Live Market Commentary For 04-18-2012

April 18th, 2012
in Gary's blogging

Markets Closing Comments:

Strictly speaking this was a dreadful session. It was boring, lackluster and just plain painful to watch. The markets couldn't have traded in a tighter range if they had too. But let's look at what is important. The $RUT and the SP500 stayed below their 50 day moving average and DID NOT rise above a resistance at about the same level. SQQQ moved in a 1 point range, TNA in a 2 point range and SSO in a 0.57 range. All risk and no reward.I think this a market you want to run away from, certainly not embrace it.

Like yesterday there was a brief sell-off at the close as DaBoyz took in some profits. The aftermarket has been quiet, with Gold rising moderately to 1641. WTI oil ended up dropping 2 points to 102 and Brent is happy at 118.08. The charts (below) tell the story and it looks like the major charts that had gaps on them were closed yesterday, opening the way further down if that is what Mr. Market wants.

Follow up:


The 500 at the close and stayed below the resistance.

The $RUT at the close. The resistance and 50 day moving average was never in question. The Russell 2000 needs to move up if we are going to see the market move up.

The DOW at the close. Notice it is moving down to what is a support. Breaking through will be a death knell.

SPY at the close. It is below its 50 day MA and forming a change of direction spinning top candle. Needs to be confirmed tomorrow.

The Indexes. The bad news is that the small caps are leading the way down with $RUT down -0.90. This not a lot with all things considered, but needs to be paid attention too.

Interesting comments and investigation.

Bidirectional Stock Market Action Is Bearish by Daryl Montgomery

Non-confirmation in a bull market should always be considered a negative for stocks. A bullish behaving Dow and a bearish acting Nasdaq is not a good sign. The Dow Industrials itself has a separate non-confirmation problem with the Transportation Average. Even though the Industrials went to new highs in the last few weeks, the Transportation Average has not. Perhaps it still will, but it doesn't look like it will happen. This has been a reliable market sell signal for over 100 years.”

Midday Market Comments:

The markets climbed higher during the morning hours on medium to high green volume only to turn red by 11 am. DaBoyz turned it around again and by noontime it was rising again luring in the greedy sheeples creating another dally saga of the manipulative market sea-saw.

The important news is that the Russell 2000 and the 500 never went above their resistance at 813 and 1390 respectively. The $RUT is seriously lagging behind at 803 dashing any hope of rising further for the large caps today. The USD rose to 80.02 and then fell to 79.64 and now at 79.71. Gold has fallen to 1640 while WTI oil followed suit falling from 104 to 102.

Brent has stayed in the 117 area making a mockery of President Obama's quest of controlling the oil speculators and driving oil prices down. Just wait until Israel bombs the crap out of Iran. These politicians just don't get it with all their meddling and wishful thinking of controlling the fiscal problems they caused in the first place.

European markets finished broadly lower today with shares in France leading the region. The CAC 40 is down 1.50% while Germany's DAX is off 1.01% and London's FTSE 100 is lower by 0.38%.

Other morning news from SA.


The Fed and BOE may have turned off the money printing presses for the time being, but the BOJ is ready to keep them running, with Deputy Governor Kiyohiko Nishimura saying "the bank is committed to implementing additional easing measures if deemed necessary." The BOJ's policy board is due to meet next week. “

Another one of my favorite authors pens this article that pretty much sums up my feeling about this market.

Ghost Rally by The Inflation Trader

Equities launched aggressively higher on Tuesday, driven essentially by pique.

The best that news hounds could do was to point to a good German confidence survey and the fact that Spain sold 12- and 18-month bills successfully. If that's worth 1.55% on the S&P, I'm unclear on why. Selling T-Bills with gallons of LTRO money sloshing around shouldn't be particularly challenging, especially because the bills will be rediscounted at the ECB for free carry. Give me a call when Spain sells 10-year notes to investors who actually have money at risk!

Ask yourself whether any finance minister or central banker would ever say "yep, we're pretty sure those suckers are going down.

Overnight Monday night there was a headline that would have made a great April Fool's Day joke. Japan announced that it is going to contribute $60bln to the IMF.

Now note this: total NYSE volume was only 665mm shares, fewer than traded on Monday and the lowest total in a month. This was a rally on vapor, a ghost rally. If this is supposed to produce the next leg of the rally, it is a foundation built on sand.

Market Direction:

The first 10 minute volume was low to moderate as the market melts up, but well below yesterday's close. The 20 minute volume turned red and falling. There is obviously little participation from the cash crowd as most of us are sitting on the sidelines waiting to see what happens. The few 'Dippers' that remain are buying, but it is probably mostly made up of the HFT and DaBoyz doing their thing.

The markets are in a neutral zone between a moderate resistance and a weak support. The market has all the characteristics of a weak one and is doubtful this mini-rally will survive the morning action. (If you can call it action.) The obvious trend is down, but Mr. market has a way to fool you and is best not to guess.

More 'Hopium' being injected into the system by the Europeans and just plain BS from the American side of the 'Pond'.


The road to recovery requires an important balance between growth and austerity, according to Timothy Geithner, US treasury secretary. He told an audience at the Brookings Institution:

To try to do it all up front, the risk is [...] you're undermining the prospects for some stability in growth, some recovery in growth, and you may end up undermining and setting back the cause of reform.

Italy has cut its 2012 economic growth forecast and moved the goalposts on its balanced budget rule.

The Italian economy is now expected to contract by 1.2pc this year from 0.4pc previously, The revision was largely expected, following a series of leaked reports in the media.

The Italian government, which had vowed to balance the budget in 2013, now expects a shortfall of 0.5pc of GDP next year, and a balanced budget in 2014. In a statement, the Italian government said:

Despite the progress made, there is still a long way to go in a context that is more favourable but still characterised by elements of uncertainty.

PM Mario Monti added:

The financial crisis is exacting a huge price on Italian families and young people.

Market Opening Comments:

No amazement here as the markets down but on green volume. The DOW opened at 13052 down 65 points. The 500 opened at 1384, down 6 points. The all important $RUT opened down 5 points at 805. The resistance levels to watch for are key to any rise and for the 500 it is around 1390 and the Russell 2000 is around 813. Premarket Action:

Not really surprised to see the premarket lower this morning as it fits the 'Five-Fingered-Financiers' working the midnight shift running their underhanded magic show. The excuse is of course, is that IBM didn't do so well, baloney I say! Until the market volumes increase, you can't rely on any chart or technical means to outguess these offenders of a free market. (Yeah, I know, I haven't finished my first cup and I am off on another rampage!)

Anyway, the markets will open down a tad and who knows what's up Mr. Markets sleeve for today. As Leavitt points out, we have a market without any clear bias. But being weak, I feel we will probably see a lackluster, low volume market that melts up during the session.


Yesterday INTC and IBM dropped after releasing earnings. Before today’s open they’re trading down 2.6% and 1.7% respectively.

When the week began there were very few good long set ups to be had and a nice basket of shorts to pick from. Now, two days later, charts of individual stocks have neutralized. There are some shorts and some longs and definitely no clear bias.

Things are not very clear in the near term. We’ve had some ups and down, and as of now, the market is unchanged over the last five weeks.”


Futures for the Dow Jones Industrial Average were down 3 points, or 34.5 points below fair value, at 13,021. Futures for the S&P 500 were down 0.7 points, or 3.6 points below fair value, at 1383. Futures for the Nasdaq was falling 0.5 points, or 7.2 points below fair value, at 2712.

In Asia, Japan's Nikkei Average finished 2.1% higher following the strength in other markets. Hong Kong's Hang Seng index rebounded 1.1%, also following gains in the other markets as well as mainland China bourses, which advanced as the property sector rallied on expectations that falling home prices would lead to stronger sales and open the door to policing easing.

In corporate earnings news, Intel cruised past Wall Street's expectations for its first-quarter results but the stock was down in premarket trading, off 2.6% to $27.72, as the Dow component forecast a sequential decline in gross margins in the second quarter.”

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Written by Gary

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