Market Commentary For 05-03-2012

May 3rd, 2012
in Gary's blogging

Aftermarket Commentary:

Markets closed down on moderate volume ahead of the NFP report, which I am guessing is going to be poor. The mid caps led the decent down followed by the small caps and lastly by the large caps. The DOW was off 61.98 or -0.47%, the 500 was off 10.74 or -0.77% and the Russell 2000 was off 12.01 or -1.47.

Gold ended up at 1636 with a positive bias in aftermarket activity. WTI oil at 102.62 and Brent climbed from 115.98 to 116.19 is subdued movement. The USD stayed in its narrow range for the day at 79.28.

There is no real news to report for today, but stay tuned for tomorrow NFP action at 8:30 am. The charts below tell the story for the day.

Follow up:


The 500 at the close. Broke through its support and closed below.

The $RUT at the close. It too, broke through its support and closed below that level and that could be telling.

The DOW at the close. The DOW has wandered up and down without any meaningful direction, but never came close to challenging its resistance – interesting.

The indexes at the close.

NonFarm Payroll is first thing in the morning.



S&P 500: Floor Breach, Breach, Breach

UPDATE: Sell-off stalled for now as S&P caught up with risk-asset's early warning for now.

S&P 500 Futures are picking up speed to the downside on rising volume which takes it back to its 50DMA (as we note AAPL has also broken its 50DMA intraday now). Has the market finally grasped that in order for the Fed to green light QE stocks have to drop and that front running QE by constantly buying stocks ahead of the ramp simply will not work? We'll know soon enough.



2 PM Commentary:

About 1:40 the markets took another and unexpected nose dive for unknown reasons thus far. The Oils have remained unchanged and gold is a bit lower at 1631. Volume is moderate.

The DOW dropped to 13178 off 84.04, the 500 dropped to 1389 off 12.17 and the $RUT dropped to 805 off 13.47 and clearly below its support.

It appears the markets have taken a breather as they have pulled back slightly. My guess of rising into the afternoon was premature in trying to guess what Mr. Market wants to do next. The markets are trending towards a negative bias at this time.

This news could be important in trying to determine any hit of a correction.


Bullish sentiment jumps 7.8 points to 35.4% in the latest AAII Sentiment Survey, the highest level in a month, but below the long term average of 39%. Likewise, bearish sentiment hit a 1-month low, diving 8.9 points to 28.5% - below the historical average of 30%.”

Stocks lose shine as ECB signals no new stimulus

Midday Market Commentary:

Around 11:45 the markets nose-dived to it opening levels testing the days lows. WTI oil dropped lower to 102 while Brent stayed at 116. The European markets closed mostly down and mixed.

Evidently the comments from Former Fed Governor Mishkin: “U.S. economy faces 'big headwinds'.” was the cause of the markets sliding to their morning lows. Volume is light and trading continues to stay in a tight zone.

By 12:30 the markets have moved sideways and volume dropping of further. Unless there is some earth shaking news, I suspect the markets will melt upwards into the afternoon.

USD ISM Non-Manufacturing Composite (APR) Report:

Considered 'Medium' in importance the Composite was expecting 55.3 and the prior was 56.0. Coming in at 53.5 was a weak number compared to the previous 56.0 and the 55.3 expected.

Markets reacted to this news driven event poorly with the DOW dropping to 13234, the 500 to 1398 and the $RUT to 813. Gold reacted to the news by dropping (slightly) to 1637. WTI oil dropped from the 105 levels to 103 and Brent dropped out of the 117 to the 116 area. The USD having been in the mid 78.00 to 79.00 for the past several sessions dropped from 79.52 to 79.24.

The markets have paused without reacting to harshly to the poor news, but anything can happen of course. Volume is red and moderate and is expected to fall to its 'normal' levels and the market is expected to melt up right after the European markets close at 11:30.

Non-Manufacturing ISM Slides, Posts Biggest Miss In 12 Months



Mario Draghi's press conference wraps up leaving European shares significantly weaker and the euro far stronger than when it started as the bank appears to be in no hurry to offer additional easing measures. Did bank staff not get a copy of this week's PMI reports? Stoxx 50 flat after being up 1.5%. Euro flat after being down 0.6%.”

Market Opening Commentary:

Market opened flat on minuscule red volume. The markets are basically where they were at yesterday's close. The DOW is at 13266, the 500 is at 1402, the $RUT is at 818, SPY is at 140 and SSO is at 57.78.

The first 10 minute volume was red and light. It appears strength is building to test the supports that the 500 and $RUT are sitting on.

Everyone is waiting for the 10 am report on the USD ISM Non-Manufacturing Composite (APR). In the meantime the trend is slightly negative with the $VIX rising to 17.07.

So we wait for the reports 20 minutes from now.

Premarket Commentary And Some Thoughts:

Premarket SP500 started out at 1396, climbed to 1402 this morning, descended to 1398 where it is at 9 am. Thoughts are for a slow day until tomorrow's NFP report at 8:30.

First indications are a flat opening on low volume and melting up after the European markets close.

The European markets are broadly higher today with shares in France leading the region. The CAC 40 is up 1.24% while Germany's DAX is up 1.01% and London's FTSE 100 is up 0.64%. The Asian markets closed mixed with the Hang Send down -0.23%.

Dr. Copper fell from 3.78+ to 3.77 this morning. Gold fell from 1647 to 1637 and WTI oil has moved up from its comfort zone of 104 to 105. Brent is stable at 117.


Investors have ignored fundamental weakness for so long that they may as well be trading from the moon, perhaps on a trip funded by all the governments that have artificially propped markets... “ Click Here for Full Report

More and more folks have given up and stopped looking.


New claims for unemployment benefits fell to 365,000 last week, the lowest since March 31, from an upwardly revised 392,000 the prior week. The drop was the biggest since May 2011. Economists were expecting a drop to 380,000 from an initially reported 388,000.”


Well, we were half right earlier when we predicted a miss in claims coupled with a material upward revision in the prior number. We did get the revision from 388K to 392K for the week ended April 21, but the current week, which was expected to print at 379K, came at a far better 365K, a drop of 27,000 from the revised number, which happens to be the biggest percentage drop since July 2011, and the biggest expectations beat since July 2009.

In other words, baffle them with bullshit as economic doctrine continues: will NFP beat tomorrow, won't it?

All depends on when Bernanke feels like launching the NEW QE. In other words, the number came in good (for the first time in 6 weeks), which of course is horrible news for a market which continues to levitate higher on hopes of more monetary heroin. (Read Article Here)


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Written by Gary

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