June 8th, 2012
in Gary's blogging
Midday Market Commentary For 06-08-2012
President Obama made a statement on the economy at 10:30 and the markets melted up a bit leaving everything in the green. He said: “It's in everyone's interests for Greece to stay in the Euro.” That is not exactly true, its only good for Germany which will take a 300 billion hit if Greece departs. He said, “Europe faces threat of renewed recession. Europe's leaders understand their situation.” Excuse me, but they are mostly in a recession now and I doubt seriously that the leaders understand the situation at all. You don't have to look any further that the new French President Hollande the socialist. I guess politicians are toast if they tell the truth, sad situation. Follow up:
Obama said, “U.S. financial system on more solid footing.” Dailyfx correctly retorted, “MF Global couldn't withstand the shocks from Europe - why is everyone convinced that the rest of a fractured banking system can?”
OMG, Obama said, “Spending should not be reduced when economy is weak.” As of last Wednesday US Federal debt, as of the close, was $15,734,596,578,458.59. I have covered the severe dangers of accumulating more debt in past articles, here and here. Now the Obama Administration wants to spend more of what we don't have, this is just crazy talk. The Keynesian motif of “look after the short term, and the long term will take care of itself” reigns supreme. Mr. Obama, you can brighten up a fire tossing kerosene on the logs for only so long and the time to pull back is now.
As a side note here the markets started to show some nervousness at this point of his 'Hopium' speech and the anemic volume started to show red and then volume fell even lower as investors await the real news from China. By noon it was evident the markets were not going to rise much further and probably will melt down a bit more.
Scary, but the following article is closer to the truth than anyone cares to go. I even wrote about this scenario in a previous article, Flash: All European And US Financial Problems Can Be Solved Today, where I penned,
“So to make a long story short, how is this going to end? Actually, easy, but painfully; mostly in the pocket books of the lower and middle class. The international markets, banks and sovereign nations will crash, fail, and or default, hopefully not all at the same time. At this juncture, the politicians, banker CEO's and heads of states will be able to point fingers and blame everyone else except themselves resolving a face saving solution.”
The "solution" is thus collapse. This model has been very effectively explored in The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization by Thomas Homer-Dixon. The basic idea is that when the carrying costs of the society exceed its output, the whole contraption collapses. The political adjunct to this systemic implosion is that the productive people just stop supporting the Status Quo because it's become too burdensome. The calculus of self-interest shifts from supporting the bloated, marginal-return Status Quo to abandoning it.
So the root problem is the system, . . . . There are no "solutions" that can fix those defaults. The "solution" is collapse, as only collapse will force everyone to go do something more sustainable to get by.”
WTI oil is at 82.88 - its low earlier this morning was 82.05.
Brent crude is currently climbing at 97.82 and traded this morning at 97.25.
Gold is at 1583, trading between 1588 and 1558 with a neutral bias.
The DOW is at 12472 up 13.09 or 0.0.10% (200 day MA is 12285, support is at 12288, black cross formed) ).
The 500 is at 1316 up 1.22 or 0.09% (200 day MA is 1288, support is at 1288, black cross formed) ).
$RUT is at 763 up 3.48 or 0.46% (200 day MA is 758, support is at 746, black cross formed) ).
SPY is at 132.05 even 0.00 or 0.00% (200 day MA is 129, support is at 129.20, black cross formed) ).
The trend is down and the current bias remains neutral.
The long term trend, based on a 45 bar moving average, is DOWN. The short term trend, based on a 9 bar moving average, is DOWN. Momentum is indicating an oversold market. However the market may continue to become more oversold.
Short Term: Recently the market has been extremely bearish, however currently the market has lost a some of its bearishness due to the following: the fast moving average slope is up from previous bar, price is above the fast moving average, price is above the slow moving average. Its possible that we may see a market rally here. if so, the rally might turn out to be a good short selling opportunity.
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Written by Gary