April 24th, 2012
in Gary's blogging
Market Closing Comments:
Markets closed up as suggested they would in yesterday's post and recovering some of the losses that occurred yesterday.
The 5 day trend is down and the DOW and The SP500 closed BELOW their respective resistances. The $RUT closed its opening gap made this morning which will aid it in sliding down some more if that is what Mr. Market has in mind tomorrow. The DOW opened at 12927 climbed to 13050 (resistance = 13037) and closed at 13001. The 500 opened at 1366, climbed to 1375 (resistance = 1374) and closed at 1371. The $RUT basically did nothing by staying right in between its resistance at ~812 and its support at 786 closing at 798. Follow up:
Gold rose to 1642 and has fallen 2 points to 1640 while WTI oil has been trading in the 103 area like it has been for several sessions and Brent has stayed in the 118 range all day. As usual we are in a decision zone that looks bearish to me and I would suggest not jumping in long. Shorting is another matter, but make it a light trade just in case. Volume has been light today and reflects the indecision of traders waiting for better news.
The charts tell the story.
The 500 at the close.
The $RUT at the close.
The DOW at the close.
The indexes at the close.
My test short FAZ is still alive and well. Bought at 22.19 reached a high of 23.50 today and closed at 22.12. Started to sell earlier, but wasn't sure it would fall all that far anyway. Tomorrow is the day of reconing.
Midday Market Commentary:
Morning reporting did move the markets up, perhaps the medium important USD New Home Sales (MAR) was the moving factor after all. The volume fell off as the markets continued to churn in a tight narrow zone with the bulls and bears just about even. The $VIX fell to 18.39 but the DOW and the SP500 remained below the all important resistance levels.
Volume has fallen back to the 'normal' anemic levels and typically DaBoyz take the advantage to melt the markets up in an obviously weak market place. Everyone is now waiting for the USD Durable Goods Orders (MAR), USD Durables Ex Transportation (MAR) tomorrow morning and the FOMC report in the afternoon.
As reported earlier, 32,000 new homes were sold in March. Translated that means each state on an average sold 640 homes. Kinda brings the bleak picture into perspective doesn't?
The seasonally adjusted estimate of new houses for sale at the end of March was 144,000. This represents a supply of 5.3 months at the current sales. Obviously this does not include the millions and millions of homes in shadow inventory and even more homes which have negative equity and will be critical in determining future demand.
The irony is that due to February revision to 353,000 total new home sales meant that the sequential change was a -7.1% drop on expectations of +1.9% rise. Alas, the robots took the headline and ran with it convinced this number is a green light to QE when in fact the print was better than expected (if still creeping along the bottom).
Market Financial Reporting At Ten AM:
Interesting that a few minutes before the 10 am report markets started to fall, someone is getting advance notice of the numbers while the rest of us has to wait. Smacks of manipulation I think. After the 10 am reports the markets took off on insignificant positive news from the Richmond Manufacturing Index.
The DOW moved sharply up and is testing its resistance at 13033 and the same with the 500 at 1374. The $RUT which is really the one to watch moved up slightly to 796 but nowhere near any support or resistance. After a few minutes the markets started slipping again reaffirming the upper resistance levels as important and strong.
The green volume was heavy during the brief run up but turned red and moderate as the markets turned negative again.
The USD Richmond Fed Manufacturing Index (APR) was up a striking 14 with 6 expected and last reporting was 7. That drove the markets up big time even though it is considered a low importance. The figure is often used to affirm or question the ISM report, and has little impact on markets
$USD: U.S. Consumer confidence (Apr) print lower at 69.2 vs. 69.6 expected. Previous revised downwards to 69.5 from 70.2.
$USD: U.S New home sales (Mar) print in higher 328k vs. 320k expected. Prior revised upwards to 353k from 313k.
“More on AT&T's (T +2.2%) Q1: A 41% Q/Q smartphone sales drop contributed to AT&T's wireless operating margin rising to 27.2%, up 140 bps Y/Y and 1200 bps Q/Q. Also, Ma Bell delivered 726K wireless net adds (includes 460K tablet/PC data plans) and churn of 1.1% (1.21% in Q4), and a 1.7% Q/Q increase in ARPU to $64.46. 200K U-Verse TV subs were added and wireline data revenue rose 8.7% Y/Y, but wireline voice fell 10% “
“The February Case Shiller number is out and represents the latest high frequency economic miss, with the 20 City Seasonally Adjusted number printing up 0.15% on expectations of 0.20%.
The good news, of course, is that this is the first improvement in the Seasonally Adjusted Top 20 MSA Series since April 2011.
The bad news is that this was all warm weather driven, and courtesy of seasonal adjustments: unadjusted the February data declined once again, this time by 0.8%, the 6th consecutive decline in a row, and the lowest number in a decade.
Furthermore, the data would be uglier if it were not for prior period downward revisions in what seems to be a page right out of the BLS propaganda playbook. Needless to say, since this data is two months delayed, as many will recall in February the market was soaring on hopes that this time, just once, the "recovery" will be self-sustaining.
Then the LTRO aftereffects fizzled, and everything went to hell again. Finally putting it all into perspective, the February data puts the Top 20 City data back on par with price levels last seen in early 2003. But hey - at least we have a very brief and transitory seasonally adjusted upswing.”
Market Opening Analysis:
Market opened mixed with the DOW opening just above yesterday's close at 12927 and moving up to 12971 in the first few minutes and the 500 opened At its close of 1366 and moved up to 1369. The $RUT opened at 972 a point above its close yesterday and moved to 973. Sluggish opening at best and the bias is positive – so far!
The first 10 minute volume was low to moderate and red and then turned green as the markets churned for position.
WTI oil spiked up to 104 and melted down to the high 103's while Brent has remained steady in the 118 range. Gold also moved smartly up to 1646. The Asian markets closed mixed with the Nikkei down at -0.78%. European markets are slightly higher with shares in France leading the region. The CAC 40 is up 0.69% while Germany's DAX is up 0.09% and London's FTSE 100 is up 0.04%. At one point the DAX went negative earlier.
The premarket started out above yesterday's close and then melted its way down blow the close and back up to where it closed. It is going to be one of the days unless the 10 am financial's are really down and ugly.
The S&P/Case-Shiller composite index of 20 metropolitan areas shows home prices fell 0.8% in February on a non-seasonally adjusted basis, a steeper drop than the 0.6% economists had expected. Prices fell 3.5% from the same month in 2011, a slightly bigger drop than the 3.4% expected.
3M revealed first-quarter earnings of $1.59 a share on revenue of $7.5 billion, beating expectations of $1.49 a share on $7.49 billion. The Dow component also boosted the lower end of its full-year earnings forecast by ten cents.
Not a whole lot going on as everyone is waiting for the 10 am news.
To contact me with suggestions or deserved praise:
Written by Gary