Live Market Commentary For 04-30-2012

April 30th, 2012
in Gary's blogging

Market Closing Comments:

Except for a last ditch effort on the bulls part the market was a low volume lackluster session that was quite frankly boring as hell. There was some bullish after-market activity that was a bit unusual, but no extreme movements as the markets more or less stayed exactly where they closed at.

Tomorrow morning at 10:00 AM the ISM Index and the Construction Spending are up for reporting. I am expecting lower numbers than what is expected and a depressed market.

Follow up:


For those interested, I did sell the FAZ I bought last week for 22.32 for a 1.13 point profit. The unfortunately, on a good trading day you can get that on an hourly basis. The trading now has to be done over several session with tremendous risk, something I don't recommend.

I just saw this old market saying, “Amateurs open the market, but professionals close it”. It will probably be rewritten to say, “Amateurs may open the markets, but the crooks that proliferate manipulate itby Gary


At the close: Dow -0.11% to 13214. S&P -0.42% to 1397. Nasdaq -0.66% to 3049.
Treasurys: 30-year +0.06%. 10-yr +0.08%. 5-yr +0.02%.
Commodities: Crude -0.1% to $104.82. Gold +0.11% to $1666.65.
Currencies: Euro -0.11% vs. dollar. Yen -0.53%. Pound +0.22%.

Market recap: Stocks failed to gain traction after a batch of underwhelming headlines, including news that Spain's economy is officially in recession and weak readings on U.S. personal spending and manufacturing. Financials and techs slumped to losses, while energy eked out gains. Apple sold off again, -3%. NYSE declining issues topped advancers two to one.


Mid Afternoon Activity:

Not much has happened since my report at 10:30. Low volume, sideways movement is a tight and narrow range leaves the markets exactly where they were at 10:30. The bias is negative, but the bulls, the few that are buying, have kept the markets from deteriorating. There is little to gain by trying to guess what is going to happen next.

The news is light with occasional article observing the weakening Eurozone and China lack of news. The Zerohedge has an interesting observation.



Charting Equity's Hype/Hope

On this slow news and market action day it is worth noting that Equities and Treasuries have dramatically dislocated in the last few days with Treasury yields near multi-month lows and stocks at one-month highs. Whether this is the ($700 billion expected) QE3-trade or a reflection of the increasingly bifurcated world in which we live is unclear but for certain this is the largest disconnect (with equities rich) of the year so far.

Mid Morning Comments And Analysis:

At 10 am the Chicago Purchasing Management Index (CPI) droped to 56.2 in April from 62.2 in March and is the lowest level since November 2009. The CPI index, which measures manufacturing activity in the Midwest region, was expected to drop to 61.

The Markets reaction was biased to the positive side but not enough to close in on its opening decline. The volume turned green and finally diminished to anemic levels. Numbers above 50 indicate expansion, while below 50 point to a contraction of manufacturing activity.

By 10:30 the market bias once again turned negative, but on very low volume.

Market Opening Analysis And Commentary:

Markets opened lower to flat and much like Friday, not much is happening. In the first few minutes the markets languished and without direction although the markets bias is negative a bit.

At the opening the DOW is down at 13223, the 500 is down at 1400 closing on Friday at 1403, the $RUT is down slightly at 824 closing on Friday at 825.47.

The first 10 minute volume was red and low and turned green. The 'Dippers” were there in small numbers taking up some the slack. Volume became moderate at the 15 minute mark and red. The battle between the bears and the bulls kept the trading in a very tight range for the first few minutes and then stared to drop in earnest on heaver red volume.

By 8:45 the markets we decisively lower and very heavy volume. The DOW was off -30.00, the 500 was off -6.41 and the Russell 2000 was off -5.30.

After a four-day winning streak like in the US, the UK's FTSE 100 opened mostly flat with the Eurozone again in focus as Spanish debt concerns continue to weigh on sentiment. European markets are mixed at the US opening. The FTSE 100 is higher by 0.02%, while the CAC 40 is leading the DAX lower. They are down 0.97% and 0.09% respectively. The Hang Send closed higher at 1.70 while the other Asian markets closed lower and in the red.

Comments regarding this morning financial government reports were not exactly glowing and showing some concern as to what they really mean.


Most importantly, the surprising inversion between spending and income, pushed the savings rate from 3.7% to 3.8%, just shy of 4 year lows, and the first increase in 2012, although well below the 4.9% savings rate in March 2011, which means that increasingly the consumer is tapped out. When one takes away the impact of the record warm winter (of which March data was still part of), it becomes quite clear that unless Joe Sixpack is charging everything, then Q2 GDP will be a very big disappointment.


Consumer spending in the US continues to climb - albeit at a slower pace. Household purchases, which account for more than two-thirds of the economy, increased by 0.3pc in March, from an upwardly revised 0.9pc in February, according to the US commerce department.

Tom Porcelli at RBC capital markets added:

I do not think there was that much here [in the US] as most of this was known thanks to Friday's GDP report. We already know that spending was decent in the first quarter and this rounds out the information that was lacking on Friday. At the end of the day there is not a whole lot here. How much of the spending in the first quarter was due to warm weather is the big question.

Louise Cooper at BGC Partners said:

The news that the Spanish economy contracted by 0.3% in the first quarter of the year after a 4Q contraction of 0.3% puts the economy back into recession (two quarters of negative gdp). Although the figure is not quite as bad as forecast of a 0.4% fall, do not get carried away with optimism – I believe that Spain is close to imploding under austerity and a property bust. It is following Ireland but without the benefits of a reformed and pro business economy.”

Canada is another country to report gloomy stats today.


Canada February GDP -0.2% vs. +0.2% expected, +0.1% previous. Y/Y +1.6%, +1.7% previous. The loonie - recently going strong thanks to talk of rate hikes by the BoC - takes a tumble, -0.6% to $1.0142.


PORTUGAL'S PM GASPAR: Portugal continues to forecast recession in 2012.

BANK OF GREECE: Greek bank lending contracted 4% in March.

PORTUGAL: to reduce primary spending limit 3.2% and reduce total spending limit 2.1% in 2013.


Trading has been difficult lately because we have not always had an obvious and dominant trend to cling to. Rallies have gotten sold and dips bought. No move has lasted long, so unless you were ahead of the curve taking profits, you didn’t make nearly as much as you could.”

Premarket Commentary:

By 8:45am the market reaction was muted. The DOW futures are down -20.00, NASDAQ is down -10.25 and the SP500 is down -9.00 at 1394 closing Friday at 1403.

Gold fell from 1659 to 1650 at the 8:30 am announcements. The oils remained steady at the prices they have held for weeks. WTI at 104 and Brent at 119.


U.S. consumer spending climbs 0.3% in March

(MarketWatch) - Consumer spending in the U.S. rose a slower 0.3% in March after a sharp increase in February, the Commerce Department said Monday.

Personal income climbed a slightly faster 0.4% last month, mainly because of higher government benefit payments. Economists surveyed by MarketWatch had forecast spending to rise by 0.4% and income by 0.3%.

Since incomes rose faster than spending, the personal savings rate edged up to 3.8% from 3.7%, though it's still near a post-recession low. Adjusted for inflation, disposable income (money leftover after taxes) increased 0.2% last month.

The core PCE index, which excludes food and energy, also rose 0.2% and matched expectations. And revised data for February showed that spending rose 0.9% instead of 0.8% as originally reported.

That's the biggest increase since August 2009, driven largely by a surge in auto sales

U.S. savings rate edges up to 3.8% from 3.7%


Mar. Personal Income and Outlays: Income +0.4% vs. +0.3% expected, +0.2% prior. Personal spending +0.3% vs. +0.4% expected, +0.8% prior. PCE core price index +0.2% vs. +0.2% expected, +0.1% prior.

To contact me with suggestions or deserved praise:

Written by Gary

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