still looks like a big source of uncertainty for markets
Obama holding press conference to update on debt ceiling talks, still sounds as if there's a ton of work to do on achieving a viable plan, Republicans clearly still dragging their feet and in my opinion likely want to lure Congress into giving Obama the power to raise the debt ceiling without Congressional approval so that Republicans can say "Obama driving the country into debt" when next year's elections come around...in the meantime however US debt issue still looks like a big source of uncertainty for markets
11:15AM EST
Market starting to feel a bit sluggish here, believe the fade short start up soon...note gold and silver continue to hold up very well even at overbought conditions and with equities rallying which is suspicious and continues to signal there's something big looming here...overall, a bit slow here in the early session but believe action should pick up later in the day as traders position for AAPL earnings after the bell...in terms of AAPL its a tough one to call heading into earnings as huge rally heading into numbers feels like someone knows something (maybe stock split) however most good news appears to be priced in, also believe we're in the red zone for announcement of Jobs resignation here so we'll see, price action making it tough to get long or short
Market starting to feel a bit sluggish here, believe the fade short start up soon...note gold and silver continue to hold up very well even at overbought conditions and with equities rallying which is suspicious and continues to signal there's something big looming here...overall, a bit slow here in the early session but believe action should pick up later in the day as traders position for AAPL earnings after the bell...in terms of AAPL its a tough one to call heading into earnings as huge rally heading into numbers feels like someone knows something (maybe stock split) however most good news appears to be priced in, also believe we're in the red zone for announcement of Jobs resignation here so we'll see, price action making it tough to get long or short
9:51AM EST
Would start selling S&P short here in this 1318-1320 range as it fills friday gap at 1316.14 and hits some trendline resistance from 5-day downtrend...buy interest this morning is broadbased but not that aggressive (mostly short-covering), feels like its going to stall out and begin fading here shortly
Would start selling S&P short here in this 1318-1320 range as it fills friday gap at 1316.14 and hits some trendline resistance from 5-day downtrend...buy interest this morning is broadbased but not that aggressive (mostly short-covering), feels like its going to stall out and begin fading here shortly
9:13AM EST
US futures higher ahead of the open as solid earnings reports from IBM, KO, and MOS offset weak reports out of GS and BAC...dollar lower on Euro strength stemming from decent bond auction in Spain and yields narrowing a bit in Italy (Greek bonds however continue to sell-off), US Treasuries roughly flat, and most commodities trading mildly higher on positive mood in equities...in terms of trading today, expect we may print highs of the day here in first hour of trading with downside bias throughout the rest of the session as S&P has been in a solid downtrend for the past 4 sessions and will hit some technical resistance here at the open on this gap higher...also expect Eurozone debt worries will continue to weigh on indices especially with Greek yields continuing to tick higher, US debt ceiling uncertainty also likely to keep buyers at bay and sellers prevalent
US futures higher ahead of the open as solid earnings reports from IBM, KO, and MOS offset weak reports out of GS and BAC...dollar lower on Euro strength stemming from decent bond auction in Spain and yields narrowing a bit in Italy (Greek bonds however continue to sell-off), US Treasuries roughly flat, and most commodities trading mildly higher on positive mood in equities...in terms of trading today, expect we may print highs of the day here in first hour of trading with downside bias throughout the rest of the session as S&P has been in a solid downtrend for the past 4 sessions and will hit some technical resistance here at the open on this gap higher...also expect Eurozone debt worries will continue to weigh on indices especially with Greek yields continuing to tick higher, US debt ceiling uncertainty also likely to keep buyers at bay and sellers prevalent
July 18, 2011
3:10PM EST
Market trying to come off bottom here as funds trying to get ahead of the expected blowout earnings from AAPL tomorrow...as usual though market likely fully pricing in perfection here so any gap higher in AAPL and tech likely to be faded especially with so much stress in the banking sector on a global basis and continued concern over that US debt ceiling where little to no headway is being made...note Gold and Silver continue to hold onto all gains, with every single dip being bought aggressively with very few large sellers out there, continue to believe this precious metals move is signaling something very serious within the banking sector and/or possible downgrade of US credit rating by a major ratings agency (even if debt ceiling is raised)...looking ahead to tomorrow it'll be all about earnings with BAC WFC and GS reporting ahead of the open and likely producing a somber tone to equities as there's really nothing they can report which would get anyone excited over banking stocks even here at these levels especially with so much contagion risk out there (now spreading to major European banks) and uncertainty over how much exposure these banks have to European debt/banks...and of course later on in the session we'll see traders position ahead of those AAPL numbers (may see some squeezing into the close tomorrow) which feel very much priced in now (everyone always expects blowout numbers from AAPL so no real dichotomy in terms of trades...everyone gets long, which is why we usually see fades the next day)...more importantly however, big focal point for us is the "major headline" which appears to be looming in markets due to price action in gold/silver as well as European debt/bank stocks pricing in major contagion...definitely feels like this European crisis + US debt ceiling issue is going to hit a head soon which feels like its leading up to a big parabolic move in Gold and Silver and a major sell-off in equities near-term, therefore maintaining long precious metals/short S&P positioning here
Egan-Jones Downgrades US From AAA To AA+
July 18 (ZeroHedge) -- While others huff and puff, and threaten to do what had to be done ages ago, the one truly independent and capable NRSRO, Egan-Jones, downgraded the US from AAA to AA+ over the weekend.
From the release:
Real GDP increased at an annualized rate of 4.0% in Q1 2011, following an increase of 3.5% rise in the prior quarter. Personal consumption expenditures, exports, and nonresidential fixed investment contributed positively to growth during the quarter. Meanwhile, imports rose sharply. In the March 2011 quarter, trade in goods and services resulted in a deficit of $562B, many because of the high price of petroleum. However, the major factor driving credit quality is the relatively high level of debt and the difficulty in significantly cutting spending. We are taking a negative action not based on the delay in raising the debt ceiling but rather our concern about the high level of debt to GDP in excess of 100% compared to Canada's 35%. Nonetheless, since the US's debt is denominated in dollars, a hard default is unlikely. continued
Market trying to come off bottom here as funds trying to get ahead of the expected blowout earnings from AAPL tomorrow...as usual though market likely fully pricing in perfection here so any gap higher in AAPL and tech likely to be faded especially with so much stress in the banking sector on a global basis and continued concern over that US debt ceiling where little to no headway is being made...note Gold and Silver continue to hold onto all gains, with every single dip being bought aggressively with very few large sellers out there, continue to believe this precious metals move is signaling something very serious within the banking sector and/or possible downgrade of US credit rating by a major ratings agency (even if debt ceiling is raised)...looking ahead to tomorrow it'll be all about earnings with BAC WFC and GS reporting ahead of the open and likely producing a somber tone to equities as there's really nothing they can report which would get anyone excited over banking stocks even here at these levels especially with so much contagion risk out there (now spreading to major European banks) and uncertainty over how much exposure these banks have to European debt/banks...and of course later on in the session we'll see traders position ahead of those AAPL numbers (may see some squeezing into the close tomorrow) which feel very much priced in now (everyone always expects blowout numbers from AAPL so no real dichotomy in terms of trades...everyone gets long, which is why we usually see fades the next day)...more importantly however, big focal point for us is the "major headline" which appears to be looming in markets due to price action in gold/silver as well as European debt/bank stocks pricing in major contagion...definitely feels like this European crisis + US debt ceiling issue is going to hit a head soon which feels like its leading up to a big parabolic move in Gold and Silver and a major sell-off in equities near-term, therefore maintaining long precious metals/short S&P positioning here
1:14PM EST
2 major stories being reported on ZeroHedge which should be a key website to have open at all times during this time of high global market uncertainty: 1) Based on Goldman's dark trading pool Sigma X which has accurately predicted where contagion would spread, it is suggesting the next major banking stress will occur in the UK which would be a major major headline as ZeroHedge suggests contagion to Lloyds, RBS, and Barclays would make the contagion a global issue as nearly all major banks have at least some sort of trading exposure with these banks 2) Independent credit rating agency Egan-Jones did exactly what we predicted would happen on Friday and downgraded the USs credit rating from AAA down to AA+ (see Friday's 3:08PM entry)...as we've been noting, bullish price action in gold and silver continue to signal major major stress in the financial system and thus far we're not seeing any shift away from this price action so until we see these issues hit a head we're maintaining our long Gold/Silver, short S&P bias
Sigma X Trading Suggests European Contagion May Be Shifting From Italy To The UK
July 18 (ZeroHedge) -- Over 3 weeks ago, before Italian treasury spreads blew out by several hundred basis points, and before Italian bank stock trading halts became a daily occurrence, we suggested that the European contagion was shifting to Italy based on Goldman dark pool Sigma X trading. To wit: "Today's most active names are Banca Monte dei Paschi di Siena, Unicredit and Intesa Sanpaolo. Translation: someone is actively positioning for serious action in Italy shortly." That someone sure was right, and it is precisely this trifecta of stocks that at last check was halted on the Borsa. Well, based on today's action at Sigma X, the next, and probably biggest domino may be about to fall: the UK itself, because coming in at position #2, just behind UniCredit, we see Lloyds Banking. And if Lloyds goes, the ones that will follow are Barclays and RBS. At that point, the financial crisis goes global. continued
2 major stories being reported on ZeroHedge which should be a key website to have open at all times during this time of high global market uncertainty: 1) Based on Goldman's dark trading pool Sigma X which has accurately predicted where contagion would spread, it is suggesting the next major banking stress will occur in the UK which would be a major major headline as ZeroHedge suggests contagion to Lloyds, RBS, and Barclays would make the contagion a global issue as nearly all major banks have at least some sort of trading exposure with these banks 2) Independent credit rating agency Egan-Jones did exactly what we predicted would happen on Friday and downgraded the USs credit rating from AAA down to AA+ (see Friday's 3:08PM entry)...as we've been noting, bullish price action in gold and silver continue to signal major major stress in the financial system and thus far we're not seeing any shift away from this price action so until we see these issues hit a head we're maintaining our long Gold/Silver, short S&P bias
Sigma X Trading Suggests European Contagion May Be Shifting From Italy To The UK
July 18 (ZeroHedge) -- Over 3 weeks ago, before Italian treasury spreads blew out by several hundred basis points, and before Italian bank stock trading halts became a daily occurrence, we suggested that the European contagion was shifting to Italy based on Goldman dark pool Sigma X trading. To wit: "Today's most active names are Banca Monte dei Paschi di Siena, Unicredit and Intesa Sanpaolo. Translation: someone is actively positioning for serious action in Italy shortly." That someone sure was right, and it is precisely this trifecta of stocks that at last check was halted on the Borsa. Well, based on today's action at Sigma X, the next, and probably biggest domino may be about to fall: the UK itself, because coming in at position #2, just behind UniCredit, we see Lloyds Banking. And if Lloyds goes, the ones that will follow are Barclays and RBS. At that point, the financial crisis goes global. continued
Egan-Jones Downgrades US From AAA To AA+
July 18 (ZeroHedge) -- While others huff and puff, and threaten to do what had to be done ages ago, the one truly independent and capable NRSRO, Egan-Jones, downgraded the US from AAA to AA+ over the weekend.
From the release:
Real GDP increased at an annualized rate of 4.0% in Q1 2011, following an increase of 3.5% rise in the prior quarter. Personal consumption expenditures, exports, and nonresidential fixed investment contributed positively to growth during the quarter. Meanwhile, imports rose sharply. In the March 2011 quarter, trade in goods and services resulted in a deficit of $562B, many because of the high price of petroleum. However, the major factor driving credit quality is the relatively high level of debt and the difficulty in significantly cutting spending. We are taking a negative action not based on the delay in raising the debt ceiling but rather our concern about the high level of debt to GDP in excess of 100% compared to Canada's 35%. Nonetheless, since the US's debt is denominated in dollars, a hard default is unlikely. continued
11:12AM EST
Here's that first test of minor support at 1300, as noted however we dont expect this support level will hold and based on price action thus far believe we'll be closing below this level today...note Gold and Silver hitting intraday highs here as Italian banks getting halted due to stocks trading limit down which is a sign of major stress within the European banking system and suggests a major financial crisis maybe looming with possible run on banks coming...also note Euro getting pummeled again validating European concerns...everything playing out as expected thus far, would continue to hold onto long Gold./Silver positions, short S&P positions here as feels like European financial crisis and US debt concerns have yet to hit a head
Here's that first test of minor support at 1300, as noted however we dont expect this support level will hold and based on price action thus far believe we'll be closing below this level today...note Gold and Silver hitting intraday highs here as Italian banks getting halted due to stocks trading limit down which is a sign of major stress within the European banking system and suggests a major financial crisis maybe looming with possible run on banks coming...also note Euro getting pummeled again validating European concerns...everything playing out as expected thus far, would continue to hold onto long Gold./Silver positions, short S&P positions here as feels like European financial crisis and US debt concerns have yet to hit a head
9:57AM EST
Note NFLX breaking below 20-day EMA on a downgrade out of Pacific Crest, next stop is that July 1st gap at $268 where very short-term shorts should cover for solid gains, medium-term shorts hold for move down to bottom of trading channel at high $250s where its also possible we may see a major breakdown below that support level and a more intense move to the downside as recent price hikes may put in a major top on the stock (see July 14- 12:-8PM entry for color)
Note NFLX breaking below 20-day EMA on a downgrade out of Pacific Crest, next stop is that July 1st gap at $268 where very short-term shorts should cover for solid gains, medium-term shorts hold for move down to bottom of trading channel at high $250s where its also possible we may see a major breakdown below that support level and a more intense move to the downside as recent price hikes may put in a major top on the stock (see July 14- 12:-8PM entry for color)
9:36AM EST
Should see a test of that minor target at 1300 on the S&P by the close today, however prime target for the week remains that 200-day SMA currently at 1277.52, so would remain bias to the short side in equities until these levels
Should see a test of that minor target at 1300 on the S&P by the close today, however prime target for the week remains that 200-day SMA currently at 1277.52, so would remain bias to the short side in equities until these levels
9:15AM EST
US markets set to gap lower as congressional leaders failed to agree on tax cuts needed to raise debt ceiling and European contagion concerns remained in prime focus as Spanish, Italian, and Greek bonds hit new all-time lows...dollar pushing higher on Euro weakness stemming from European bond/bank sell-off, US Treasuries slightly lower as default risk remained a prime concern ahead of August 2nd debt ceiling deadline, and most commodities trading lower on global growth concerns, Gold and Silver however continued to surge with Gold pushing to a new high over that $1600 level and Silver gapping above $40...in terms of trading today, expect downside pressure in equities throughout the session as market sure to remain focused on those new highs in European bond yields signifying contagion risk is still extremely high, inability of congress to make any headway in terms of tax cuts also likely to keep buyers at bay as loss of US's AAA credit rating remains a major risk...overall, continue to believe Gold/Silver long remains best bet in financial markets at the moment due to perfect storm of catalysts
US markets set to gap lower as congressional leaders failed to agree on tax cuts needed to raise debt ceiling and European contagion concerns remained in prime focus as Spanish, Italian, and Greek bonds hit new all-time lows...dollar pushing higher on Euro weakness stemming from European bond/bank sell-off, US Treasuries slightly lower as default risk remained a prime concern ahead of August 2nd debt ceiling deadline, and most commodities trading lower on global growth concerns, Gold and Silver however continued to surge with Gold pushing to a new high over that $1600 level and Silver gapping above $40...in terms of trading today, expect downside pressure in equities throughout the session as market sure to remain focused on those new highs in European bond yields signifying contagion risk is still extremely high, inability of congress to make any headway in terms of tax cuts also likely to keep buyers at bay as loss of US's AAA credit rating remains a major risk...overall, continue to believe Gold/Silver long remains best bet in financial markets at the moment due to perfect storm of catalysts
July 15, 2011
3:08PM EST
Closed out last half of July 132 SPY puts here in the $1.00-1.05 range for +100%, dont want to deal with any manipulation into the close...looking ahead into next week, not too much economic data, it will mostly be about earnings (big companies like IBM and AAPL reporting), but also price action in precious metals, treasuries, and dollar continues to signal there's something lingering here so have feels like we're gonna see another uptick in European debt issues and of course heavy debate over US debt ceiling so earnings reports may be dampened by these macro concerns (ie bad reports will see strong negative reactions, good earnings likely to be faded)...technically, we also continue to see a retest of that 200-day SMA (1275 on S&P) near-term as price action this week was decidedly negative with several up days showing very strong reversals signaling very strong risk reduction by funds...also as noted we believe this last half of July will see a strong downleg in equities due to the confluence of these major macro issues coming to a head (August 2nd US debt ceiling deadline as well as continued concern over European sovereign debt contagion which has yet to subside)...with respect to debt ceiling, the continued bullish price action in Gold feels like what we may see is a raise of the debt ceiling by the August 2nd deadline, however we may actually see one of the major rating agencies marginally lower the USs credit rating due to a weak economic outlook (weak tax revenue generation) in tandem with inability to cut spending enough to comfortably meet credit obligations...USs debt load is clearly a concern here (we're essentially saying if we can't borrow more money we cant pay which is not a good scenario) and with the economy continuing to look very fragile it would not be surprising to see us lose our AAA credit rating....this would of course be a major global headline, and its a bit of a low probability possibility but it feels like there is something major along these lines looming in financial markets...
Closed out last half of July 132 SPY puts here in the $1.00-1.05 range for +100%, dont want to deal with any manipulation into the close...looking ahead into next week, not too much economic data, it will mostly be about earnings (big companies like IBM and AAPL reporting), but also price action in precious metals, treasuries, and dollar continues to signal there's something lingering here so have feels like we're gonna see another uptick in European debt issues and of course heavy debate over US debt ceiling so earnings reports may be dampened by these macro concerns (ie bad reports will see strong negative reactions, good earnings likely to be faded)...technically, we also continue to see a retest of that 200-day SMA (1275 on S&P) near-term as price action this week was decidedly negative with several up days showing very strong reversals signaling very strong risk reduction by funds...also as noted we believe this last half of July will see a strong downleg in equities due to the confluence of these major macro issues coming to a head (August 2nd US debt ceiling deadline as well as continued concern over European sovereign debt contagion which has yet to subside)...with respect to debt ceiling, the continued bullish price action in Gold feels like what we may see is a raise of the debt ceiling by the August 2nd deadline, however we may actually see one of the major rating agencies marginally lower the USs credit rating due to a weak economic outlook (weak tax revenue generation) in tandem with inability to cut spending enough to comfortably meet credit obligations...USs debt load is clearly a concern here (we're essentially saying if we can't borrow more money we cant pay which is not a good scenario) and with the economy continuing to look very fragile it would not be surprising to see us lose our AAA credit rating....this would of course be a major global headline, and its a bit of a low probability possibility but it feels like there is something major along these lines looming in financial markets...
1:25PM EST
Very slow out there following stress test results, market just drifting around now, still trepidation out there over European debt so expect we'll see sellers in equities into the close...watch for spike in Gold/Silver though as technical shorts likely to cover into the close as sell-off on better than expected stress test results did not materialize and both holding up very well on short-term overbought conditions...continue to believe long Gold/Silver best bet across all markets right now
Very slow out there following stress test results, market just drifting around now, still trepidation out there over European debt so expect we'll see sellers in equities into the close...watch for spike in Gold/Silver though as technical shorts likely to cover into the close as sell-off on better than expected stress test results did not materialize and both holding up very well on short-term overbought conditions...continue to believe long Gold/Silver best bet across all markets right now
12:06PM EST
5 Spanish, 2 Greek, 1 Austrian Banks fail stress test...market may get a bit concerned over high number of Spanish banks which failed which may signal more intense problems in Spain (the big concern for Eurozone right now)....20 banks would have failed as of December 31, 2010....note all Italian, French, and Irish banks passed which is unbelievable...would use this pop just over 1315 to sell market short as dont believe this rally will hold, also note precious metals holding up very strong on results, expect heavy short covering into the close
5 Spanish, 2 Greek, 1 Austrian Banks fail stress test...market may get a bit concerned over high number of Spanish banks which failed which may signal more intense problems in Spain (the big concern for Eurozone right now)....20 banks would have failed as of December 31, 2010....note all Italian, French, and Irish banks passed which is unbelievable...would use this pop just over 1315 to sell market short as dont believe this rally will hold, also note precious metals holding up very strong on results, expect heavy short covering into the close
11:56AM EST
Stress test results just minutes away, believe even if they don't show a slew of bank failures market will view the stress tests as not stringent enough...reality is the market knows that many banks throughout the Eurozone are in trouble and they're just looking to see if stress test results are going to reflect reality or not...again would use any type of relief rally (should it materialize) to sell short into as we believe market is ultimately headed down to 200-day SMA at 1275 next week, would also be a buyer of any dip in precious metals as believe they will be pushing higher into the close and next week
Stress test results just minutes away, believe even if they don't show a slew of bank failures market will view the stress tests as not stringent enough...reality is the market knows that many banks throughout the Eurozone are in trouble and they're just looking to see if stress test results are going to reflect reality or not...again would use any type of relief rally (should it materialize) to sell short into as we believe market is ultimately headed down to 200-day SMA at 1275 next week, would also be a buyer of any dip in precious metals as believe they will be pushing higher into the close and next week
10:10AM EST
Note NFLX unable to catch a high-beta bounce on GOOG numbers as well as a green market, stock feels very weak here, should see first target of $268 (July 1st gap) sometime next week
Note NFLX unable to catch a high-beta bounce on GOOG numbers as well as a green market, stock feels very weak here, should see first target of $268 (July 1st gap) sometime next week
10:04AM EST
Michigan Sentiment much weaker than expected at 63.8 vs. expectations of 71.4, futures reacting to such a huge miss with DOW hitting breakeven, you can definitely still feel that heaviness in equities with funds much heavier on the sell side than on the bid, feels like we're in for another big reversal into red today especially once those stress test resuls come out as they will definitely not produce any definitive conclusion to Eurozone debt issue...likely gonna be chopping around for the next couple hours here so sit tight until we approach that critical noon release of stress test results...note Gold/Silver still holding up very well here this morning, reversing overnight losses yet again, would not be surprised to see Gold end up $15-20 by the close as most technical traders likely short now on slightly overbought conditions, however believe we still have strong buy interest at these levels so these shorts likely get squeezed here near-term
Michigan Sentiment much weaker than expected at 63.8 vs. expectations of 71.4, futures reacting to such a huge miss with DOW hitting breakeven, you can definitely still feel that heaviness in equities with funds much heavier on the sell side than on the bid, feels like we're in for another big reversal into red today especially once those stress test resuls come out as they will definitely not produce any definitive conclusion to Eurozone debt issue...likely gonna be chopping around for the next couple hours here so sit tight until we approach that critical noon release of stress test results...note Gold/Silver still holding up very well here this morning, reversing overnight losses yet again, would not be surprised to see Gold end up $15-20 by the close as most technical traders likely short now on slightly overbought conditions, however believe we still have strong buy interest at these levels so these shorts likely get squeezed here near-term
9:18AM EST
Industrial Production comes in slightly weaker than expected at +.2% vs. expectations of +.3%, no major reaction in futures as funds waiting for stress test results to adjust positions...note Michigan Sentiment out at 9:55AM just after the bell, don't expect major reaction to this number as well
Industrial Production comes in slightly weaker than expected at +.2% vs. expectations of +.3%, no major reaction in futures as funds waiting for stress test results to adjust positions...note Michigan Sentiment out at 9:55AM just after the bell, don't expect major reaction to this number as well
9:13AM EST
US futures higher ahead of the open as better than expected earnings out of GOOG and C more than offset yet another weak Empire Manufacturing report (-3.76 vs. expectations of +1.0) and a warning out of S&P that US has a 50/50 chance of losing its AAA credit rating in the next 90 days (S&P noted it is critical that debt deal remove at least $4 Trillion in spending to preserve credit rating)...US dollar trading flat ahead of major European Stress Test results released at noon EST, US Treasuries lower on S&P warning on credit rating, and commodities trading mostly flat...in terms of trading today, major intraday focal point which will dictate price action heading into the close will of course be European Stress Test results, and as noted yesterday we expect any relief rally on results will be sold into yet again as funds clearly using strength to liquidate long positions here, so would use any midday pop to get short heading into the close as we believe next week we'll be seeing a retest of 200-day SMA on the S&P (1275)...note major chatter out there that 15 banks will fail the stress tests, so this is the over-under in terms of expectations
US futures higher ahead of the open as better than expected earnings out of GOOG and C more than offset yet another weak Empire Manufacturing report (-3.76 vs. expectations of +1.0) and a warning out of S&P that US has a 50/50 chance of losing its AAA credit rating in the next 90 days (S&P noted it is critical that debt deal remove at least $4 Trillion in spending to preserve credit rating)...US dollar trading flat ahead of major European Stress Test results released at noon EST, US Treasuries lower on S&P warning on credit rating, and commodities trading mostly flat...in terms of trading today, major intraday focal point which will dictate price action heading into the close will of course be European Stress Test results, and as noted yesterday we expect any relief rally on results will be sold into yet again as funds clearly using strength to liquidate long positions here, so would use any midday pop to get short heading into the close as we believe next week we'll be seeing a retest of 200-day SMA on the S&P (1275)...note major chatter out there that 15 banks will fail the stress tests, so this is the over-under in terms of expectations
July 14, 2011
3:14PM EST
Just took profits on half of July 132 SPY put position at $1.30s for solid +200% intraday gain from .44 entry, holding the rest into tomorrow
Just took profits on half of July 132 SPY put position at $1.30s for solid +200% intraday gain from .44 entry, holding the rest into tomorrow
2:46PM EST
Emails about what time European Stress Test results will be released tomorrow, if i'm not mistaken they'll be released at 5:00PM London Time which is Noon New York Time and 9:00AM on the west coast...obviously the big focal point tomorrow and note this data will be released after major US CPI data (note Core PPI came in higher than expected today at .3% vs. expectations of .2%), Industrial Production data, Empire Manufacturing, and Michigan sentiment so should be a wild one tomorrow....also note GOOG earnings out tonight which will likely have an effect on tech tomorrow morning at least...believe however trend of fund selling into strength will continue near-term so should we see a push higher during early morning session Id be a seller into the close as funds will likely come in to lighten up yet again ahead of what looks like another wave of Eurozone headlines and considerable concern over US debt ceiling
Emails about what time European Stress Test results will be released tomorrow, if i'm not mistaken they'll be released at 5:00PM London Time which is Noon New York Time and 9:00AM on the west coast...obviously the big focal point tomorrow and note this data will be released after major US CPI data (note Core PPI came in higher than expected today at .3% vs. expectations of .2%), Industrial Production data, Empire Manufacturing, and Michigan sentiment so should be a wild one tomorrow....also note GOOG earnings out tonight which will likely have an effect on tech tomorrow morning at least...believe however trend of fund selling into strength will continue near-term so should we see a push higher during early morning session Id be a seller into the close as funds will likely come in to lighten up yet again ahead of what looks like another wave of Eurozone headlines and considerable concern over US debt ceiling
1:29PM EST
Something definitely going on here, put volume on weekly ETFs is very high, selling is very aggressive/bids very weak, may be leak of tomorrows European Stress Test results, note rumors have been that several Spanish, Greek, Italian, and even some German banks will fail the test...Greek and Italian banks will surely fail however it is doubtful that any major Spanish or German banks will fail as this would reek havoc throughout the entire Eurozone banking system which the EU surely does not want to see, so even if the major Spanish and German banks are undercapitalized its doubtful that the results will actually show that...however price action in equities over the past 3 days with indices being unable to hold gains amid rallies says someone definitely has information on something, and todays significant reversal definitely corroborates that...best bet for short-term shorts looking to close out positions near-term is to close half positions on any in the money puts expiring tomorrow/profitable short positions into the close today, and let the other half ride into tomorrow due to red flags raised over past several sessions
Something definitely going on here, put volume on weekly ETFs is very high, selling is very aggressive/bids very weak, may be leak of tomorrows European Stress Test results, note rumors have been that several Spanish, Greek, Italian, and even some German banks will fail the test...Greek and Italian banks will surely fail however it is doubtful that any major Spanish or German banks will fail as this would reek havoc throughout the entire Eurozone banking system which the EU surely does not want to see, so even if the major Spanish and German banks are undercapitalized its doubtful that the results will actually show that...however price action in equities over the past 3 days with indices being unable to hold gains amid rallies says someone definitely has information on something, and todays significant reversal definitely corroborates that...best bet for short-term shorts looking to close out positions near-term is to close half positions on any in the money puts expiring tomorrow/profitable short positions into the close today, and let the other half ride into tomorrow due to red flags raised over past several sessions
1:03PM EST
Aggressive liquidation over the past 3 sessions amid rally attempts has us lowering our prime target from 1315 down to 1275 for a retest of the 200-day SMA sometime over the next week or so...definitely feels like buyers are waning here with very heavy sell side action so supply/demand action shows strong potential for much stronger downside and this runs parallel to our thesis that we would see another strong downleg during second half of July as this final POMO push in early July winds down...also feel as if we have a much higher than average probability of breaking below this 200-day SMA heading into the end of July which would set us up for a much larger downtrend triggered by a break below the 1250 neckline of that 6-month head and shoulders we outlined at the beginning of July (see July 1 - 10:08AM entry)...Gold and Silver action also continues to signal that there are major banking concerns within the system here and we expect to see these concerns uptick significantly during last half of July in tandem with the ongoing debate over US debt ceiling...as noted yesterday continue to believe best positioning right now is long Gold/Silver, short S&P, neutral on dollar and Treasuries
Aggressive liquidation over the past 3 sessions amid rally attempts has us lowering our prime target from 1315 down to 1275 for a retest of the 200-day SMA sometime over the next week or so...definitely feels like buyers are waning here with very heavy sell side action so supply/demand action shows strong potential for much stronger downside and this runs parallel to our thesis that we would see another strong downleg during second half of July as this final POMO push in early July winds down...also feel as if we have a much higher than average probability of breaking below this 200-day SMA heading into the end of July which would set us up for a much larger downtrend triggered by a break below the 1250 neckline of that 6-month head and shoulders we outlined at the beginning of July (see July 1 - 10:08AM entry)...Gold and Silver action also continues to signal that there are major banking concerns within the system here and we expect to see these concerns uptick significantly during last half of July in tandem with the ongoing debate over US debt ceiling...as noted yesterday continue to believe best positioning right now is long Gold/Silver, short S&P, neutral on dollar and Treasuries
12:24PM EST
Major reversal underway with 1315 support level broken as predicted, all 3 indices now firmly red with sell programs picking up....July 132 SPY puts bought this morning on head and shoulders now almost tripled...note however gold and silver holding onto green thus far even though Bernanke somewhat dampened expectations for QE3
Major reversal underway with 1315 support level broken as predicted, all 3 indices now firmly red with sell programs picking up....July 132 SPY puts bought this morning on head and shoulders now almost tripled...note however gold and silver holding onto green thus far even though Bernanke somewhat dampened expectations for QE3
12:08PM EST
Put a short on NFLX here in $291s as stock trading right at the top of its trading channel and typically comes down to bottom of its channel which currently is about high-$250s before pushing higher again...stock also has a real nice gap to fill from July 1st at $267.99 which we should gravitate towards as a first target...moreover, recent price hike has a few analysts concerned over customer churn as many might view the new pricing plan as a bit too aggressive with customers deciding to opt out of NFLX all together and ultimately slowing NFLXs growth, so we do have potential to see a major top here at these levels if these concerns do in fact materialize...therefore on a technical and fundamental basis we have a strong case for both a short and long-term top at these levels so short position is favorable here in common stock and also green lit for an out of the money put position for more aggressive traders...note big August put spread put on at the 270 and 240 strike today with over 3,000 contracts traded
Put a short on NFLX here in $291s as stock trading right at the top of its trading channel and typically comes down to bottom of its channel which currently is about high-$250s before pushing higher again...stock also has a real nice gap to fill from July 1st at $267.99 which we should gravitate towards as a first target...moreover, recent price hike has a few analysts concerned over customer churn as many might view the new pricing plan as a bit too aggressive with customers deciding to opt out of NFLX all together and ultimately slowing NFLXs growth, so we do have potential to see a major top here at these levels if these concerns do in fact materialize...therefore on a technical and fundamental basis we have a strong case for both a short and long-term top at these levels so short position is favorable here in common stock and also green lit for an out of the money put position for more aggressive traders...note big August put spread put on at the 270 and 240 strike today with over 3,000 contracts traded
11:10AM EST
Nasdaq just went red here, S&P just above breakeven as sell programs continue to liquidate as expected as Bernanke tries to temper QE3 expectations a bit, dollar now eyeing green here as it comes off bottom on Bernanke remarks, Gold/Silver paring gains however still holding onto positive territory...dont believe Gold/Silver action is solely predicated on QE3 expectations but mostly being driven by bullish technicals as well Eurozone and US debt ceiling uncertainty (uptick in QE3 probability is just one of 3/4 tailwinds at this time)...also note 3 major reversals in 3 days on the S&P chart really highlighting some strong liquidation in equities going on here on any rallies
Nasdaq just went red here, S&P just above breakeven as sell programs continue to liquidate as expected as Bernanke tries to temper QE3 expectations a bit, dollar now eyeing green here as it comes off bottom on Bernanke remarks, Gold/Silver paring gains however still holding onto positive territory...dont believe Gold/Silver action is solely predicated on QE3 expectations but mostly being driven by bullish technicals as well Eurozone and US debt ceiling uncertainty (uptick in QE3 probability is just one of 3/4 tailwinds at this time)...also note 3 major reversals in 3 days on the S&P chart really highlighting some strong liquidation in equities going on here on any rallies
10:40AM EST
Sell programs starting up here as S&P comes off that right shoulder we highlighted, dollar also starting to perk up a bit may be some Eurozone headlines on the way to produce that break below 1315 tomorrow...feels like we're gonna reverse hard into red by the close today with a likely test of that 1315 level yet again
Sell programs starting up here as S&P comes off that right shoulder we highlighted, dollar also starting to perk up a bit may be some Eurozone headlines on the way to produce that break below 1315 tomorrow...feels like we're gonna reverse hard into red by the close today with a likely test of that 1315 level yet again
9:59AM EST
Long weekly July 132 SPY puts here at .44 (expiring tomorrow) for possible break below 1315 neckline of 2-day head and shoulders
Long weekly July 132 SPY puts here at .44 (expiring tomorrow) for possible break below 1315 neckline of 2-day head and shoulders
9:52AM EST
Head and shoulders forming here on the 2-day S&P chart with left shoulder at Tuesdays highs at 1326, head at yesterdays 1331 high, right shoulder forming here on this morning push higher, and neckline right at that 1315 support level, would sell S&P short here on a push just above 1325 for possible break below 1315 neckline later today or tomorrow
Head and shoulders forming here on the 2-day S&P chart with left shoulder at Tuesdays highs at 1326, head at yesterdays 1331 high, right shoulder forming here on this morning push higher, and neckline right at that 1315 support level, would sell S&P short here on a push just above 1325 for possible break below 1315 neckline later today or tomorrow
9:14AM EST
US futures reversing overnight losses to trade higher on better than expected earnings on JPM, better than expected Retail Sales (.1% vs. expectations of -.2%), and slight drop in initial jobless claims to 405K vs. expectations of 410K and down from last week's 427K...dollar and Treasuries trading lower on Moody's placing US credit rating under review ahead of August 2nd debt ceiling deadline as talks continue to stall (Obama rumored to have walked out of talks last night), and commodities trading mixed with precious metals being in prime focus as Gold pushes to yet another new high while Silver closes in on $40...in terms of trading today, expect equity weakness will persist as past two sessions inability to hold onto gains even in the face of potential QE3 dictates there are significant fund sellers liquidating positions into strength here at these levels, and we believe we'll see continuation of sell pressure today with a likely break below that 1315 support level dictated by May closing lows, Gold and Silver however should continue to shine near-term as fund/retail chase continues
US futures reversing overnight losses to trade higher on better than expected earnings on JPM, better than expected Retail Sales (.1% vs. expectations of -.2%), and slight drop in initial jobless claims to 405K vs. expectations of 410K and down from last week's 427K...dollar and Treasuries trading lower on Moody's placing US credit rating under review ahead of August 2nd debt ceiling deadline as talks continue to stall (Obama rumored to have walked out of talks last night), and commodities trading mixed with precious metals being in prime focus as Gold pushes to yet another new high while Silver closes in on $40...in terms of trading today, expect equity weakness will persist as past two sessions inability to hold onto gains even in the face of potential QE3 dictates there are significant fund sellers liquidating positions into strength here at these levels, and we believe we'll see continuation of sell pressure today with a likely break below that 1315 support level dictated by May closing lows, Gold and Silver however should continue to shine near-term as fund/retail chase continues
July 13, 2011
3:30PM EST
Equities fading fast here during final hour as sell programs come in as expected, inability of equities to hold onto gains for 2 sessions now on the back of possible QE3 really negating the whole "equities higher on QE" trade which is what we believed we'd see as markets now more focused on why US has been unable to produce any organic growth thus far and are likely becoming convinced that yet another round of QE will do little to catalyze growth and most likely do nothing more than fan the flames of inflation....in any case, big reversal here on charts looking very bearish for tomorrow when we'll get another round of initial jobless claims which will be watched very closely as labor market remains a prime focus for the Fed...as noted yesterday we believe economic data will now carry much more weight as QE3 is now being debated within the Fed, and any weakness in economic data will likely have the most pronounced effect on those precious metals which are the most correlated asset to changes in monetary policy...we'll also be getting retail sales numbers and PPI and expect any weakness in retail sales will be an additional factor in raising prospect for QE....expect that Fed is not extremely worried about US economic growth and will look to garner support for QE3 (their last bullet) by releasing much weaker than expected economic data near-term (ie data will be manipulated downward)...reiterate best trade right is long precious metals, and expect any pullbacks on short-term overbought technicals will find solid bid interest near-term
Equities fading fast here during final hour as sell programs come in as expected, inability of equities to hold onto gains for 2 sessions now on the back of possible QE3 really negating the whole "equities higher on QE" trade which is what we believed we'd see as markets now more focused on why US has been unable to produce any organic growth thus far and are likely becoming convinced that yet another round of QE will do little to catalyze growth and most likely do nothing more than fan the flames of inflation....in any case, big reversal here on charts looking very bearish for tomorrow when we'll get another round of initial jobless claims which will be watched very closely as labor market remains a prime focus for the Fed...as noted yesterday we believe economic data will now carry much more weight as QE3 is now being debated within the Fed, and any weakness in economic data will likely have the most pronounced effect on those precious metals which are the most correlated asset to changes in monetary policy...we'll also be getting retail sales numbers and PPI and expect any weakness in retail sales will be an additional factor in raising prospect for QE....expect that Fed is not extremely worried about US economic growth and will look to garner support for QE3 (their last bullet) by releasing much weaker than expected economic data near-term (ie data will be manipulated downward)...reiterate best trade right is long precious metals, and expect any pullbacks on short-term overbought technicals will find solid bid interest near-term
2:38PM EST
Equities starting to fade a bit as we approach final hour, remember we are nowhere near out of the woods yet with respect to Eurozone so funds can not go full throttle on risk just yet even with prospect of QE3, they are realistically likely still biased to reducing on pops due to plethora of headline risks on both the Eurozone front as well as US debt ceiling front...in any case, as we've been noting all 3 of these issues producing massive tailwind for precious metals and we continue believe this is the best place to be positioned long right and for those willing to take on additional risk a short position on the S&P until August 2nd is not a bad bet as Eurozone issues and US debt ceiling issue will surely act as dual headwinds until at least this August 2nd date when US debt ceiling debate will culminate in some fashion and one headwind may be removed...in terms of dollar, expect the greenback to be rather volatile over these next two weeks as its dealing with tailwind of an structurally unstable Euro while trying to price in yet another round of money printing....both issues are very strong monetary issues which will likely have the dollar swinging all over the place near-term so want to remain neutral on it for the time being, however don't expect dollar moves will have a tremendous effect on precious metals as Gold has proven over the past week or so that it can indeed rally in the face of dollar strength most likely due to strong buying out of Europe due to concerns over viability of Euro...in terms of Oil, technicals continue to indicate underlying weakness here due to continued uncertainty with respect to global growth, and we continue to believe cyclical commodities will remain in a downtrend for the time being even with the prospect of QE3 as the "long all commodities on QE" trade has likely already been exhausted and global growth issues are so strong right now that this long cyclical commodities trade will likely attract very few buyers...lastly with respect to Treasuries, expect this area to be volatile due to US debt ceiling issue which has buyers at bay coupled now with prospect of QE3 and uncertainty in terms of 2nd half growth estimates, so expect Treasuries will also be swinging all over the place similar to dollar at least until August 2nd when US debt issue will culminate in some fashion
Equities starting to fade a bit as we approach final hour, remember we are nowhere near out of the woods yet with respect to Eurozone so funds can not go full throttle on risk just yet even with prospect of QE3, they are realistically likely still biased to reducing on pops due to plethora of headline risks on both the Eurozone front as well as US debt ceiling front...in any case, as we've been noting all 3 of these issues producing massive tailwind for precious metals and we continue believe this is the best place to be positioned long right and for those willing to take on additional risk a short position on the S&P until August 2nd is not a bad bet as Eurozone issues and US debt ceiling issue will surely act as dual headwinds until at least this August 2nd date when US debt ceiling debate will culminate in some fashion and one headwind may be removed...in terms of dollar, expect the greenback to be rather volatile over these next two weeks as its dealing with tailwind of an structurally unstable Euro while trying to price in yet another round of money printing....both issues are very strong monetary issues which will likely have the dollar swinging all over the place near-term so want to remain neutral on it for the time being, however don't expect dollar moves will have a tremendous effect on precious metals as Gold has proven over the past week or so that it can indeed rally in the face of dollar strength most likely due to strong buying out of Europe due to concerns over viability of Euro...in terms of Oil, technicals continue to indicate underlying weakness here due to continued uncertainty with respect to global growth, and we continue to believe cyclical commodities will remain in a downtrend for the time being even with the prospect of QE3 as the "long all commodities on QE" trade has likely already been exhausted and global growth issues are so strong right now that this long cyclical commodities trade will likely attract very few buyers...lastly with respect to Treasuries, expect this area to be volatile due to US debt ceiling issue which has buyers at bay coupled now with prospect of QE3 and uncertainty in terms of 2nd half growth estimates, so expect Treasuries will also be swinging all over the place similar to dollar at least until August 2nd when US debt issue will culminate in some fashion
1:04PM EST
Fitch downgrading Greece down to CCC, market already has Greece default mostly priced in so no major reaction here...equities feel like they're stalling a bit here just under the 1330 level, note volume remains rather low here midday, expect we may see a repeat of yesterday with sell programs using strength to unload into the close...note yesterday, when equities tried to surge on first sign of QE3, funds unloaded straight into the volume surge closing equities at low of the day, so definitely some sellers our there likely due to continued high levels of headline risk on a global basis...note however gold and silver remain very firmly bid here with active short covering in Silver which is precisely what we expected, believe we still have several days of both fund and retail chasing in precious metals here so not ready to get off the boat just yet
Fitch downgrading Greece down to CCC, market already has Greece default mostly priced in so no major reaction here...equities feel like they're stalling a bit here just under the 1330 level, note volume remains rather low here midday, expect we may see a repeat of yesterday with sell programs using strength to unload into the close...note yesterday, when equities tried to surge on first sign of QE3, funds unloaded straight into the volume surge closing equities at low of the day, so definitely some sellers our there likely due to continued high levels of headline risk on a global basis...note however gold and silver remain very firmly bid here with active short covering in Silver which is precisely what we expected, believe we still have several days of both fund and retail chasing in precious metals here so not ready to get off the boat just yet
10:22AM EST
Link to full Bernanke testimony
Key paragraphs alluding to QE3:
Once the temporary shocks that have been holding down economic activity pass, we expect to again see the effects of policy accommodation reflected in stronger economic activity and job creation. However, given the range of uncertainties about the strength of the recovery and prospects for inflation over the medium term, the Federal Reserve remains prepared to respond should economic developments indicate that an adjustment in the stance of monetary policy would be appropriate.
On the one hand, the possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support. Even with the federal funds rate close to zero, we have a number of ways in which we could act to ease financial conditions further. One option would be to provide more explicit guidance about the period over which the federal funds rate and the balance sheet would remain at their current levels. Another approach would be to initiate more securities purchases or to increase the average maturity of our holdings. The Federal Reserve could also reduce the 25 basis point rate of interest it pays to banks on their reserves, thereby putting downward pressure on short-term rates more generally. Of course, our experience with these policies remains relatively limited, and employing them would entail potential risks and costs. However, prudent planning requires that we evaluate the efficacy of these and other potential alternatives for deploying additional stimulus if conditions warrant.
Link to full Bernanke testimony
Key paragraphs alluding to QE3:
Once the temporary shocks that have been holding down economic activity pass, we expect to again see the effects of policy accommodation reflected in stronger economic activity and job creation. However, given the range of uncertainties about the strength of the recovery and prospects for inflation over the medium term, the Federal Reserve remains prepared to respond should economic developments indicate that an adjustment in the stance of monetary policy would be appropriate.
On the one hand, the possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support. Even with the federal funds rate close to zero, we have a number of ways in which we could act to ease financial conditions further. One option would be to provide more explicit guidance about the period over which the federal funds rate and the balance sheet would remain at their current levels. Another approach would be to initiate more securities purchases or to increase the average maturity of our holdings. The Federal Reserve could also reduce the 25 basis point rate of interest it pays to banks on their reserves, thereby putting downward pressure on short-term rates more generally. Of course, our experience with these policies remains relatively limited, and employing them would entail potential risks and costs. However, prudent planning requires that we evaluate the efficacy of these and other potential alternatives for deploying additional stimulus if conditions warrant.
10:18AM EST
Market clearly focused on Bernanke's statement of "Fed prepared to act if economy worsens" seeing it as a clear sign of possible QE3 even though he also says stimulus might not be needed....note yesterday however when Fed alluded to QE3 for the first time in its FOMC minutes equities were unable to hold gains, here they're rallying yet on very light volume, would continue to be wary of equities with a strong bias toward precious metals at this time as fundmantal and technical backdrop of gold and silver much firmer than equities at the moment
Market clearly focused on Bernanke's statement of "Fed prepared to act if economy worsens" seeing it as a clear sign of possible QE3 even though he also says stimulus might not be needed....note yesterday however when Fed alluded to QE3 for the first time in its FOMC minutes equities were unable to hold gains, here they're rallying yet on very light volume, would continue to be wary of equities with a strong bias toward precious metals at this time as fundmantal and technical backdrop of gold and silver much firmer than equities at the moment
10:07AM EST
Bernanke testimony begins with Fed Chairman saying "pace of recovery will pick up in coming quarters" which is lifting futures a bit here, Gold and Silver also holding onto all gains...also news coming out of Mumbai of two major explosions, early reports saying 4 dead but looks like it could be a lot worse as it appears they were both in very crowded locations which may be partially why Gold/Silver remain firm here
Bernanke testimony begins with Fed Chairman saying "pace of recovery will pick up in coming quarters" which is lifting futures a bit here, Gold and Silver also holding onto all gains...also news coming out of Mumbai of two major explosions, early reports saying 4 dead but looks like it could be a lot worse as it appears they were both in very crowded locations which may be partially why Gold/Silver remain firm here
9:37AM EST
Silver starting to squeeze hard as predicted yesterday (see 3:15PM entry) as retail and fund chase commences on Gold breakout to new highs...SLV breakout over $36 neckline of perfect inverted head and shoulders providing perfect technical backdrop for higher prices near-term...reiterate Silver headed to $40-42, Gold to $1625-1650 by next week on heavy fund/retail demand
Silver starting to squeeze hard as predicted yesterday (see 3:15PM entry) as retail and fund chase commences on Gold breakout to new highs...SLV breakout over $36 neckline of perfect inverted head and shoulders providing perfect technical backdrop for higher prices near-term...reiterate Silver headed to $40-42, Gold to $1625-1650 by next week on heavy fund/retail demand
9:14AM EST
US futures higher ahead of the open on the back of better than expected China GDP (9.5% vs. expectations of 9.3%) which slightly allayed global growth fears however Eurozone sovereign debt issues still linger following Moody's downgrade of Ireland to junk status yesterday...dollar pulling back on technical rebound in Euro as well as FOMC minutes which showed Fed discussing possibility of QE3, Treasuries slightly lower on increased risk appetite on China data, and commodities mostly higher with precious metals leading the way on Gold breakout to new all-time highs...in terms of trading today, pre-market volumes very low here so expect we may see a light volume push higher throughout the session with weakness heading into the close as Eurozone contagion fears still a major concern for markets, also Bernanke Humphrey-Hawkins testimony today on monetary policy may spook markets a bit as he paints a bearish outlook for the US economy and prepares markets for possible need for another round of stimulus...Bernanke commentary likely to add further fuel to precious metals today, as noted over the past week believe long Gold/Silver likely the best trade in markets at this time as perfect storm of fiscal and monetary concerns providing massive tailwind for both metals
US futures higher ahead of the open on the back of better than expected China GDP (9.5% vs. expectations of 9.3%) which slightly allayed global growth fears however Eurozone sovereign debt issues still linger following Moody's downgrade of Ireland to junk status yesterday...dollar pulling back on technical rebound in Euro as well as FOMC minutes which showed Fed discussing possibility of QE3, Treasuries slightly lower on increased risk appetite on China data, and commodities mostly higher with precious metals leading the way on Gold breakout to new all-time highs...in terms of trading today, pre-market volumes very low here so expect we may see a light volume push higher throughout the session with weakness heading into the close as Eurozone contagion fears still a major concern for markets, also Bernanke Humphrey-Hawkins testimony today on monetary policy may spook markets a bit as he paints a bearish outlook for the US economy and prepares markets for possible need for another round of stimulus...Bernanke commentary likely to add further fuel to precious metals today, as noted over the past week believe long Gold/Silver likely the best trade in markets at this time as perfect storm of fiscal and monetary concerns providing massive tailwind for both metals
July 12, 2011
3:30PM EST
Moodys downgrades Ireland to Ba1, Outlook Negative...equities taking another hit here as Euro falls yet again, Gold however pushing right back up toward those intraday highs....nearly all headlines coming out of Eurozone, on US debt ceiling, and all economic data likely to benefit these precious metals near-term = Perfect Storm
Moodys downgrades Ireland to Ba1, Outlook Negative...equities taking another hit here as Euro falls yet again, Gold however pushing right back up toward those intraday highs....nearly all headlines coming out of Eurozone, on US debt ceiling, and all economic data likely to benefit these precious metals near-term = Perfect Storm
3:15PM EST
Equities continue to fade here as we head into the close as we noted equities would likely get spooked a bit over Fed commentary that economic activity is weak enough to warrant yet another round of stimulus...again, big beneficiary will be Gold and Silver as QE3 now a major tailwind in addition to major concern over Eurozone sovereign debt, European banks, uncertainty over US debt ceiling, and bullish technicals, all of which are creating the absolute perfect storm for precious metals here...important to note, now that Fed has openly discussed the possibility of QE3, each and every piece of weaker than expected economic data from here on out will raise the probability of QE3, and hence expect to see much stronger reactions in Gold and Silver on economic data releases...in terms of upping our exposure to precious metals, we just went long August 36 SLV calls here in $1.30s as we believe Gold breakout to new highs will produce a major short squeeze in silver here near-term as funds and especially retailers scramble to regain exposure to precious metals, and will likely jump into this higher beta metal just as they did several months ago...will we see new highs in Silver? doubtful, however we believe we'll see another move over $40 near-term and we'll reassess strength of momentum once we get there
Equities continue to fade here as we head into the close as we noted equities would likely get spooked a bit over Fed commentary that economic activity is weak enough to warrant yet another round of stimulus...again, big beneficiary will be Gold and Silver as QE3 now a major tailwind in addition to major concern over Eurozone sovereign debt, European banks, uncertainty over US debt ceiling, and bullish technicals, all of which are creating the absolute perfect storm for precious metals here...important to note, now that Fed has openly discussed the possibility of QE3, each and every piece of weaker than expected economic data from here on out will raise the probability of QE3, and hence expect to see much stronger reactions in Gold and Silver on economic data releases...in terms of upping our exposure to precious metals, we just went long August 36 SLV calls here in $1.30s as we believe Gold breakout to new highs will produce a major short squeeze in silver here near-term as funds and especially retailers scramble to regain exposure to precious metals, and will likely jump into this higher beta metal just as they did several months ago...will we see new highs in Silver? doubtful, however we believe we'll see another move over $40 near-term and we'll reassess strength of momentum once we get there
2:36PM EST
Note equities coming off a bit here, equity markets not sure what to do with big contagion risk in Eurozone, US debt ceiling uncertainty, and discussion of QE3....big clear answer however is precious metals as they benefit from all 3 scenarios which is essentially creating a perfect storm for precious metals right now, watch for huge money to flow in here over the next week or so...reiterate Gold target of $1625-1650, Silver to $40-42 sometime over the next week or so
Note equities coming off a bit here, equity markets not sure what to do with big contagion risk in Eurozone, US debt ceiling uncertainty, and discussion of QE3....big clear answer however is precious metals as they benefit from all 3 scenarios which is essentially creating a perfect storm for precious metals right now, watch for huge money to flow in here over the next week or so...reiterate Gold target of $1625-1650, Silver to $40-42 sometime over the next week or so
2:20PM EST
Closed out July 21 UUP calls here in .60s from .43 entry for decent gain, dollar should see weakness here on discussion of QE3 however weakness may be somewhat limited given more extreme structural weakness in Eurozone which should keep sell pressure on Euro
Closed out July 21 UUP calls here in .60s from .43 entry for decent gain, dollar should see weakness here on discussion of QE3 however weakness may be somewhat limited given more extreme structural weakness in Eurozone which should keep sell pressure on Euro
2:16PM EST
Key paragraph from FOMC minutes discussing possibility of QE3, best trade right now is long precious metals:
"The information received over the intermeeting period indicated that the economic recovery was continuing at a moderate pace, though somewhat more slowly than the Committee had expected, and that the labor market was weaker than anticipated. Inflation had increased in recent months as a result of higher prices for some commodities, as well as supply chain disruptions related to the tragic events in Japan. Nonetheless, members saw the pace of the economic expansion as picking up over the coming quarters and the unemployment rate resuming its gradual decline toward levels consistent with the Committee's dual mandate. Moreover, with longer-term inflation expectations stable, members expected that inflation would subside to levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate. However, many members saw the outlook for both employment and inflation as unusually uncertain. Against this backdrop, members agreed that it was appropriate to maintain the Committee's current policy stance and accumulate further information regarding the outlook for growth and inflation before deciding on the next policy step. On the one hand, a few members noted that, depending on how economic conditions evolve, the Committee might have to consider providing additional monetary policy stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run."
Key paragraph from FOMC minutes discussing possibility of QE3, best trade right now is long precious metals:
"The information received over the intermeeting period indicated that the economic recovery was continuing at a moderate pace, though somewhat more slowly than the Committee had expected, and that the labor market was weaker than anticipated. Inflation had increased in recent months as a result of higher prices for some commodities, as well as supply chain disruptions related to the tragic events in Japan. Nonetheless, members saw the pace of the economic expansion as picking up over the coming quarters and the unemployment rate resuming its gradual decline toward levels consistent with the Committee's dual mandate. Moreover, with longer-term inflation expectations stable, members expected that inflation would subside to levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate. However, many members saw the outlook for both employment and inflation as unusually uncertain. Against this backdrop, members agreed that it was appropriate to maintain the Committee's current policy stance and accumulate further information regarding the outlook for growth and inflation before deciding on the next policy step. On the one hand, a few members noted that, depending on how economic conditions evolve, the Committee might have to consider providing additional monetary policy stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run."
2:11PM EST
Putting a target of $1625-1650 on Gold next week, Silver $40-42 as this discussion of QE3 in FOMC minutes will produce a major retail as well as fund chase in precious metals again here near-term which will force all previous metals shorts to cover
Putting a target of $1625-1650 on Gold next week, Silver $40-42 as this discussion of QE3 in FOMC minutes will produce a major retail as well as fund chase in precious metals again here near-term which will force all previous metals shorts to cover
2:03PM EST
FOMC Minutes out just out, big focal point for market is Fed's discussion over possibility of QE3 which we had not seen before (now we know why Gold took off 30 minutes prior to release, clear leak)...equities seeing a small pop, however precious metals will be biggest beneficiary as equities may in fact get spooked by the fact that QE3 is needed due to such slow growth, Gold however simply reacting to possibility of further dollar printing (no real cyclical correlation)
FOMC Minutes out just out, big focal point for market is Fed's discussion over possibility of QE3 which we had not seen before (now we know why Gold took off 30 minutes prior to release, clear leak)...equities seeing a small pop, however precious metals will be biggest beneficiary as equities may in fact get spooked by the fact that QE3 is needed due to such slow growth, Gold however simply reacting to possibility of further dollar printing (no real cyclical correlation)
1:32PM EST
Gold just went from red to green again here with huge buyer showing up to break it out past those June highs at $152 on GLD, keep a close eye on SLV as its about to go green here as well in my opinion...past 2 days shakeout with Gold maintaining its bullish bias throughout this weakness signaling precious metals about to take off big in my opinion...not sure if there's actual news out there as dollar and equities seeing a slight bit of weakness but nothing major...Gold move likely due to someone taking note of major bullish reversals over past 2 sessions
Gold just went from red to green again here with huge buyer showing up to break it out past those June highs at $152 on GLD, keep a close eye on SLV as its about to go green here as well in my opinion...past 2 days shakeout with Gold maintaining its bullish bias throughout this weakness signaling precious metals about to take off big in my opinion...not sure if there's actual news out there as dollar and equities seeing a slight bit of weakness but nothing major...Gold move likely due to someone taking note of major bullish reversals over past 2 sessions
11:34AM EST
Choppy rangebound trade continues here, feels like we might catch a technical bounce here off those May closing lows at 1315 and confluence of 20 and 50-day EMA support at 1312 and 1314 respectively...overall though, buy interest remains rather weak here so not sure how strong this technical bounce will be, but its worth noting as market right now is in wait and see mode with respect to this Eurozone debt/banking issue....also note Gold and Silver creeping higher slowly, believe this past 2 days shakeout is a positive for precious metals as we've now shaken out some weak hands and are ready for another strong move higher here near-term....also note how well Gold has held up amid very strong dollar gains, should we see even a marginal dollar pullback expect Gold to take off, Gold and the miners definitely a sector to watch near-term...in the meantime, tough to make a big call here with market in such a sensitive position with respect to headlines, if had to venture a guess though believe we may catch a small technical bounce here off 1315 however it will be quickly followed by another downleg to retest 1300 likely on wednesay or thursday
Choppy rangebound trade continues here, feels like we might catch a technical bounce here off those May closing lows at 1315 and confluence of 20 and 50-day EMA support at 1312 and 1314 respectively...overall though, buy interest remains rather weak here so not sure how strong this technical bounce will be, but its worth noting as market right now is in wait and see mode with respect to this Eurozone debt/banking issue....also note Gold and Silver creeping higher slowly, believe this past 2 days shakeout is a positive for precious metals as we've now shaken out some weak hands and are ready for another strong move higher here near-term....also note how well Gold has held up amid very strong dollar gains, should we see even a marginal dollar pullback expect Gold to take off, Gold and the miners definitely a sector to watch near-term...in the meantime, tough to make a big call here with market in such a sensitive position with respect to headlines, if had to venture a guess though believe we may catch a small technical bounce here off 1315 however it will be quickly followed by another downleg to retest 1300 likely on wednesay or thursday
10:08AM EST
Very choppy here at the open with S&P hovering around this 1315 level we highlighted, high-beta tech however seeing increased sell pressure as funds starting to get more active in reducing risk levels, SMH (semiconductors) also down nearly 3% on warning out of MCHP (stock down over 12%) which is weighing on entire sector...overall feels like its gonna be one of those very choppy trading sessions with wild moves in both directions which is primarily due to the enormous amounts of uncertainty out there...market will likely remain extremely sensitive to headlines and even rumors here near-term so would keep it small on an intraday basis especially as headlines continue to surface out of EU here and market could move rapidly in either direction here
Very choppy here at the open with S&P hovering around this 1315 level we highlighted, high-beta tech however seeing increased sell pressure as funds starting to get more active in reducing risk levels, SMH (semiconductors) also down nearly 3% on warning out of MCHP (stock down over 12%) which is weighing on entire sector...overall feels like its gonna be one of those very choppy trading sessions with wild moves in both directions which is primarily due to the enormous amounts of uncertainty out there...market will likely remain extremely sensitive to headlines and even rumors here near-term so would keep it small on an intraday basis especially as headlines continue to surface out of EU here and market could move rapidly in either direction here
9:12AM EST
US futures mixed ahead of the open as markets remained extremely nervous over contagion throughout Eurozone due to rumors that 6 Spanish banks have failed European stress tests, China's Hang Seng also closed down 3% last night while reports surfacing that CSCO may cut as many as 10,000 jobs to revive growth...dollar slightly higher on further Euro weakness, Treasuries higher on safe haven bid, and commodities mostly lower on continued dollar strenth, risk aversion, and concerns over global growth...in terms of trading today, while futures well off their overnight lows ahead of the open, expect to see heavy weakness resurrect itself throughout the trading session as uncertainty remains extremely high at the moment producing very weak buy interest...while S&P looks set to open right at our first target of 1315, as noted yesterday expect we'll see a retest of 1300 on the S&P here near-term
US futures mixed ahead of the open as markets remained extremely nervous over contagion throughout Eurozone due to rumors that 6 Spanish banks have failed European stress tests, China's Hang Seng also closed down 3% last night while reports surfacing that CSCO may cut as many as 10,000 jobs to revive growth...dollar slightly higher on further Euro weakness, Treasuries higher on safe haven bid, and commodities mostly lower on continued dollar strenth, risk aversion, and concerns over global growth...in terms of trading today, while futures well off their overnight lows ahead of the open, expect to see heavy weakness resurrect itself throughout the trading session as uncertainty remains extremely high at the moment producing very weak buy interest...while S&P looks set to open right at our first target of 1315, as noted yesterday expect we'll see a retest of 1300 on the S&P here near-term
July 11, 2011
3:29PM EST
Still no real volume surge here as we head into the close, most funds probably have stops in at 1300 so likely won't see any major programs kick in until break below that level...AA earnings kick off earnings season tonight, however as we've noted several times AA is never a market mover, and it won't be tonight as the implications of their earnings pale in comparison to the major macro issues which surround global equities at the moment...actually in terms of earnings this week (with the likes of JPM and GOOG reporting) expect any pops will be sold into until this Eurozone mess shows any real sign of improvement (which looks unlikely right now)...heading into tomorrow, main focal point of course will be any news coming out of EU tonight as leaders continue to discuss possible aid to Italy in Brussels...continued weakness in Euro and dollar closing near its highs says no real headway has been made, and as noted we don't see any quick fix to this issue anytime soon with situation likely to get much worse before it gets better...also note Gold heading right back toward those highs here as we head into the close signaling risk to the financial system remains high here...as noted last week, would continue to use Gold/Silver and the dollar as your main proxies for stress within the financial system near-term
Still no real volume surge here as we head into the close, most funds probably have stops in at 1300 so likely won't see any major programs kick in until break below that level...AA earnings kick off earnings season tonight, however as we've noted several times AA is never a market mover, and it won't be tonight as the implications of their earnings pale in comparison to the major macro issues which surround global equities at the moment...actually in terms of earnings this week (with the likes of JPM and GOOG reporting) expect any pops will be sold into until this Eurozone mess shows any real sign of improvement (which looks unlikely right now)...heading into tomorrow, main focal point of course will be any news coming out of EU tonight as leaders continue to discuss possible aid to Italy in Brussels...continued weakness in Euro and dollar closing near its highs says no real headway has been made, and as noted we don't see any quick fix to this issue anytime soon with situation likely to get much worse before it gets better...also note Gold heading right back toward those highs here as we head into the close signaling risk to the financial system remains high here...as noted last week, would continue to use Gold/Silver and the dollar as your main proxies for stress within the financial system near-term
2:30PM EST
No buyers anywhere all day, feels like a bunch of sell programs should come in during final hour which should hit equities pretty hard with lack of bid out there (note Nasdaq already down 60, could end down +70 by the close)...lack of buy interest clearly stemming from the fact that there is no real concrete or quick resolution to this Eurozone mess outside of just letting it play out, and given the relentless resistance from EU officials to let this happen, it appears that consequences of this big Eurozone debt unwinding are going to be extremely severe...also note we're just focused on Italy now but we still have Portgual, Ireland, and the biggie Spain to worry about and on top of that we still need to quantify the effect of all this with on both European and even American banks...just a ton of uncertainty out there in terms of how bad this is going to be, only thing market knows is that things will get worse on some level...as noted first target remains 1315 near-term, but given severity of issue out there now and how hard we tanked here on the first trading day of the week with big Euro stress test results still looming on friday and no real headway with respect to US debt ceiling, feels we will more realistically be seeing a test of 1300 near-term
No buyers anywhere all day, feels like a bunch of sell programs should come in during final hour which should hit equities pretty hard with lack of bid out there (note Nasdaq already down 60, could end down +70 by the close)...lack of buy interest clearly stemming from the fact that there is no real concrete or quick resolution to this Eurozone mess outside of just letting it play out, and given the relentless resistance from EU officials to let this happen, it appears that consequences of this big Eurozone debt unwinding are going to be extremely severe...also note we're just focused on Italy now but we still have Portgual, Ireland, and the biggie Spain to worry about and on top of that we still need to quantify the effect of all this with on both European and even American banks...just a ton of uncertainty out there in terms of how bad this is going to be, only thing market knows is that things will get worse on some level...as noted first target remains 1315 near-term, but given severity of issue out there now and how hard we tanked here on the first trading day of the week with big Euro stress test results still looming on friday and no real headway with respect to US debt ceiling, feels we will more realistically be seeing a test of 1300 near-term
1:07PM EST
Volume has slowed down here midday, actually overall volume not terribly heavy given the plethora of macro concerns out there, market looks a bit confused here doesn't really know what to do with all this information...most funds also have a big cushion in most long positions right now given recent 2 week rally so there's no real fear to unload just yet...big focal point for all fund managers right now is of course Italy and most programs now highly correlated to Euro moves now as Euro is clearly the proxy for severity of European sovereign debt contagion...most still shocked that Euro is holding the $1.40 level with all of these European contagion concerns, however todays 1.5% decline really has everyones attention as big Euro unwind (or possible crash) looks like its gaining momentum...as we noted over the past several weeks, there is no easy solution to Europe's sovereign debt crisis right now, ECB simply can not bailout every single ailing nation, and should every debt-ridden country enact austerity measures to entice aid we'll be looking at a major recessionary environment overseas which would be horrible for the global economy...other scenario is to simply let countries default however there is just far too much fear of contagion right now to allow that to happen...so either way we're looking at a negative outcomes in Europe for the time being...believe what will end up happening is something similar to what we saw with the US Financial crisis: markets will inevitably let the weakest of the PIIGS fail, most likely Greece, Portugal, and maybe even Italy, and once they default markets will move to support the debt of larger (more critical) countries like Spain and Germany so that the contagion is somewhat limited...so like 2009 they'll let the Lehams and the Bears fail, and then move in to support the critical entities like the JPMs and the GSs when the contagion and the fear starts to spread...we may even see a complete restructuring of the Eurozone (ie kick Greece and Portugal out of the EU and have them float their own currencies) in order to create more firm footing under the Euro over the long-term
Volume has slowed down here midday, actually overall volume not terribly heavy given the plethora of macro concerns out there, market looks a bit confused here doesn't really know what to do with all this information...most funds also have a big cushion in most long positions right now given recent 2 week rally so there's no real fear to unload just yet...big focal point for all fund managers right now is of course Italy and most programs now highly correlated to Euro moves now as Euro is clearly the proxy for severity of European sovereign debt contagion...most still shocked that Euro is holding the $1.40 level with all of these European contagion concerns, however todays 1.5% decline really has everyones attention as big Euro unwind (or possible crash) looks like its gaining momentum...as we noted over the past several weeks, there is no easy solution to Europe's sovereign debt crisis right now, ECB simply can not bailout every single ailing nation, and should every debt-ridden country enact austerity measures to entice aid we'll be looking at a major recessionary environment overseas which would be horrible for the global economy...other scenario is to simply let countries default however there is just far too much fear of contagion right now to allow that to happen...so either way we're looking at a negative outcomes in Europe for the time being...believe what will end up happening is something similar to what we saw with the US Financial crisis: markets will inevitably let the weakest of the PIIGS fail, most likely Greece, Portugal, and maybe even Italy, and once they default markets will move to support the debt of larger (more critical) countries like Spain and Germany so that the contagion is somewhat limited...so like 2009 they'll let the Lehams and the Bears fail, and then move in to support the critical entities like the JPMs and the GSs when the contagion and the fear starts to spread...we may even see a complete restructuring of the Eurozone (ie kick Greece and Portugal out of the EU and have them float their own currencies) in order to create more firm footing under the Euro over the long-term
11:02AM EST
Everything getting liquidated here as Euro continues to fall apart and dollar pushes to new intraday highs, precious metals also getting caught in the downdraft as things getting a bit panicky here and dollar strength has some technical sellers coming in on slightly overbought conditions...however dont believe this precious metals sell-off is anything more than a breather amid an ongoing uptrend...note SLV also just filled Tuesday July 5th gap at $34.63, Gold filled this mornings gap higher and now bouncing...note concerns over viability over fiat currencies like the Euro are precisely the time you want to own precious metals...also note S&P now just 5 points away from that first target at 1315 (May closing lows)
Everything getting liquidated here as Euro continues to fall apart and dollar pushes to new intraday highs, precious metals also getting caught in the downdraft as things getting a bit panicky here and dollar strength has some technical sellers coming in on slightly overbought conditions...however dont believe this precious metals sell-off is anything more than a breather amid an ongoing uptrend...note SLV also just filled Tuesday July 5th gap at $34.63, Gold filled this mornings gap higher and now bouncing...note concerns over viability over fiat currencies like the Euro are precisely the time you want to own precious metals...also note S&P now just 5 points away from that first target at 1315 (May closing lows)
9:56AM EST
Megacap tech still seeing some spotty interest with NFLX green and over $300, GOOG green, and AAPL down less than a dollar, however feels like buyers are definitely waning her with so many macro issues at the moment, so will likely be tough to produce another strong rally off a gap down today....overall continue to watch that dollar for signs of a reversal and note dollar has broken out of that ascending triangle a bit earlier than most expected here due to major Eurozone headlines today on possible partial default Greek debt as well as not enough capital to finance an Italy bailout which is what we expected based on strength in precious metals all last week...continue to believe best bet in market right now is long Gold and Silver with a more bullish bias toward Gold as it is just a $20 away from breaking to new highs here
Megacap tech still seeing some spotty interest with NFLX green and over $300, GOOG green, and AAPL down less than a dollar, however feels like buyers are definitely waning her with so many macro issues at the moment, so will likely be tough to produce another strong rally off a gap down today....overall continue to watch that dollar for signs of a reversal and note dollar has broken out of that ascending triangle a bit earlier than most expected here due to major Eurozone headlines today on possible partial default Greek debt as well as not enough capital to finance an Italy bailout which is what we expected based on strength in precious metals all last week...continue to believe best bet in market right now is long Gold and Silver with a more bullish bias toward Gold as it is just a $20 away from breaking to new highs here
9:17AM EST
US markets set to gap markedly lower on chatter that Greece may need to default on some of its bonds, concerns that the European rescue fund is not large enough to accommodate a bailout of Italy, and China CPI coming in higher than expected at 6.4% vs. expectations of 6.2%...dollar exploding higher by over 1% on Euro weakness stemming from from concerns over Italy and Greece, Treasuries higher on a safe haven bid, and commodities mostly lower on dollar strength and global growth concerns, Gold and Silver however bucking the trend to trade higher on a flight to safety and bullish technicals...in terms of trading today, expect European sovereign debt concerns to weigh heavily on markets especially with Euro collapse today confirming major structural weakness throughout the Eurozone, also 6-month head and shoulders we outlined on the S&P likely to produce technical sell pressure, first target on the downside remains those May closing lows at 1315 which looks viable here this week especially with US debt ceiling talks stalling and European stress test results looming (due out this Friday)
US markets set to gap markedly lower on chatter that Greece may need to default on some of its bonds, concerns that the European rescue fund is not large enough to accommodate a bailout of Italy, and China CPI coming in higher than expected at 6.4% vs. expectations of 6.2%...dollar exploding higher by over 1% on Euro weakness stemming from from concerns over Italy and Greece, Treasuries higher on a safe haven bid, and commodities mostly lower on dollar strength and global growth concerns, Gold and Silver however bucking the trend to trade higher on a flight to safety and bullish technicals...in terms of trading today, expect European sovereign debt concerns to weigh heavily on markets especially with Euro collapse today confirming major structural weakness throughout the Eurozone, also 6-month head and shoulders we outlined on the S&P likely to produce technical sell pressure, first target on the downside remains those May closing lows at 1315 which looks viable here this week especially with US debt ceiling talks stalling and European stress test results looming (due out this Friday)
July 8, 2011
3:28PM EST
Wild week coming to a close here with market holding up fairly well relative to absolutely horrendous jobs report...most traders and funds right now left with a sense of uncertainty in terms of how to position in this market especially at these levels...shorts fearful of getting run over again, while funds fearful of getting of the boat too early and missing a move to new highs...expect this low volume environment where no one does much of anything to persist for the next few sessions especially as economic data will remain light until FOMC minutes come out wednesday, followed by Retail Sales data, PPI Thursday, and CPI, Industrial Production, Michigan Sentiment on Friday...of course volume will only remain light if European sovereign debt issues remain swept under the rug which looks somewhat improbable here with Itallian CDSs, sell-off in Italian banks, and strength in gold/silver raising red flags...somethings definitely bubbling underneath the surface here and most have one eye constantly on Europe for breaking headlines...moreover, big focal point for next week will be those European stress test results which come out on Friday July 15th, expect to hear leaks of results over the next several sessions which is likely to produce a nice uptick in volatility next week...note big US debt ceiling issue is looming here as August 2nd deadline is just over 2 weeks away now and fear-mongering from Republicans looking to use this issue to cut taxes will certainly produce a jittery market especially in tandem with these intensifying concerns over Italy and its banking system...definitely feels like these next 2 weeks will be rather volatile and solely on these major macro concerns bias should be to the short side during second half of July...of course short trade has been a losing trade for the past 2 weeks but as noted we believe much of this rally has been driven by accumulated POMO capital from June used to negate the "no QE, equities hammered" thesis, and as noted we expect this capital will likely dwindle by mid-July here...near-term with equity positioning a bit uncertain due to fear of continued manipulation higher, best bet looks like long precious metals as sector has traded very well here this week and European sovereign debt concerns as well as US debt ceiling concerns like to produce inflows and an ultimate breakout in Gold to new highs here likely next week
Wild week coming to a close here with market holding up fairly well relative to absolutely horrendous jobs report...most traders and funds right now left with a sense of uncertainty in terms of how to position in this market especially at these levels...shorts fearful of getting run over again, while funds fearful of getting of the boat too early and missing a move to new highs...expect this low volume environment where no one does much of anything to persist for the next few sessions especially as economic data will remain light until FOMC minutes come out wednesday, followed by Retail Sales data, PPI Thursday, and CPI, Industrial Production, Michigan Sentiment on Friday...of course volume will only remain light if European sovereign debt issues remain swept under the rug which looks somewhat improbable here with Itallian CDSs, sell-off in Italian banks, and strength in gold/silver raising red flags...somethings definitely bubbling underneath the surface here and most have one eye constantly on Europe for breaking headlines...moreover, big focal point for next week will be those European stress test results which come out on Friday July 15th, expect to hear leaks of results over the next several sessions which is likely to produce a nice uptick in volatility next week...note big US debt ceiling issue is looming here as August 2nd deadline is just over 2 weeks away now and fear-mongering from Republicans looking to use this issue to cut taxes will certainly produce a jittery market especially in tandem with these intensifying concerns over Italy and its banking system...definitely feels like these next 2 weeks will be rather volatile and solely on these major macro concerns bias should be to the short side during second half of July...of course short trade has been a losing trade for the past 2 weeks but as noted we believe much of this rally has been driven by accumulated POMO capital from June used to negate the "no QE, equities hammered" thesis, and as noted we expect this capital will likely dwindle by mid-July here...near-term with equity positioning a bit uncertain due to fear of continued manipulation higher, best bet looks like long precious metals as sector has traded very well here this week and European sovereign debt concerns as well as US debt ceiling concerns like to produce inflows and an ultimate breakout in Gold to new highs here likely next week
2:25PM EST
Note major outperformance in precious metals all week regardless of equity and dollar moves which is signaling an ominous source of distress within the banking system...believe most buying coming out of Europe due to knowledge of wave of major sovereign debt/bank solvency headlines out of Italy, Spain, Ireland, Portugal...leak of next week's release of European Stress Test Results (friday July 15th) may be the primary driver here and likely to be the catalyst to send Gold to new highs near-term, with Silver likely testing if not breaking past the $40 level once again
Chart Of The Week
Note major outperformance in precious metals all week regardless of equity and dollar moves which is signaling an ominous source of distress within the banking system...believe most buying coming out of Europe due to knowledge of wave of major sovereign debt/bank solvency headlines out of Italy, Spain, Ireland, Portugal...leak of next week's release of European Stress Test Results (friday July 15th) may be the primary driver here and likely to be the catalyst to send Gold to new highs near-term, with Silver likely testing if not breaking past the $40 level once again
Chart Of The Week
1:14PM EST
Activity has slowed down here midday following early session sell pressure....not a lot of buy or sell interest out there right now, but one of those markets where you never know if they'll jolt the market higher into the close...right now it doesn't look like we'll see a rally, but that one-sided tape over the last 2 weeks has made it dangerous to make calls based on rational supply/demand so shying away from making any aggressive calls here...based on weak jobs report and concerns over those European stress tests and especially Italian banks which were hammered during todays European session, we should see some sell pressure into the close as longs will likely want to reduce exposure heading into next week...would keep an eye on precious metals though into the close, as both silver and gold have held up very well here amid equity weakness and more importantly dollar gains, so watch for possible squeeze in gold/silver heading into the close especially with sovereign debt/bank solvency issues in the forefront next week
Activity has slowed down here midday following early session sell pressure....not a lot of buy or sell interest out there right now, but one of those markets where you never know if they'll jolt the market higher into the close...right now it doesn't look like we'll see a rally, but that one-sided tape over the last 2 weeks has made it dangerous to make calls based on rational supply/demand so shying away from making any aggressive calls here...based on weak jobs report and concerns over those European stress tests and especially Italian banks which were hammered during todays European session, we should see some sell pressure into the close as longs will likely want to reduce exposure heading into next week...would keep an eye on precious metals though into the close, as both silver and gold have held up very well here amid equity weakness and more importantly dollar gains, so watch for possible squeeze in gold/silver heading into the close especially with sovereign debt/bank solvency issues in the forefront next week
11:13AM EST
S&P fading down to new intraday low here as Euro continues to fall on those European stress test concerns (stress test result will be released next friday July 15th) along with concerns over Italy being next country to teeter on the verge of default (Italian banks getting hammered today)...would continue to keep a close eye on those precious metals, as we noted both the dollar and gold/silver price action have continued to signal there's definitely still some stress in the financial system, and both likely to continue appreciating here near-term...in terms of downside targets here, tough to call with this market which could just turn higher at any moment for no reason, but barring any manipulation that 1315 level we outlined on wednesday (see July 6 - 2:48PM entry) looks like a solid target near-term and an area where buyers may resurrect themselves as 20 and 50-day EMAs trending right up toward that level and likely to provide additional short-term technical support
S&P fading down to new intraday low here as Euro continues to fall on those European stress test concerns (stress test result will be released next friday July 15th) along with concerns over Italy being next country to teeter on the verge of default (Italian banks getting hammered today)...would continue to keep a close eye on those precious metals, as we noted both the dollar and gold/silver price action have continued to signal there's definitely still some stress in the financial system, and both likely to continue appreciating here near-term...in terms of downside targets here, tough to call with this market which could just turn higher at any moment for no reason, but barring any manipulation that 1315 level we outlined on wednesday (see July 6 - 2:48PM entry) looks like a solid target near-term and an area where buyers may resurrect themselves as 20 and 50-day EMAs trending right up toward that level and likely to provide additional short-term technical support
10:08AM EST
Even though market is down this morning, pricing still looks very strange, note VIX only up a mere 2.5% on a horrendous jobs report...definitely feels like we're about to stall out on this push higher off the gap down at the open, but you never know with this market, conviction levels still very low
Even though market is down this morning, pricing still looks very strange, note VIX only up a mere 2.5% on a horrendous jobs report...definitely feels like we're about to stall out on this push higher off the gap down at the open, but you never know with this market, conviction levels still very low
9:10AM EST
US markets set to gap markedly lower on much weaker than expected employment report where economy added a meager 18K jobs vs. expectations of 80K and whisper numbers much higher especially after Thursdays blowout ADP report, unemployment report also ticked up to 9.2%...dollar however ticking higher on Euro weakness stemming from major concerns that many European banks throughout the Eurozone will not pass stress tests when results are announced next week, Treasuries also ticking higher on weak employment report as well as flight to safety out of Europe ahead of stress test results, cyclical commodities lower on growth concerns while precious metals bucking the tend to trade higher on flight to safety as well as uptick in probability of QE3 following such a weak jobs report...in terms of trading today, heavy volume coming in pre-market as funds jump ship after a stellar two week rally in equities, expect downside bias will persist throughout the day as supply/demand now heavily imbalanced to the downside, watch for precious metals to continue adding to gains throughout the day as Gold now a mere $30 from new all-time highs and equity profits likely to reallocate into gold/silver ahead on bullish technicals and safe haven ahead of next weeks European stress test results which in tandem with overbought technicals in equities could cause a significant slide in stocks
US markets set to gap markedly lower on much weaker than expected employment report where economy added a meager 18K jobs vs. expectations of 80K and whisper numbers much higher especially after Thursdays blowout ADP report, unemployment report also ticked up to 9.2%...dollar however ticking higher on Euro weakness stemming from major concerns that many European banks throughout the Eurozone will not pass stress tests when results are announced next week, Treasuries also ticking higher on weak employment report as well as flight to safety out of Europe ahead of stress test results, cyclical commodities lower on growth concerns while precious metals bucking the tend to trade higher on flight to safety as well as uptick in probability of QE3 following such a weak jobs report...in terms of trading today, heavy volume coming in pre-market as funds jump ship after a stellar two week rally in equities, expect downside bias will persist throughout the day as supply/demand now heavily imbalanced to the downside, watch for precious metals to continue adding to gains throughout the day as Gold now a mere $30 from new all-time highs and equity profits likely to reallocate into gold/silver ahead on bullish technicals and safe haven ahead of next weeks European stress test results which in tandem with overbought technicals in equities could cause a significant slide in stocks
July 7, 2011
3:37PM EST
Still not a damn seller in sight, with respect to tomorrows employment report would suspect ADP was used to sucker in longs (rather than shorts) ahead of nonfarm payrolls number, however in this market who knows what they're gonna do tomorrow, calling a top has been futile...volatility has been shot, market goes up hard everyday, no real sellers yet even as technicals approach overbought territory, we're at the point now where we just have to take things day by day, awaiting headlines and economic data...even longs at this point confused as a move like this is completely unpredictable...obviously at this point, long have their eyes on those 1370 highs on the S&P, important to note that a break above this level will have all shorts squeezed out so should at least start to see an uptick in volatility on break above 1370...in the meantime the hold your nose and buy rally continues here on very low volume, where it will top out exactly I dont think anyone knows just yet
Still not a damn seller in sight, with respect to tomorrows employment report would suspect ADP was used to sucker in longs (rather than shorts) ahead of nonfarm payrolls number, however in this market who knows what they're gonna do tomorrow, calling a top has been futile...volatility has been shot, market goes up hard everyday, no real sellers yet even as technicals approach overbought territory, we're at the point now where we just have to take things day by day, awaiting headlines and economic data...even longs at this point confused as a move like this is completely unpredictable...obviously at this point, long have their eyes on those 1370 highs on the S&P, important to note that a break above this level will have all shorts squeezed out so should at least start to see an uptick in volatility on break above 1370...in the meantime the hold your nose and buy rally continues here on very low volume, where it will top out exactly I dont think anyone knows just yet
1:53PM EST
Market keeps working its way higher on no volume, pretty sure we're gonna see someone unloading into the close today ahead of those employment numbers tomorrow as market likely now has good numbers fully priced in and supply/demand is becoming really imbalanced with a very crowded long side at this point, any loss of momentum will likely have a ton of longs looking to lock in some profits...look for someone to begin unloading here shortly especially now that technical break over that left shoulder resistance level at 1342 has now occurred and forced the last of the very short-term shorts to cover...most shorts likely had stops in at 1345, very few likely have them set all the way up at 1370 highs especially with market relentlessly pressing higher for 2 weeks straight here...in any case, still tough to call this market as it is paying very little attention to technicals of fundamentals at this point, market simply running on a huge jolt of June POMO most likely coupled with some fund and retail chasing...we'll see how like this irrational exuberance lasts, as noted we dont believe it will last for much longer and will likely top out sometime next week with another strong downleg during second half of July...we'll see though as this kind of market has all conviction levels near lows
Market keeps working its way higher on no volume, pretty sure we're gonna see someone unloading into the close today ahead of those employment numbers tomorrow as market likely now has good numbers fully priced in and supply/demand is becoming really imbalanced with a very crowded long side at this point, any loss of momentum will likely have a ton of longs looking to lock in some profits...look for someone to begin unloading here shortly especially now that technical break over that left shoulder resistance level at 1342 has now occurred and forced the last of the very short-term shorts to cover...most shorts likely had stops in at 1345, very few likely have them set all the way up at 1370 highs especially with market relentlessly pressing higher for 2 weeks straight here...in any case, still tough to call this market as it is paying very little attention to technicals of fundamentals at this point, market simply running on a huge jolt of June POMO most likely coupled with some fund and retail chasing...we'll see how like this irrational exuberance lasts, as noted we dont believe it will last for much longer and will likely top out sometime next week with another strong downleg during second half of July...we'll see though as this kind of market has all conviction levels near lows
11:51AM EST
SEC charges JPM With Fraudulent Bidding Practices, will pay $228.2M to settle, market shrugging it off for the most part...however technically you can start to feel the exhaustion here, not a lot of bargains left out there especially taking into account risk/reward at these technically overbought levels...dollar coming off its morning gap higher here which touched just under that upper rendline resistance level formed by that big symmetrical triangle forming on the UUP chart...big standouts right now are precious metals which continue to find a solid bid here even with equity market pressing higher which is strange in that this safe haven bid should be unwinding if the equity market was in fact pricing in a much stronger second half recovery...also note Mohammed El-Erian saying QE3 is "improbable" at this point and this is not having an effect on precious metal pricing either...precious metals space really feels like its about to breakout big here near-term, not sure on what headlines just yet, but something appears to be lingering here, possibly Italy default now that Greece has been somewhat swept under the rug for the time being
SEC charges JPM With Fraudulent Bidding Practices, will pay $228.2M to settle, market shrugging it off for the most part...however technically you can start to feel the exhaustion here, not a lot of bargains left out there especially taking into account risk/reward at these technically overbought levels...dollar coming off its morning gap higher here which touched just under that upper rendline resistance level formed by that big symmetrical triangle forming on the UUP chart...big standouts right now are precious metals which continue to find a solid bid here even with equity market pressing higher which is strange in that this safe haven bid should be unwinding if the equity market was in fact pricing in a much stronger second half recovery...also note Mohammed El-Erian saying QE3 is "improbable" at this point and this is not having an effect on precious metal pricing either...precious metals space really feels like its about to breakout big here near-term, not sure on what headlines just yet, but something appears to be lingering here, possibly Italy default now that Greece has been somewhat swept under the rug for the time being
10:58AM EST
Added a bunch more FBCD.PK at .027-.029 on news of closing of merger with FBC Holdings, but more importantly positioning ahead of expected run into Comic-Con (July 21-24) where FBCD is set to have its own booth with some big name artists doing signings...company has also stated it will be announcing new licensing deals ahead of Comic-Con so expect additional PRs here over the coming 2 weeks which should add fuel to the momentum run...no reason we can't see +100% move to .06-.07 near-term especially with so much speculative capital sloshing around markets
Added a bunch more FBCD.PK at .027-.029 on news of closing of merger with FBC Holdings, but more importantly positioning ahead of expected run into Comic-Con (July 21-24) where FBCD is set to have its own booth with some big name artists doing signings...company has also stated it will be announcing new licensing deals ahead of Comic-Con so expect additional PRs here over the coming 2 weeks which should add fuel to the momentum run...no reason we can't see +100% move to .06-.07 near-term especially with so much speculative capital sloshing around markets
9:51AM EST
Industrials underperforming here this morning, transports also look exhausted, watch for DOW to lead us lower here near-term, wouldn't be surprised to see DOW trade red intraday
Industrials underperforming here this morning, transports also look exhausted, watch for DOW to lead us lower here near-term, wouldn't be surprised to see DOW trade red intraday
9:35AM EST
Long weekly July 350 AAPL Puts at .50-.52 (expiring tomorrow), this gap higher feels like possible blowoff top, S&P now in overbought territory after going straight up for almost 2 weeks, pullback is likely here especially with strong employment report tomorrow now priced in....decent bet on a risk/reward basis (risk .50 to make +$2-3)
Long weekly July 350 AAPL Puts at .50-.52 (expiring tomorrow), this gap higher feels like possible blowoff top, S&P now in overbought territory after going straight up for almost 2 weeks, pullback is likely here especially with strong employment report tomorrow now priced in....decent bet on a risk/reward basis (risk .50 to make +$2-3)
9:10AM EST
US markets set to gap higher on much stronger than expected ADP Employment report which showed private employers hired 157K new workers vs. expectations of 60K...dollar brushing aside 25bp rate hike from ECB to trade higher on ADP report, Treasuries falling on prospect of strengthening domestic economy, while most commodities being led higher by +2% gain in Oil...in terms of trading today, S&P looks to open in technically overbought territory so likely to see some technical sell programs kick in during first half of session, funds however now pricing in strong employment report tomorrow so bulk of gains should hold into the close
US markets set to gap higher on much stronger than expected ADP Employment report which showed private employers hired 157K new workers vs. expectations of 60K...dollar brushing aside 25bp rate hike from ECB to trade higher on ADP report, Treasuries falling on prospect of strengthening domestic economy, while most commodities being led higher by +2% gain in Oil...in terms of trading today, S&P looks to open in technically overbought territory so likely to see some technical sell programs kick in during first half of session, funds however now pricing in strong employment report tomorrow so bulk of gains should hold into the close
July 6, 2011
3:03PM EST
Long some weekly July 133 SPY puts at $.40 (expire this friday July 8) for pullback on weak ADP report tomorrow likely down to 1315 level...position will be covered in the first half of tomorrows session
Long some weekly July 133 SPY puts at $.40 (expire this friday July 8) for pullback on weak ADP report tomorrow likely down to 1315 level...position will be covered in the first half of tomorrows session
2:40PM EST
In terms of how next 2 sessions likely to play out, expect tomorrows ADP numbers (which are coming out tomorrow rather than today due to July 4th holiday on monday) may come in weaker than expected just to sucker in a few shorts ahead of fridays employment report which good or bad will likely be used to try and break market out to the upside...in terms of downside on a weaker than expected ADP number tomorrow, believe S&P may trade down to those May closing lows at 1315 where market will likely find buyers positioning for friday squeeze...so barring any additional headlines, weakness during first half of the session should be bought at the 1315 level in preparation for some short covering/buying heading into the close which will likely bring market off its lows and ready for a squeeze on friday...also note a trade down to 1315 will form a mini 6-week inverted head and shoulders on the S&P chart with shoulders at 1315 head at those June lows at 1260 and neckline right at 1342 resistance so this will likely be the set up for the breakout near-term, and as noted we believe this breakout will actually be a false breakout and a set up for a weak second half of July on resurrection of Eurozone debt concerns which precious metals market along with dollar seem to be signaling here
In terms of how next 2 sessions likely to play out, expect tomorrows ADP numbers (which are coming out tomorrow rather than today due to July 4th holiday on monday) may come in weaker than expected just to sucker in a few shorts ahead of fridays employment report which good or bad will likely be used to try and break market out to the upside...in terms of downside on a weaker than expected ADP number tomorrow, believe S&P may trade down to those May closing lows at 1315 where market will likely find buyers positioning for friday squeeze...so barring any additional headlines, weakness during first half of the session should be bought at the 1315 level in preparation for some short covering/buying heading into the close which will likely bring market off its lows and ready for a squeeze on friday...also note a trade down to 1315 will form a mini 6-week inverted head and shoulders on the S&P chart with shoulders at 1315 head at those June lows at 1260 and neckline right at 1342 resistance so this will likely be the set up for the breakout near-term, and as noted we believe this breakout will actually be a false breakout and a set up for a weak second half of July on resurrection of Eurozone debt concerns which precious metals market along with dollar seem to be signaling here
12:44PM EST
Couple of questions on getting long AAPL here, in my opinion I would take GOOG over AAPL at these levels as AAPL likely to be more sensitive to market pullback than GOOG as GOOG far more underowned and being reaccumulated by the street after a couple of years of major concerns over management and growth...as noted Google+ has street interested in the name again as a growth play and we continue to believe stock is headed to a first target of $578 near-term (April 14th gap) and likely over $600 shortly therafter...therefore expect on any broad market pullbacks, GOOG will be a much bigger outperformer than AAPL which due to its overownership by funds is likely still susceptible to fund liquidation to raise cash should Eurozone concerns arise...both likely solid plays over the next 6 months but given market outlook if I had to choose 1 Id take GOOG over AAPL here at these levels
Couple of questions on getting long AAPL here, in my opinion I would take GOOG over AAPL at these levels as AAPL likely to be more sensitive to market pullback than GOOG as GOOG far more underowned and being reaccumulated by the street after a couple of years of major concerns over management and growth...as noted Google+ has street interested in the name again as a growth play and we continue to believe stock is headed to a first target of $578 near-term (April 14th gap) and likely over $600 shortly therafter...therefore expect on any broad market pullbacks, GOOG will be a much bigger outperformer than AAPL which due to its overownership by funds is likely still susceptible to fund liquidation to raise cash should Eurozone concerns arise...both likely solid plays over the next 6 months but given market outlook if I had to choose 1 Id take GOOG over AAPL here at these levels
12:16PM EST
S&P right back to 1340 following that early morning dip to 1331 as expected, expect we'll see resistance here at 1340 as volumes remain too low for any major breakouts at this time...1330-1340 trading range should remain in place until fridays unemployment report where price action along with thesis of accumulated June POMO driving prices higher suggests market is likely setting up for a breakout over that 1340 level...however as noted we dont think this breakout will have any real longevity as June POMO likely to dwindle producing a much weaker bid by mid July and we'd be looking to start positioning short again sometime next week for another strong downleg during second half of July...in any case, long bias amid this low volume grind higher remains in tact near-term with tech, high-betas, and small cap Chinas seeing most buy interest....continue to keep an eye on that dollar though along with precious metals as both continue to signal stress throughout Eurozone and we suspect this will be the prime driver of downleg in equities during later half of July...our small cap ALTI seeing a nice 20% pop off that bottom we spotted last week (see June 27 - 12:14PM entry), would also continue to watch HAUP and VTRO closely as both setting up for similar moves near-term in my opinion
S&P right back to 1340 following that early morning dip to 1331 as expected, expect we'll see resistance here at 1340 as volumes remain too low for any major breakouts at this time...1330-1340 trading range should remain in place until fridays unemployment report where price action along with thesis of accumulated June POMO driving prices higher suggests market is likely setting up for a breakout over that 1340 level...however as noted we dont think this breakout will have any real longevity as June POMO likely to dwindle producing a much weaker bid by mid July and we'd be looking to start positioning short again sometime next week for another strong downleg during second half of July...in any case, long bias amid this low volume grind higher remains in tact near-term with tech, high-betas, and small cap Chinas seeing most buy interest....continue to keep an eye on that dollar though along with precious metals as both continue to signal stress throughout Eurozone and we suspect this will be the prime driver of downleg in equities during later half of July...our small cap ALTI seeing a nice 20% pop off that bottom we spotted last week (see June 27 - 12:14PM entry), would also continue to watch HAUP and VTRO closely as both setting up for similar moves near-term in my opinion
10:09AM EST
ISM Services slightly weaker than expected at 53.3 vs. expectations of 54.0 and down from last month's reading of 54.6...Price Index fell to 60.9 from 69.6 in May, so inflationary pressure letting up a bit surely due to drop in Oil prices...futures pulling back just a bit on numbers as expected and as noted this morning we'd be buyers right around 1330 on the S&P for a bounce as volume remains rather low and sell pressure remains unaggressive at this point so major breakdown unlikely just yet...expect this 1330-1340 area will likely be our trading range until fridays unemployment report...overall, remains pretty slow out there, market essentially taking a breather following last weeks rally, continue to keep an eye on dollar here as it heads back up toward trendline resistance and will likely be the prime driver of equity pricing near-term
ISM Services slightly weaker than expected at 53.3 vs. expectations of 54.0 and down from last month's reading of 54.6...Price Index fell to 60.9 from 69.6 in May, so inflationary pressure letting up a bit surely due to drop in Oil prices...futures pulling back just a bit on numbers as expected and as noted this morning we'd be buyers right around 1330 on the S&P for a bounce as volume remains rather low and sell pressure remains unaggressive at this point so major breakdown unlikely just yet...expect this 1330-1340 area will likely be our trading range until fridays unemployment report...overall, remains pretty slow out there, market essentially taking a breather following last weeks rally, continue to keep an eye on dollar here as it heads back up toward trendline resistance and will likely be the prime driver of equity pricing near-term
9:17AM EST
Gold and Silver upside bias in the face of China rate hike and dollar strength signaling something brewing within Eurozone in my opinion...believe theres some strong buying of precious metals coming out of Europe here likely ahead of additional headlines on Spain, Italy, Portugal, Ireland, and even Greece near-term...as noted yesterday (see July 5 - 3:31PM entry), believe yesterday's move was the start of a very strong upleg here with Gold targeting previous highs at $1570 and Silver likely headed to $39-40...also continue to keep an eye on the dollar, expect UUP will be pushing to $21.50ish before another stall on resistance from upper trendline of symmetrical triangle we've been outlining
Gold and Silver upside bias in the face of China rate hike and dollar strength signaling something brewing within Eurozone in my opinion...believe theres some strong buying of precious metals coming out of Europe here likely ahead of additional headlines on Spain, Italy, Portugal, Ireland, and even Greece near-term...as noted yesterday (see July 5 - 3:31PM entry), believe yesterday's move was the start of a very strong upleg here with Gold targeting previous highs at $1570 and Silver likely headed to $39-40...also continue to keep an eye on the dollar, expect UUP will be pushing to $21.50ish before another stall on resistance from upper trendline of symmetrical triangle we've been outlining
9:08AM EST
US futures lower ahead of the open on 25bp rate hike out of China, as well as trepidation ahead of possible rollover of Greek debt...US dollar higher on Euro weakness stemming from continued concerns over not only Greece but Portugal and Italy as well, Treasuries ticking higher on safe haven buying out of Europe, and most commodities trading lower on China rate hike as well as dollar strength with Gold and Silver bucking the trend to trade higher...in terms of trading today, volume levels expected to remain light today as funds likely remain sidelined for the most part until unemployment report friday, ISM Services at 10AM may produce a dip in equities however expect to see buy interest on any dip down to 1330 S&P on a near-term basis
US futures lower ahead of the open on 25bp rate hike out of China, as well as trepidation ahead of possible rollover of Greek debt...US dollar higher on Euro weakness stemming from continued concerns over not only Greece but Portugal and Italy as well, Treasuries ticking higher on safe haven buying out of Europe, and most commodities trading lower on China rate hike as well as dollar strength with Gold and Silver bucking the trend to trade higher...in terms of trading today, volume levels expected to remain light today as funds likely remain sidelined for the most part until unemployment report friday, ISM Services at 10AM may produce a dip in equities however expect to see buy interest on any dip down to 1330 S&P on a near-term basis
July 5, 2011
3:31PM EST
Equities still holding onto gains into close even after intraday Moodys headline on Portugal...have a feeling Fed told banks to hold onto June POMO capital and stockpile it for last week of June and into July to transition market into a non-QE environment...so Fed essentially bought up those bonds in June, banks held onto capital (note equity market weakness in June) and are now putting it to work here in July to kill that "no QE = equity market is screwed" theory....however this bid will not be here indefinitely in my opinion, it will probably linger for the first couple weeks of July then we'll start to see it die off as POMO capital dwindles down to zero and market is left with very few bidders...so next couple weeks we'll likely see this bid in markets regardless of news, optimal short may therefore come mid-July sometime....in the meantime, long bias toward equities probably best bet here...outside of equities, precious metals looking very solid with both GLD and SLV bouncing strongly off double bottom, have a feeling todays move is the start of a strong technical upleg with Silver likely trading up to $39-40 and Gold retesting those $1570 highs, therefore just got long August 148 GLD Calls at $2.65 while continuing to hold onto SLV long position from $33.75 (initial inverted head and shoulders we spotted on SLV chart did not pan out but ETF held onto $32.00 level where our stop was set)...with respect to tomorrow, ADP Employment will give us another look at private labor market and ISM Services also out just after the bell at 10AM, based on price action so far (no real mystery sellers) numbers should probably be ok with any technical dip down to1330 or so on S&P likely being bought...also continue to keep an eye on dollar here near-term even though equities likely to decouple a bit from correlation to greenback, however still important to watch it as a gauge of Eurozone stress as dollar action very much hinged on Euro action here...symmetrical triangle on FXE chart show FXE should head down to just under $142.00 on this pullback, UUP just over $21.50
Equities still holding onto gains into close even after intraday Moodys headline on Portugal...have a feeling Fed told banks to hold onto June POMO capital and stockpile it for last week of June and into July to transition market into a non-QE environment...so Fed essentially bought up those bonds in June, banks held onto capital (note equity market weakness in June) and are now putting it to work here in July to kill that "no QE = equity market is screwed" theory....however this bid will not be here indefinitely in my opinion, it will probably linger for the first couple weeks of July then we'll start to see it die off as POMO capital dwindles down to zero and market is left with very few bidders...so next couple weeks we'll likely see this bid in markets regardless of news, optimal short may therefore come mid-July sometime....in the meantime, long bias toward equities probably best bet here...outside of equities, precious metals looking very solid with both GLD and SLV bouncing strongly off double bottom, have a feeling todays move is the start of a strong technical upleg with Silver likely trading up to $39-40 and Gold retesting those $1570 highs, therefore just got long August 148 GLD Calls at $2.65 while continuing to hold onto SLV long position from $33.75 (initial inverted head and shoulders we spotted on SLV chart did not pan out but ETF held onto $32.00 level where our stop was set)...with respect to tomorrow, ADP Employment will give us another look at private labor market and ISM Services also out just after the bell at 10AM, based on price action so far (no real mystery sellers) numbers should probably be ok with any technical dip down to1330 or so on S&P likely being bought...also continue to keep an eye on dollar here near-term even though equities likely to decouple a bit from correlation to greenback, however still important to watch it as a gauge of Eurozone stress as dollar action very much hinged on Euro action here...symmetrical triangle on FXE chart show FXE should head down to just under $142.00 on this pullback, UUP just over $21.50
2:35PM EST
Euro starting come off right at that trendline resistance level formed by that symmetrical triangle (FXE chart is essentially an inverted UUP chart), driver behind weakness of course is that intraday Moodys headline of downgrade of Portuguese debt which of course just "coincidently" came right at the exact technical level of trendline resistance on both Euro and S&P (no coincidence)...market continues to feel very strange, volume picked up a bit on Moodys headline but still not heavy by any means, prices however coming off a bit with no real fight, just feels like we're floating around back and forth around breakeven...overall however we noted European issues were far from over so keep that in the back of your minds here near-term as headlines can strike at any moment...tough to time exactly when headlines are gonna hit outside of major technical levels so really just need to keep that macro environment in focus even with prices doing the opposite of whats expected as headline risk will remain present here near-term
Euro starting come off right at that trendline resistance level formed by that symmetrical triangle (FXE chart is essentially an inverted UUP chart), driver behind weakness of course is that intraday Moodys headline of downgrade of Portuguese debt which of course just "coincidently" came right at the exact technical level of trendline resistance on both Euro and S&P (no coincidence)...market continues to feel very strange, volume picked up a bit on Moodys headline but still not heavy by any means, prices however coming off a bit with no real fight, just feels like we're floating around back and forth around breakeven...overall however we noted European issues were far from over so keep that in the back of your minds here near-term as headlines can strike at any moment...tough to time exactly when headlines are gonna hit outside of major technical levels so really just need to keep that macro environment in focus even with prices doing the opposite of whats expected as headline risk will remain present here near-term
2:06PM EST
Looks like this is the culprit: *DJ Moody's Downgrades Portugal On Growing Risk Country Will Need 2nd Round Of Financing
Looks like this is the culprit: *DJ Moody's Downgrades Portugal On Growing Risk Country Will Need 2nd Round Of Financing
2:03PM EST
Not sure if theres news somewhere but big sell program just came in here, looking for headline
Not sure if theres news somewhere but big sell program just came in here, looking for headline
11:34AM EST
Volume remains extremely anemic here this morning and expected to remain this way throughout the session (probably like this until unemployment report on friday), only buy interest right now is in high-beta tech...something definitely up within tech, if you remember last week or so when S&P kept trying to bounce off that 200-day SMA, tech was the big leader especially high-beta tech, so there's definitely a big buy program focused on driving prices higher specifically in this space...still tough to call definitively what's gonna happen here at these levels mostly because of this low volume environment...we certainly have resistance at 1340 with that big head and shoulders on the S&P staring everyone in the face, however volume is so low that it won't be tough to just push equities past this level...so right now everything is just inefficient and illiquid making it difficult to make a call, we really just need some more news here to increase liquidity a bit and pick up some signals as to what the larger players are doing...overall though,environment definitely bears resemblance to last summer when volume came to a halt and markets continued to grind higher day by day on fumes so that risk to the upside is definitely there, only caveat though is last year we had QE firmly in place to explain the push prices higher, and now QE is "supposedly" not in equities...however as we've seen over the past 2 session since QE ended, there really hasnt been too much change to liquidity, so feels like there's still some underlying bid in market from someone and it really doesn't feel like a typical fund...as you can see, so many crosscurrents and uncertainties here and such low volume so tough to call those big turns, yet if I had to make a call here Id say we'll probably hold up in this 1330-1340 range for the next few sessions
Volume remains extremely anemic here this morning and expected to remain this way throughout the session (probably like this until unemployment report on friday), only buy interest right now is in high-beta tech...something definitely up within tech, if you remember last week or so when S&P kept trying to bounce off that 200-day SMA, tech was the big leader especially high-beta tech, so there's definitely a big buy program focused on driving prices higher specifically in this space...still tough to call definitively what's gonna happen here at these levels mostly because of this low volume environment...we certainly have resistance at 1340 with that big head and shoulders on the S&P staring everyone in the face, however volume is so low that it won't be tough to just push equities past this level...so right now everything is just inefficient and illiquid making it difficult to make a call, we really just need some more news here to increase liquidity a bit and pick up some signals as to what the larger players are doing...overall though,environment definitely bears resemblance to last summer when volume came to a halt and markets continued to grind higher day by day on fumes so that risk to the upside is definitely there, only caveat though is last year we had QE firmly in place to explain the push prices higher, and now QE is "supposedly" not in equities...however as we've seen over the past 2 session since QE ended, there really hasnt been too much change to liquidity, so feels like there's still some underlying bid in market from someone and it really doesn't feel like a typical fund...as you can see, so many crosscurrents and uncertainties here and such low volume so tough to call those big turns, yet if I had to make a call here Id say we'll probably hold up in this 1330-1340 range for the next few sessions
10:07AM EST
Factory Orders a bit below consensus at .8% vs. expectations of +1.0%, May Durable Goods Orders revised up to 2.1% from 1.9% and April Facotry Orders revised up to -.9% from -1.2%...seeing a push higher following numbers as not too many funds here today so easy to manipulate, revisions higher coupled with continued strength in high-betas has market holding breakeven, however overall market feels a bit exhausted here so feels like we may be on our last legs before a short-term pullback
Factory Orders a bit below consensus at .8% vs. expectations of +1.0%, May Durable Goods Orders revised up to 2.1% from 1.9% and April Facotry Orders revised up to -.9% from -1.2%...seeing a push higher following numbers as not too many funds here today so easy to manipulate, revisions higher coupled with continued strength in high-betas has market holding breakeven, however overall market feels a bit exhausted here so feels like we may be on our last legs before a short-term pullback
9:51AM EST
Banks dragging yet again while high betas continue to get bid up, overall volume however remains very low here at the open...as noted however keep an eye on the dollar here as greenback right at trendline support of a big symmetrical triangle and likely to see some upside here which may pressure equities near-term (see July 1 - 10:57AM entry)
Banks dragging yet again while high betas continue to get bid up, overall volume however remains very low here at the open...as noted however keep an eye on the dollar here as greenback right at trendline support of a big symmetrical triangle and likely to see some upside here which may pressure equities near-term (see July 1 - 10:57AM entry)
9:36AM EST
NFLX taking off on expansion into Latin America and the Caribbean, GOOG also still going on Google+ rollout...missed the optimal entry on GOOG but as noted last week believe it has upside to $578 (see June 30 - 10:51AM entry)...2 stocks to watch near-term
NFLX taking off on expansion into Latin America and the Caribbean, GOOG also still going on Google+ rollout...missed the optimal entry on GOOG but as noted last week believe it has upside to $578 (see June 30 - 10:51AM entry)...2 stocks to watch near-term
9:13AM EST
US indices roughly flat ahead of the open as no major developments out of Greece and markets awaited US Factory Orders at 10AM following a quiet 4th of July weekend...dollar slightly higher onEuro weakness stemming from Italian yields widening (Italy appears to be next major Eurozone concern for markets following Greece), Treasuries catching a technical bounce following last weeks sell-off, and commodities mostly higher with precious metals leading the way on Moodys warning that China's local debt may be $540B higher than estimates...in terms of trading today, pre-market volume levels very low here as most fund managers extending their 4th of july holiday until later in the week when more material economic data is scheduled for release (big focal point this week is unemployment data on friday) so todays midday session likely to be rather slow, expect we may see some technical resistance here from this 1340 level on S&P as it marks top of right shoulder of major head and shoulders formation on S&P we outlined last week, equities also extremely overextended here following a full week of aggressive short-covering
US indices roughly flat ahead of the open as no major developments out of Greece and markets awaited US Factory Orders at 10AM following a quiet 4th of July weekend...dollar slightly higher onEuro weakness stemming from Italian yields widening (Italy appears to be next major Eurozone concern for markets following Greece), Treasuries catching a technical bounce following last weeks sell-off, and commodities mostly higher with precious metals leading the way on Moodys warning that China's local debt may be $540B higher than estimates...in terms of trading today, pre-market volume levels very low here as most fund managers extending their 4th of july holiday until later in the week when more material economic data is scheduled for release (big focal point this week is unemployment data on friday) so todays midday session likely to be rather slow, expect we may see some technical resistance here from this 1340 level on S&P as it marks top of right shoulder of major head and shoulders formation on S&P we outlined last week, equities also extremely overextended here following a full week of aggressive short-covering
July 1, 2011
3:08PM EST
Theres 1340, if you're thankfully not short, this is a spot you might want to think of putting on a short...might see a 1340 open tuesday with a little morning squeeze to take out some 1342 stops followed by a selloff during final hour and close back below 1340 and maybe some follow thru to the downside midweek next week...risk/reward you can put on a position here with a stop at 1350 (risk is 10 S&P points, reward is at least 40), overall though with this type of market move, conviction levels are not very high
Theres 1340, if you're thankfully not short, this is a spot you might want to think of putting on a short...might see a 1340 open tuesday with a little morning squeeze to take out some 1342 stops followed by a selloff during final hour and close back below 1340 and maybe some follow thru to the downside midweek next week...risk/reward you can put on a position here with a stop at 1350 (risk is 10 S&P points, reward is at least 40), overall though with this type of market move, conviction levels are not very high
2:51PM EST
Relentless buying pressure, getting ripped a new one this week (along with bunch of other hedge funds, ton of hedgies and shorts in the fetal position right now)...this is the kind of market where no one really has any idea what to do as both shorts and longs questioning daily how high this thing can go....clearly a very broadbased squeeze going on, but what the fundamental driver is no one knows exactly...QE2 is supposedly out of markets but from what we're seeing there's really zero change in liquidity, manufacturing data overseas continues to come in weak, unemployment still sucks, Eurozone still has a ton of debt issues to deal with (no way this rally is one big Greece reaction)...maybe has to do with prospect of Oil coming down even further medium-term coupled with Greece avoiding default for the time being and lower volumes during the summer which has market ready for manipulation...also likely a bunch of funds coming back in after being shaken out on very weak economic data in early June along with trepidation over end of QE2...obviously that spate of weak data during early June was in preparation for this rally, but now we have no idea what the economy is really doing...early june manufacturing data sucks, this week its booming, very confusing...is this the beginning of one long summer "hold your nose and buy rally?" I really dont know yet especially with QE2 supposedly out of markets (that was the prime driver of these types of rallies), all I can see though is this right shoulder formation topping out at 1340-1342 level has a ton of peoples attention right now
Relentless buying pressure, getting ripped a new one this week (along with bunch of other hedge funds, ton of hedgies and shorts in the fetal position right now)...this is the kind of market where no one really has any idea what to do as both shorts and longs questioning daily how high this thing can go....clearly a very broadbased squeeze going on, but what the fundamental driver is no one knows exactly...QE2 is supposedly out of markets but from what we're seeing there's really zero change in liquidity, manufacturing data overseas continues to come in weak, unemployment still sucks, Eurozone still has a ton of debt issues to deal with (no way this rally is one big Greece reaction)...maybe has to do with prospect of Oil coming down even further medium-term coupled with Greece avoiding default for the time being and lower volumes during the summer which has market ready for manipulation...also likely a bunch of funds coming back in after being shaken out on very weak economic data in early June along with trepidation over end of QE2...obviously that spate of weak data during early June was in preparation for this rally, but now we have no idea what the economy is really doing...early june manufacturing data sucks, this week its booming, very confusing...is this the beginning of one long summer "hold your nose and buy rally?" I really dont know yet especially with QE2 supposedly out of markets (that was the prime driver of these types of rallies), all I can see though is this right shoulder formation topping out at 1340-1342 level has a ton of peoples attention right now
12:38PM EST
S&P 45 degree mechanical stairstep higher continues, now up almost 70 points in 5 sessions, just unbelievable...big issue staring everyone in the face right now is this big 6-month head and shoulders on the S&P chart...note this isn't a tiny 1/2-month formation which can be easily broken but a major topping chart pattern due to its timespan, so it has to be taken seriously especially with macro headwinds such as Eurozone debt issues still lingering, as well as uncertainty with respect to US debt ceiling in play this month...
S&P 45 degree mechanical stairstep higher continues, now up almost 70 points in 5 sessions, just unbelievable...big issue staring everyone in the face right now is this big 6-month head and shoulders on the S&P chart...note this isn't a tiny 1/2-month formation which can be easily broken but a major topping chart pattern due to its timespan, so it has to be taken seriously especially with macro headwinds such as Eurozone debt issues still lingering, as well as uncertainty with respect to US debt ceiling in play this month...
10:57AM EST
Dollar forming a real nice symmetrical triangle here (nice set of lower highs and higher lows) and right at lower trendline where we should see another bounce to $21.50ish (another lower high)...dollar bounce might be primary driver of some weakness near-term so keep an eye on greenback near-term
Dollar forming a real nice symmetrical triangle here (nice set of lower highs and higher lows) and right at lower trendline where we should see another bounce to $21.50ish (another lower high)...dollar bounce might be primary driver of some weakness near-term so keep an eye on greenback near-term
10:48AM EST
Watch for a high velocity pullback here sometime today or Tuesday...typically when we see high velocity on the upside, the downside reversal off overbought levels will be just as fast...market has gotten way ahead of itself here, there's gonna be a rollover soon
Watch for a high velocity pullback here sometime today or Tuesday...typically when we see high velocity on the upside, the downside reversal off overbought levels will be just as fast...market has gotten way ahead of itself here, there's gonna be a rollover soon
10:08AM EST
ISM Index comes in much better than expected at 55.3 vs. expectations of 51.1 and up from last month's reading of 53.5, futures getting yet another jolt higher, and really can't believe we're only 10 points away from those February highs at 1340...those highs are of key interest because S&P is now forming a near perfect 6-month head and shoulders on the charts with left shoulder right at that February high at 1342, head at the May high at 1370, right shoulder forming now, and neckline right at those March and June lows at 1260...and with the extremely high velocity of this recent up move toward those 1340 highs wouldnt be surprised to see us move back down toward that neckline just as fast if/when we top out
ISM Index comes in much better than expected at 55.3 vs. expectations of 51.1 and up from last month's reading of 53.5, futures getting yet another jolt higher, and really can't believe we're only 10 points away from those February highs at 1340...those highs are of key interest because S&P is now forming a near perfect 6-month head and shoulders on the charts with left shoulder right at that February high at 1342, head at the May high at 1370, right shoulder forming now, and neckline right at those March and June lows at 1260...and with the extremely high velocity of this recent up move toward those 1340 highs wouldnt be surprised to see us move back down toward that neckline just as fast if/when we top out
9:56AM EST
Been watching liquidity this morning for signs of changes now that QE2 has wrapped up, and thus far doesn't look too different out there...just went long some UAL here at $23.20 on thesis of continued Oil weakness due to supply overhang from IEAs 60M barrel release of Oil from reserves in tandem with concerns over China demand especially with manufacturing data continuing to come out weak not only in China but throughout Eurozone...UAL also a great summer play on increased travel demand, chart also looks good here with solid risk /reward on this recent pullback...GOOG and GS also standing out his morning with GOOG pushing higher on the back of increased fund interest due to new Google+ which looks to turn search into a social experience (see yesterday's 10:51AM entry for color)...
Been watching liquidity this morning for signs of changes now that QE2 has wrapped up, and thus far doesn't look too different out there...just went long some UAL here at $23.20 on thesis of continued Oil weakness due to supply overhang from IEAs 60M barrel release of Oil from reserves in tandem with concerns over China demand especially with manufacturing data continuing to come out weak not only in China but throughout Eurozone...UAL also a great summer play on increased travel demand, chart also looks good here with solid risk /reward on this recent pullback...GOOG and GS also standing out his morning with GOOG pushing higher on the back of increased fund interest due to new Google+ which looks to turn search into a social experience (see yesterday's 10:51AM entry for color)...
9:15AM EST
US futures flat ahead of the open as markets take a breather from a massive 4-day end of quarter rally and now await ISM data just after the bell (10AM), however weaker than expected manufacturing data out of China, UK, and Italy weighing on Oil...dollar slightly higher on technical exhaustion out of Euro, Treasuries marginally higher on technical bounce, and commodities mostly lower with Oil down nearly 1% on concerns over China growth due to weak China PMI (came in at 50.9 vs. expectations of 51.5), Corn getting hammered again as USDA reported higher than expected supplies, and precious metals lower as diminished concerns over Greece default causing safe haven bid to unwind a bit...in terms of trading today, should ISM report come in weaker than expected may see some liquidation as report will echo weaker than expected manufacturing data from China and UK this morning which should produce an uptick in concerns over global growth, equities also overextended near-term so they could certainly use a breather following a massive end of quarter rally...overall however, following ISM report this morning it should be very slow as fund managers head out for the 4th of July weekend
US futures flat ahead of the open as markets take a breather from a massive 4-day end of quarter rally and now await ISM data just after the bell (10AM), however weaker than expected manufacturing data out of China, UK, and Italy weighing on Oil...dollar slightly higher on technical exhaustion out of Euro, Treasuries marginally higher on technical bounce, and commodities mostly lower with Oil down nearly 1% on concerns over China growth due to weak China PMI (came in at 50.9 vs. expectations of 51.5), Corn getting hammered again as USDA reported higher than expected supplies, and precious metals lower as diminished concerns over Greece default causing safe haven bid to unwind a bit...in terms of trading today, should ISM report come in weaker than expected may see some liquidation as report will echo weaker than expected manufacturing data from China and UK this morning which should produce an uptick in concerns over global growth, equities also overextended near-term so they could certainly use a breather following a massive end of quarter rally...overall however, following ISM report this morning it should be very slow as fund managers head out for the 4th of July weekend
June 30, 2011
3:44PM EST
Market holding onto most gains here headed into close, bad call on my part here, should have taken my own advice on monday of staying neutral until this quarter end manipulation ended...really have to wait until tomorrow and most likely monday (as tomorrow will likely see low volume as fund managers likely heading out early for july 4th weekend) to see if this rally is actually for real or just the end of quarter ramp job by last of QE2 as well as some window dressing/fund chasing...so far just looks so sloppy and extreme out there in terms of pricing across all major financial markets that these past few sessions do not look hinged on any major fundamental data or the beginning of a major trend, but tough to say with conviction when we're clearly not in tune with this market at this point...ultimately just have to wait for the removal of QE2 and close of Q2 here to see if these were in fact the primary drivers of this rally...fear is that all of a sudden we "magically" start seeing better than expected economic data which gets funds chasing stocks again after being shaken out over the past several weeks on weaker than expected data and Greece...honestly just very tough to call at this point given uncertainty over how the economic data is going to come in near-term and what will transpire in Europe and the debt ceiling over the coming weeks...major risk which continues here is the fact that Europe is nowhere near out of the woods yet, and Spain, Italy, Portugal, and Ireland are ticking time bombs and will be making headlines here shortly especially following IMF/ECB reaction to Greece issue...and debt ceiling issue and volatility in Treasury market will surely complicate matters next month as August 2nd deadline looms...really just very tough to call here with market making this move at end of quarter, but we'll have a better idea over the coming 2-3 sessions once manipulation is expected to die down and market should return back to more normal fund supply/demand
Market holding onto most gains here headed into close, bad call on my part here, should have taken my own advice on monday of staying neutral until this quarter end manipulation ended...really have to wait until tomorrow and most likely monday (as tomorrow will likely see low volume as fund managers likely heading out early for july 4th weekend) to see if this rally is actually for real or just the end of quarter ramp job by last of QE2 as well as some window dressing/fund chasing...so far just looks so sloppy and extreme out there in terms of pricing across all major financial markets that these past few sessions do not look hinged on any major fundamental data or the beginning of a major trend, but tough to say with conviction when we're clearly not in tune with this market at this point...ultimately just have to wait for the removal of QE2 and close of Q2 here to see if these were in fact the primary drivers of this rally...fear is that all of a sudden we "magically" start seeing better than expected economic data which gets funds chasing stocks again after being shaken out over the past several weeks on weaker than expected data and Greece...honestly just very tough to call at this point given uncertainty over how the economic data is going to come in near-term and what will transpire in Europe and the debt ceiling over the coming weeks...major risk which continues here is the fact that Europe is nowhere near out of the woods yet, and Spain, Italy, Portugal, and Ireland are ticking time bombs and will be making headlines here shortly especially following IMF/ECB reaction to Greece issue...and debt ceiling issue and volatility in Treasury market will surely complicate matters next month as August 2nd deadline looms...really just very tough to call here with market making this move at end of quarter, but we'll have a better idea over the coming 2-3 sessions once manipulation is expected to die down and market should return back to more normal fund supply/demand
1:32PM EST
Just talked to HAUP sales department (no answer at IR), confirmed Broadway will be released in July, couldn't tell me if it was beginning or end of July, either way watch for Broadway = Live TV on your IPad/IPhone PR near-term ahead of release which will bring in momentum spike...HAUP one to buy and hold for July
Just talked to HAUP sales department (no answer at IR), confirmed Broadway will be released in July, couldn't tell me if it was beginning or end of July, either way watch for Broadway = Live TV on your IPad/IPhone PR near-term ahead of release which will bring in momentum spike...HAUP one to buy and hold for July
1:08PM EST
Accumulated small position in small cap low floater HAUP here in $1.77-1.84 range (want more but not enough on the ask) on 1-Year double bottom here in the $1.70s (July 2010 lows) in tandem with long term trendline support...stock known for large percentage spikes/runs off technical support levels and news, one major PR to watch out for over the next several weeks is the North American release of their new Broadway product which allows users to stream live TV onto their IPads and IPhones which was mentioned here in last quarters earnings report:
"In addition to Colossus, we started to ship our newest product, Broadway, into the European market in mid April. Broadway was developed by our PCTV Systems group in Europe, and sends live TV from a cable TV box or from a TV antenna to an Apple iPad and iPhone. Broadway can also send live TV in the home via Wi-Fi or via the Internet anywhere in the world. Broadway has a retail price of 199 Euros and has similar functions to our WinTV Extend software, but is a small stand-alone box and does not require a PC to operate. We are very excited about Broadway, and plan to start North America shipments within the next quarter."
Accumulated small position in small cap low floater HAUP here in $1.77-1.84 range (want more but not enough on the ask) on 1-Year double bottom here in the $1.70s (July 2010 lows) in tandem with long term trendline support...stock known for large percentage spikes/runs off technical support levels and news, one major PR to watch out for over the next several weeks is the North American release of their new Broadway product which allows users to stream live TV onto their IPads and IPhones which was mentioned here in last quarters earnings report:
"In addition to Colossus, we started to ship our newest product, Broadway, into the European market in mid April. Broadway was developed by our PCTV Systems group in Europe, and sends live TV from a cable TV box or from a TV antenna to an Apple iPad and iPhone. Broadway can also send live TV in the home via Wi-Fi or via the Internet anywhere in the world. Broadway has a retail price of 199 Euros and has similar functions to our WinTV Extend software, but is a small stand-alone box and does not require a PC to operate. We are very excited about Broadway, and plan to start North America shipments within the next quarter."
12:38PM EST
Getting a real nice screwing here on this last day of QE2, totally should have seen this coming especially with Q2 coming to a close and upside bias likely, in any case big tell will come over friday and monday sessions as we observe how markets react to withdrawl of QE2...with respect to tomorrow, have a feeling most fund managers will likely be headed to the Hamptons for 4th of July weekend after the close today, so most likely tomorrow should be a rather thin session with monday being the bigger tell (will be watching for signals tomorrow nonetheless)...market right now all over the place with Treasuries tanking big over the past several sessions, dollar taking a nice hit, commodities flat to lower, and equities going straight up, really need things to settle down a bit as end of quarter manipulation in tandem with final liquidity surge from QE really reeking havoc here and producing action not indicative of real supply/demand
Getting a real nice screwing here on this last day of QE2, totally should have seen this coming especially with Q2 coming to a close and upside bias likely, in any case big tell will come over friday and monday sessions as we observe how markets react to withdrawl of QE2...with respect to tomorrow, have a feeling most fund managers will likely be headed to the Hamptons for 4th of July weekend after the close today, so most likely tomorrow should be a rather thin session with monday being the bigger tell (will be watching for signals tomorrow nonetheless)...market right now all over the place with Treasuries tanking big over the past several sessions, dollar taking a nice hit, commodities flat to lower, and equities going straight up, really need things to settle down a bit as end of quarter manipulation in tandem with final liquidity surge from QE really reeking havoc here and producing action not indicative of real supply/demand
10:51AM EST
Looking to get long GOOG near-term through some out of the money August calls as this new Google+ projectthey're launching looks like a new growth driver which could certainly get the street reenergized about the stock...and with the street so currently underexposed to the name due to management issues and lackluster earnings over the past several quarters, we could really see a nice run here over the next 6-8 weeks on fund reaccumulation of the name...looking to take a call position on this beaten up name on a pullback into $490s hopefully tomorrow with a 6-8 week target of $578.51 which is the April 14th gap and just above the current 200-day SMA which should trend higher and likely push up to that $575-580 level should the stock start to breakout here over the coming weeks
Looking to get long GOOG near-term through some out of the money August calls as this new Google+ projectthey're launching looks like a new growth driver which could certainly get the street reenergized about the stock...and with the street so currently underexposed to the name due to management issues and lackluster earnings over the past several quarters, we could really see a nice run here over the next 6-8 weeks on fund reaccumulation of the name...looking to take a call position on this beaten up name on a pullback into $490s hopefully tomorrow with a 6-8 week target of $578.51 which is the April 14th gap and just above the current 200-day SMA which should trend higher and likely push up to that $575-580 level should the stock start to breakout here over the coming weeks
9:52AM EST
Chicago PMI comes in much better than expected at 61.1 vs. expectations of 54.0 and up from last month's reading of 56.6...stronger than expected reading not surprising here on last day of the quarter as government wants to do everything it can to close market strong on last day of the second quarter in order to keep Americans satisfied with their Q2 statements which ultimately promotes the wealth effect (ie strong stock market = better consumer spending)...also note surge in futures 3 minutes prior to scheduled release of Chicago PMI ay 9:45, now "subscribers" to Chicago PMI get the data early which is a joke...overall, not sure equities will be able to hold onto all their gains by day's end as funds will surely be looking to liquidate positions here into this 4-day end of quarter rally as uncertainty over how Q3 will look in terms of liquidity (due to absence of QE2) will have them reducing a bit of risk today
Chicago PMI comes in much better than expected at 61.1 vs. expectations of 54.0 and up from last month's reading of 56.6...stronger than expected reading not surprising here on last day of the quarter as government wants to do everything it can to close market strong on last day of the second quarter in order to keep Americans satisfied with their Q2 statements which ultimately promotes the wealth effect (ie strong stock market = better consumer spending)...also note surge in futures 3 minutes prior to scheduled release of Chicago PMI ay 9:45, now "subscribers" to Chicago PMI get the data early which is a joke...overall, not sure equities will be able to hold onto all their gains by day's end as funds will surely be looking to liquidate positions here into this 4-day end of quarter rally as uncertainty over how Q3 will look in terms of liquidity (due to absence of QE2) will have them reducing a bit of risk today
9:14AM EST
US futures higher ahead of the open as German banks proposing rollover of Greek debt which would further stave off the prospect of immediate default by Greece, this is offsetting weaker than expected US initial jobless claims which came in at 428K vs. expectations of 420K (Chicago PMI due out at 9:45AM)...dollar weaker on Euro strength stemming from potential rollover of Greek debt, Treasuries roughly flat, and most major commodities trading flat to slightly higher on dollar weakness...in terms of trading today, pre-market volume levels rather light, expect we may see rather lackluster trade today with slight downside bias following Chicago PMI release as funds take a bit of profits off the table here heading into quarter end, note however Fed buy program has been very active past several sessions as last of QE2 works its way through equities, so pullback likely to be rather limited in nature today (real weakness should commence tomorrow and into next week)
US futures higher ahead of the open as German banks proposing rollover of Greek debt which would further stave off the prospect of immediate default by Greece, this is offsetting weaker than expected US initial jobless claims which came in at 428K vs. expectations of 420K (Chicago PMI due out at 9:45AM)...dollar weaker on Euro strength stemming from potential rollover of Greek debt, Treasuries roughly flat, and most major commodities trading flat to slightly higher on dollar weakness...in terms of trading today, pre-market volume levels rather light, expect we may see rather lackluster trade today with slight downside bias following Chicago PMI release as funds take a bit of profits off the table here heading into quarter end, note however Fed buy program has been very active past several sessions as last of QE2 works its way through equities, so pullback likely to be rather limited in nature today (real weakness should commence tomorrow and into next week)
June 29, 2011
3:05PM EST
Still a very annoying bid in market here even as sell programs getting a bit more aggressive, and character of the bid says its not a fund, this is the last of QE2 hitting markets and realistically it may have been the prime driver of this rally over the past several sessions, not window dressing....will be very interesting to see how bid/ask changes come July 1st when QE2 will supposedly not be involved in boosting stock prices, we'll have to wait and see if anything does indeed change as Fed may try to somehow boost equities through other market participants...will be paying close attention to bid/ask come Friday...in any case, sell programs here are getting more aggressive and using this last liquidity surge to unload, so believe any attempt by Fed buy program to try and drive prices higher from this 1305 level into tomorrow will be rather muted, so short positions should be held here
Still a very annoying bid in market here even as sell programs getting a bit more aggressive, and character of the bid says its not a fund, this is the last of QE2 hitting markets and realistically it may have been the prime driver of this rally over the past several sessions, not window dressing....will be very interesting to see how bid/ask changes come July 1st when QE2 will supposedly not be involved in boosting stock prices, we'll have to wait and see if anything does indeed change as Fed may try to somehow boost equities through other market participants...will be paying close attention to bid/ask come Friday...in any case, sell programs here are getting more aggressive and using this last liquidity surge to unload, so believe any attempt by Fed buy program to try and drive prices higher from this 1305 level into tomorrow will be rather muted, so short positions should be held here
2:26PM EST
Sell-off accelerating here on break below 1305, AAPL hitting low of the day, also note Treasuries not rallying here, and this sell-off is not being triggered by dollar push higher as dollar has not budged since sell program came in...feels strange, might be related to concerns over US debt ceiling as all US assets seeing weakness at the same time (Equities, US Treasuries, and US Dollar)
Sell-off accelerating here on break below 1305, AAPL hitting low of the day, also note Treasuries not rallying here, and this sell-off is not being triggered by dollar push higher as dollar has not budged since sell program came in...feels strange, might be related to concerns over US debt ceiling as all US assets seeing weakness at the same time (Equities, US Treasuries, and US Dollar)
1:59PM EST
Decent sized sell program coming in here, feels a bit strange coming in at this time of day, feels like someone getting ahead of final hour sell programs...watch 1305 on S&P there's intraday stops set there, so we may accelerate on break below that level
Decent sized sell program coming in here, feels a bit strange coming in at this time of day, feels like someone getting ahead of final hour sell programs...watch 1305 on S&P there's intraday stops set there, so we may accelerate on break below that level
1:10PM EST
Yet another horrible Treasury auction with 7-year notes coming in with very weak bid-to-cover, obviously concerns over this debt ceiling which will be fiercely debated over the coming weeks creating an overhang over Treasuries here with funds liquidating longs they had taken over the past several weeks on the back of weaker than expected economic data...with respect to equities, volume has slowed down here midday however expect it to pick back up again during final hour likely on the sell side as QQQ has hit its 50% retracement level from the May highs down to June lows (see 11:30AM for chart) and Greece violence likely to spread throughout Eurozone as Spain, Italy, Ireland, and Portugal likely begin to preemptively begin protesting against austerity measures with this backdrop of violence and chaos throughout Europe playing out as a backdrop to a critical debate over US debt ceiling near-term...moreover, expect uncertainty over withdrawal of QE2 and its effect on equity pricing (these past few days of price appreciation on S&P likely exacerbated by last of QE2 injections) as well as continued trend of weaker than expected economic data and uncertainty over Fed's ability to effectively mitigate this soft patch will add further downside pressure to equities near-term
Yet another horrible Treasury auction with 7-year notes coming in with very weak bid-to-cover, obviously concerns over this debt ceiling which will be fiercely debated over the coming weeks creating an overhang over Treasuries here with funds liquidating longs they had taken over the past several weeks on the back of weaker than expected economic data...with respect to equities, volume has slowed down here midday however expect it to pick back up again during final hour likely on the sell side as QQQ has hit its 50% retracement level from the May highs down to June lows (see 11:30AM for chart) and Greece violence likely to spread throughout Eurozone as Spain, Italy, Ireland, and Portugal likely begin to preemptively begin protesting against austerity measures with this backdrop of violence and chaos throughout Europe playing out as a backdrop to a critical debate over US debt ceiling near-term...moreover, expect uncertainty over withdrawal of QE2 and its effect on equity pricing (these past few days of price appreciation on S&P likely exacerbated by last of QE2 injections) as well as continued trend of weaker than expected economic data and uncertainty over Fed's ability to effectively mitigate this soft patch will add further downside pressure to equities near-term
11:30AM EST
Long July 56 QQQ Puts at .66 on 50% retracement from May high at $59.34 to June lows at $53.62 = $56.48
Long July 56 QQQ Puts at .66 on 50% retracement from May high at $59.34 to June lows at $53.62 = $56.48
10:47AM EST
Just added more July 129 SPY puts at $1.22, we're putting in a short-term top here today
Just added more July 129 SPY puts at $1.22, we're putting in a short-term top here today
10:02AM EST
Last of those end of quarter buy programs trying to hold market up here at the open, but heavy sell programs unloading aggressively into bid, by midday we should be firmly red and we should worsen into the close today...note Euro turning red here now with dollar pushing to high of the day, AAPL also already firmly negative
Last of those end of quarter buy programs trying to hold market up here at the open, but heavy sell programs unloading aggressively into bid, by midday we should be firmly red and we should worsen into the close today...note Euro turning red here now with dollar pushing to high of the day, AAPL also already firmly negative
9:33AM EST
Added second half of July 129 SPY Puts at $1.31 for average entry of $1.51 (first half taken yesterday before the close at $1.71)
Added second half of July 129 SPY Puts at $1.31 for average entry of $1.51 (first half taken yesterday before the close at $1.71)
9:20AM EST
Will be adding to July 129 Puts here at the open as feel strongly that this will mark a firm short-term top in equities, expect to see reversal in dollar to green as well today...equities may try to hold onto gains during the early session however expect heading into the close gains will surely erode on heavy sell programs looking to sell into the news
Will be adding to July 129 Puts here at the open as feel strongly that this will mark a firm short-term top in equities, expect to see reversal in dollar to green as well today...equities may try to hold onto gains during the early session however expect heading into the close gains will surely erode on heavy sell programs looking to sell into the news
9:15AM EST
US futures higher ahead of the open as Greece austerity votes have begun and appears to favor passage of austerity measures needed to avoid default, protests however turning violent and will likely intensify on announcement of austerity passage, BAC also higher on mortgage settlement...dolllar weaker on Euro strength due to passage of austerity, overall Euro gains somewhat muted as currency markets don't believe Eurozone is out of the woods yet, Treasuries also slightly weaker on weakening technicals, US debt ceiling issue, and commodities mostly higher on weak dollar and relief rally on Greek austerity passage...in terms of trading today, as noted yesterday we believe any morning rally on Greek austerity vote should be sold short as violent protests sure to offset positive implications of austerity measures which will be difficult to implement with so much public dissatisfaction...overall believe this morning's open on Greece austerity news will mark a firm short-term top in equities with next downleg likely to break below critical support on S&P at 200-day SMA
US futures higher ahead of the open as Greece austerity votes have begun and appears to favor passage of austerity measures needed to avoid default, protests however turning violent and will likely intensify on announcement of austerity passage, BAC also higher on mortgage settlement...dolllar weaker on Euro strength due to passage of austerity, overall Euro gains somewhat muted as currency markets don't believe Eurozone is out of the woods yet, Treasuries also slightly weaker on weakening technicals, US debt ceiling issue, and commodities mostly higher on weak dollar and relief rally on Greek austerity passage...in terms of trading today, as noted yesterday we believe any morning rally on Greek austerity vote should be sold short as violent protests sure to offset positive implications of austerity measures which will be difficult to implement with so much public dissatisfaction...overall believe this morning's open on Greece austerity news will mark a firm short-term top in equities with next downleg likely to break below critical support on S&P at 200-day SMA
June 28, 2011
3:49PM EST
Long July 129 SPY Puts at $1.71 (expiring July 15) will add to position on flat to green open tomorrow
Long July 129 SPY Puts at $1.71 (expiring July 15) will add to position on flat to green open tomorrow
3:47PM EST
High probability right now that S&P is going to double top here at 1295-1298 off of last weeks highs and this next downleg will lead to the break below 200-day SMA we've been calling for (delayed a few sessions due to end of quarter window dressing)...believe optimal short is either here heading into the close or tomorrow morning, best strategy is to take half short here ahead of close and put on the other half tomorrow on a flat to higher open
High probability right now that S&P is going to double top here at 1295-1298 off of last weeks highs and this next downleg will lead to the break below 200-day SMA we've been calling for (delayed a few sessions due to end of quarter window dressing)...believe optimal short is either here heading into the close or tomorrow morning, best strategy is to take half short here ahead of close and put on the other half tomorrow on a flat to higher open
3:28PM EST
Big focal point for tomorrow of course will be this Greek austerity plan vote which as we noted last week (see June 21 - 2:10PM entry) only has 2 negative outcomes:
1) Austerity measures are passed and Greece goes up in flames due to massive protests which may even produce protests in other regions of Europe shortly thereafter as other debt-laden countries now look to invoke their own austerity measures in order to preemptively gain access to IMF aid...note IMF doesnt have an open checkbook to hand out bailouts for everyone so there may be a rush by other debt-heavy European countries to request aid following any Greek bailout
2) Austerity measures are not passed and Greece defaults triggering massive contagion across Eurozone with respect to bonds and banks (ie Spanish, Italian, Irish, and Portuguese bonds likely to plummet along with banks due to uncertainty over exposure to Greek default)
so really no possible positive outcome to Greece tomorrow and should we see a pop on initial reaction to passive of Greek austerity measures we will be selling it aggressively short especially as big end of quarter window dressing bid looks to wind down over the next couple sessions
Big focal point for tomorrow of course will be this Greek austerity plan vote which as we noted last week (see June 21 - 2:10PM entry) only has 2 negative outcomes:
1) Austerity measures are passed and Greece goes up in flames due to massive protests which may even produce protests in other regions of Europe shortly thereafter as other debt-laden countries now look to invoke their own austerity measures in order to preemptively gain access to IMF aid...note IMF doesnt have an open checkbook to hand out bailouts for everyone so there may be a rush by other debt-heavy European countries to request aid following any Greek bailout
2) Austerity measures are not passed and Greece defaults triggering massive contagion across Eurozone with respect to bonds and banks (ie Spanish, Italian, Irish, and Portuguese bonds likely to plummet along with banks due to uncertainty over exposure to Greek default)
so really no possible positive outcome to Greece tomorrow and should we see a pop on initial reaction to passive of Greek austerity measures we will be selling it aggressively short especially as big end of quarter window dressing bid looks to wind down over the next couple sessions
2:47PM EST
Small seller popping up here just above 1295 on the S&P, nothing too aggressive just yet but watching him...Greek austerity vote tomorrow obviously an issue which has most longs looking to lock in profits ahead of possible sell the news scenario or even no passage of austerity which would automatically lead to default, so definitely might see some weakness here into the close...not a bad idea to put on a short here at $129.50s with a tight stop maybe at $130.00 on SPY
Small seller popping up here just above 1295 on the S&P, nothing too aggressive just yet but watching him...Greek austerity vote tomorrow obviously an issue which has most longs looking to lock in profits ahead of possible sell the news scenario or even no passage of austerity which would automatically lead to default, so definitely might see some weakness here into the close...not a bad idea to put on a short here at $129.50s with a tight stop maybe at $130.00 on SPY
1:15PM EST
Another weak Treasury auction here with 5-Year notes showing well below average bid to cover (gauge of demand)...TLT showing possible technical breakdown below 50-day EMA here, feels like big debt ceiling issue will start to weigh on Treasuries over the coming weeks especially as Congressional debate looks to intensify into that August 2nd default date...expect debt ceiling issue will also become a more significant focal point for equities in July (up till now has been somewhat overshadowed by Greece issue), and believe market will become much more reactionary to debt ceiling headlines over the coming weeks especially if Greece issue continues to be an open-ended issue and domestic and global economic data continues to come in weak (which we expect)...
Another weak Treasury auction here with 5-Year notes showing well below average bid to cover (gauge of demand)...TLT showing possible technical breakdown below 50-day EMA here, feels like big debt ceiling issue will start to weigh on Treasuries over the coming weeks especially as Congressional debate looks to intensify into that August 2nd default date...expect debt ceiling issue will also become a more significant focal point for equities in July (up till now has been somewhat overshadowed by Greece issue), and believe market will become much more reactionary to debt ceiling headlines over the coming weeks especially if Greece issue continues to be an open-ended issue and domestic and global economic data continues to come in weak (which we expect)...
11:22AM EST
Low volume end of quarter push continues with nearly everything but financials getting bid up (funds dont want these banks on their books at quarter end especially with concerns over bank exposure to Greece default making headlines)...in any case, while funds are trying to tape paint here at quarter end (tape paint = close their holdings and the market as strong as possible so performance for the quarter doesn't look so bad, and clients remain happy) we believe S&P is going to give back all of these gains once quarter closes and funds are again left with the reality of a weakening domestic and global economy and continued headline risk in terms of Eurozone debt as well as US debt limit ie macro environment remains very bearish at the moment...also tomorrow is going to be a big day with Greece austerity vote scheduled, so may see market start to weaken as early as tomorrow even with quarter end on Thursday, as Greece default is such a critical issue even the Calendar will not be able to prevent a sell-off on that news especially with market ramping higher ahead of the vote and already pricing in a positive outcome...so definitely want to start thinking about some shorts on this quarter end rampjob as it is clearly a quarter end phenomenon with no major foundation...we're waiting to see a big seller pop up to give us the greenlight to start selling short, but haven't seen it yet, so hold stay neutral for the time being
Low volume end of quarter push continues with nearly everything but financials getting bid up (funds dont want these banks on their books at quarter end especially with concerns over bank exposure to Greece default making headlines)...in any case, while funds are trying to tape paint here at quarter end (tape paint = close their holdings and the market as strong as possible so performance for the quarter doesn't look so bad, and clients remain happy) we believe S&P is going to give back all of these gains once quarter closes and funds are again left with the reality of a weakening domestic and global economy and continued headline risk in terms of Eurozone debt as well as US debt limit ie macro environment remains very bearish at the moment...also tomorrow is going to be a big day with Greece austerity vote scheduled, so may see market start to weaken as early as tomorrow even with quarter end on Thursday, as Greece default is such a critical issue even the Calendar will not be able to prevent a sell-off on that news especially with market ramping higher ahead of the vote and already pricing in a positive outcome...so definitely want to start thinking about some shorts on this quarter end rampjob as it is clearly a quarter end phenomenon with no major foundation...we're waiting to see a big seller pop up to give us the greenlight to start selling short, but haven't seen it yet, so hold stay neutral for the time being
10:03AM EST
Looks like Consumer Confidence already released at 9:30 (odd as it was scheduled for release at 10:00)...came in weaker than expected at 58.5 vs. expectations of 60.8 and down from last months reading of 61.8...market of course doesn't seem to care as not enough liquidity to take down this market just yet, and programs focused on bidding up stocks into quarter end...we'll see if we can spot any suspicious sellers here though ahead of a reversal off slightly short-term overbought conditions
Looks like Consumer Confidence already released at 9:30 (odd as it was scheduled for release at 10:00)...came in weaker than expected at 58.5 vs. expectations of 60.8 and down from last months reading of 61.8...market of course doesn't seem to care as not enough liquidity to take down this market just yet, and programs focused on bidding up stocks into quarter end...we'll see if we can spot any suspicious sellers here though ahead of a reversal off slightly short-term overbought conditions
9:55AM EST
No volume again here at the open as market pushes right up to wednesday gap at 1287 we outlined yesterday (see 2:22PM entry), and as noted with such low volume its tough to make a definitive call here that market will in fact stall...really one of those markets here in the short-run where anything can happen...in the meantime, current programs driving the market continue to heavily favor tech and really anything with short interest, cyclicals remain rather weakly bid...Consumer Confidence coming out here at the top of the hour, possibly could put in a nice intraday top here on number (good or bad) especially on S&P wednesday gap fill here
No volume again here at the open as market pushes right up to wednesday gap at 1287 we outlined yesterday (see 2:22PM entry), and as noted with such low volume its tough to make a definitive call here that market will in fact stall...really one of those markets here in the short-run where anything can happen...in the meantime, current programs driving the market continue to heavily favor tech and really anything with short interest, cyclicals remain rather weakly bid...Consumer Confidence coming out here at the top of the hour, possibly could put in a nice intraday top here on number (good or bad) especially on S&P wednesday gap fill here
9:17AM EST
US futures higher ahead of the open on reports of progress being made on Greece debt issue ahead of critical austerity vote tomorrow (France proposing to extend maturity of Greek bonds)...dollar slightly lower on Euro strength stemming from reports, Treasuries lower as well, commodities higher across the board yet mostly due to technical bounce...in terms of trading today, pre-market volume levels indicate another low volume trading session, barring any major headlines expect we'll see a rather rangebound session, however with austerity vote looming in Greece expect we have risk of market moving intraday headlines out of Eurozone
US futures higher ahead of the open on reports of progress being made on Greece debt issue ahead of critical austerity vote tomorrow (France proposing to extend maturity of Greek bonds)...dollar slightly lower on Euro strength stemming from reports, Treasuries lower as well, commodities higher across the board yet mostly due to technical bounce...in terms of trading today, pre-market volume levels indicate another low volume trading session, barring any major headlines expect we'll see a rather rangebound session, however with austerity vote looming in Greece expect we have risk of market moving intraday headlines out of Eurozone
June 27, 2011
3:27PM EST
Equities heading into close near highs here yet volume continues to remain very low with SPY barely above 120M in volume, AAPL rallying on not even 10M in volume...really just one big end of quarter manipulated bounce with very little substance or confirmation behind it, and with no real volume (signals weak) and a few days left in the quarter, (manipualtion rampant) tough to make any definitive predictions here short-term....overall macro environment however remains definitively bearish with weak US economic data and a Fed which looks unsure of what to do next the main source of concern...Greece of course continues to linger in the back ground and key austerity vote looming here with vote scheduled for Wednesday...really not a lot of substantial action out there today (really cant take low volume moves seriously as we saw last week when high-beta tech suspiciously soared then tanked again 2 sessions later)...best bet right now is to stay sidelined in the short-run until more definitive signals come in, right now we're caught between low volume manipulation into quarter end and a bearish macro environment ripe with headline risk, so risk/reward profiles showing high risk on both sides
Equities heading into close near highs here yet volume continues to remain very low with SPY barely above 120M in volume, AAPL rallying on not even 10M in volume...really just one big end of quarter manipulated bounce with very little substance or confirmation behind it, and with no real volume (signals weak) and a few days left in the quarter, (manipualtion rampant) tough to make any definitive predictions here short-term....overall macro environment however remains definitively bearish with weak US economic data and a Fed which looks unsure of what to do next the main source of concern...Greece of course continues to linger in the back ground and key austerity vote looming here with vote scheduled for Wednesday...really not a lot of substantial action out there today (really cant take low volume moves seriously as we saw last week when high-beta tech suspiciously soared then tanked again 2 sessions later)...best bet right now is to stay sidelined in the short-run until more definitive signals come in, right now we're caught between low volume manipulation into quarter end and a bearish macro environment ripe with headline risk, so risk/reward profiles showing high risk on both sides
2:22PM EST
Note MSFT up over 4% now on average volume and no real news besides "rumored" accelerated Windows 8 schedule...market clearly being manipulated higher here into quarter end to keep all that long only money happy...no real internal confirmation anywhere, but may need to keep out of the way on the short side till Thursday just in case they try to low volume ramp this market into quarter end...tough to pick up any major signals with no real volume so neutral bias over the very short-term (next few sessions) might be best here until we see something more definitive...next point of interest on the short side though would be wednesday June 22nd gap at 1287 but tough to call a definitive market stall here right now as manipulation looks to be rampant
Note MSFT up over 4% now on average volume and no real news besides "rumored" accelerated Windows 8 schedule...market clearly being manipulated higher here into quarter end to keep all that long only money happy...no real internal confirmation anywhere, but may need to keep out of the way on the short side till Thursday just in case they try to low volume ramp this market into quarter end...tough to pick up any major signals with no real volume so neutral bias over the very short-term (next few sessions) might be best here until we see something more definitive...next point of interest on the short side though would be wednesday June 22nd gap at 1287 but tough to call a definitive market stall here right now as manipulation looks to be rampant