Live Market Commentary For 05-17-2012

May 17th, 2012
in Gary's blogging

After Market Closing Comments:

The Markets fell in an orderly fashion today after a very brief rise in the premarket. Volume today was heavier than the past sessions in general although not what one would consider heavy. It is a growing sign of of more investors and funds converting to cash and moving to 'safe' assets such as TLT. TLT made a meaningful assent today, one indicator you should pay attention to, see chart below.

The DOW is at 12442 down 156.06 or -1.24% (200 day MA is 12196), the 500 is at 1304.86 down 19.94 or -1.51%(200 day MA is 1278), the $RUT is at 754.33 down 17.78 or -2.30% (200 day MA is 752.88) and SPY is 130.81 down 2.01 or -1.51%(200 day MA is 129.97). The trend is down and the current bias is down. The showdown at the 200 day MA corral is at hand and represents a serious threat to the bulls if penetrated. A bit late for shorting and I wouldn't go long either.

Follow up:

The SP500 aftermarket is still declining and is at 1301. WTI oil finished at 92.50, USD finished up at 81.69, Dr. Copper ended at 3.46 down a penny and gold finished up nicely at 1572.94.

The TLT at the close.

The SPY at the close. It has clearly penetrated the lower Bollinger Band indicating to me that we will see an up day tomorrow. The bad news is that went below AND closed below its 200 day MA. My prognosis is that we will see the markets rise a bit tomorrow, but SPY again closing below its 200 day.

The $SPX at the close.

The $RUT at the close.

The Indexes at the close.

Noon Market Commentary:

About 11:45 e bears decided that they have had enough of sideways trading and sent the markets down steeply, but not a waterfall type of thing, but enough to pay attention. The markets could easily recover by the afternoon so nothing is written in stone at this point. As noted before the supports and 200 day MA's are waiting for a test and most likely we will see those levels before long.

The DOW is at 12497 down 100 or -0.79%, the 500 is at 1311 down 13.49 or -1.02%, the $RUT is at 759 down 12.93 or -1.67% and SPY is 131.55 down 1.27 or -0.96%. The trend is down and the current bias is down as the volume remains red but low to moderate.

After Market Opening Commentary:

Markets opened at about where we left off yesterday and flat. First few minutes of volume was red and subdued until the 10 minute mark passed and then became moderate to the low end of heavy. Markets were now melting down below yesterday's daily lows as profit taking is overpowering the bulls. The oils and gold are still fumbling around the earlier reporting numbers and the USD is up slightly to 81.71.

At Dailyfx, they report some more bad news “U.S. Weekly Bloomberg Consumer Index falls to -43.6 vs. -40.4 PRIOR AND -38.0 EXPECTED.” That news melted the market down even further.

At the 10 am reports the rated moderate importance US Leading Indicators (APR) falls 0.1% while a rise of 0.1% was expected to and the US Philadelphia Fed. (MAY) fell to -5.8 when 10.0 was expected. Reports are further indication of a weakening economy and of course took the markets further down on heavy volume.

After recovering just a bit the DOW at 10 am is 12559 down 31.71 or -0.25%, the 500 is 1320 down 3.83 or -0.28%, the $RUT is 7.82 down 4.29 or -0.54% and SPY is 132.40 down 0.45 or -0.33%. The trend is down and the current bias is neutral as the markets trade in narrow range.

Leavitt is looking for a surprise rally and I think that is VERY unlikely until we get to the next levels of support or the 200 day MA, whichever comes first. Just too much weakness in the US equities and the news from across the 'Pond' is dreadful. I guess anything could happen today, but Mr. Market will probably hold off until tomorrow for options expiration to move the markets up.

Premarket Commentary:

Early on, prior to the 8:30 employment reports the markets were down to flat. The DOW was down 5 points and after the announcement that the new claims for unemployment benefits remained unchanged at 370,000 last week from the week prior. The markets slowly melted up to the point where they were a few points higher. Even though the rates stayed basically the same the markets are not reacting in a solid positive manner. The DOW edged up to a plus 2 points and the 500 up 0.40.

WTI oil is still in the 92 to 93 range with a positive bias as the markets remain positive. Brent hasn't moved this morning and is at 111.71. Gold is moving between 1557 and 1551 currently at 1553 with a negative bias. The USD was as high as 81.83 and has slipped to 81.65.



Although U.S. jobless claim figures missed market expectations, they're still holding at the lowest rate since 2008.



Is this losing streak going to continue? The S&P has dropped 9 of 11 days and many of those days the close was in the bottom third of the intraday range. It’s almost getting comical. The market just keeps going down, but the bulls haven’t hit the panic button yet. What do you think is more likely – we get a surprise rally (the biggest 1-day wonders do, after all, occur within downtrends) or the bulls throw in the towel and the floor gets pulled out?

We began the week with several breadth indicators pointing down but not yet in oversold territory…now most are. The trend is down. The path of least resistance is down. But it’s getting late to short. Even though lower prices are likely over time, in the near term the risk/rewards aren’t very favorable.

News is JP Morgan’s $2B loss has climbed to $3B. This is what happens when you announce a position that you can’t easily unwind. Every hedge fund on the planet piles on and makes matters worse. There is no mercy when it comes to trading.

Spain has officially entered a recession. I’d like to see the concept explained to the 25% unemployed that the country just now entered a recession. Customers of the Spanish bank Bankia have withdrawn $1.3B in the last week. If there’s a run on the banks, kiss Spain goodbye. They won’t have enough money to cover the demand.

My S&P target remains 1275-1300. It could happen today if the bulls push the panic button, or it may not happen until next week if the market wants to bounce. In either case, I’d be shocked if it didn’t eventually happen.”



Wal-Mart tops forecasts. Wal-Mart's (WMT) Q1 EPS of $1.09 beat by $0.05. Revenue grew 8.6% to $112.3B and beat by $1.8B. Expects Q2 EPS of $1.13-$1.18 vs. consensus $1.16. Shares were +1.5% premarket. Opinion: Wal-Mart is a bargain at $58.

JPM trading loss grows by 50%. Following JPMorgan's (JPM) massive trading loss, which the NYT says has grown to $3B, the White House has intensified talks with the Treasury about ensuring a tough interpretation of the Volcker Rule, the WSJ reports. The trouble is, even if JPM violated the spirit of Volcker, it may have found a legal way to work around the fine print. Opinion: Do the banks have a stranglehold on policy?

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Written by Gary

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