June 12th, 2012
in Gary's blogging
Midday Market Commentary For 09-12-2012
Interestingly the supports for the DOW at 12350 and the $RUT at 747 have become a point of resistance of falling further. The markets fell to that point around 10:30 and rallied back up with the 'dipper's' help and besting the morning highs. Falling volume has been mostly red and the ETF's are trading in a narrow range refusing to take a stand although the longs have the court advantage for now.
Round and round we go and never going too high or low. Sideways markets are the most dangerous to call, especially midday ones with low volume, as they can break in either direction making any call dangerous. Although it appears the markets have made a break above the morning highs, I would urge caution in jumping to any conclusion. The green volume of late has been pathetically low and the rise of equities is all due to DaBoyz and the 'Five-Fingered-Financiers' and should NOT be considered a trend in progress. Even the day traders are taking a break as the risk/reward ratio is too narrow to squeak out a profit. Remember, “Bulls and bears make money, but pigs get slaughtered”. Follow up:
Bret Jensen said this morning, “Unlike the LTRO which buoyed the market for months, I believe this latest effort's impact on our market is likely to have the half-life of a fart.” I wrote yesterday that the 100 billion insertion was like hunting for quail with a BB gun and we may see the markets try to stay up while this bailout is still news and the end of Friday.
Bret goes on to say in his article below several interesting facts that traders and investors alike should read about.
“Be careful out there as Europe still has not begun to address its core issues. Use any rally to lighten up on high beta names, especially if your portfolio is lacking dry powder. In addition, consider shorts in select overvalued names like LinkedIn (LNKD).”
WTI oil is at 83.10 climbing steadily sense this morning.
Brent crude is at 97.11 matching its highs earlier this morning.
Gold is up today at 1613, shooting up from 1587 this morning.
The DOW is at 12508 up 97.48 or 0.79% (200 day MA is 12270, support is at 12298, black cross formed).
The 500 is at 1316 up 7.92 or 0.60% (200 day MA is 1289, support is at 1288, black cross formed).
$RUT is at 755 up 4.41 or 0.57% (200 day MA is 758.95, support is at 746, black cross formed).
SPY is at 132.15 up 0.72 or 0.55% (200 day MA is 129.17, Support is at 129.20, black cross formed). The trend is up and the current bias is up.
More bad news for Spain: William Hill has cut its odds for a Spanish exit from the eurozone this year from 10/1 to 5/1. It's also shortened the odds on it being the first country to leave the eurozone from 7/1 to 4/1. Spokesman Graham Sharpe said:
The bank bail out appeared to reduce the chances of Spain departing from the euro in the short term, but punters seem to believe that with their borrowing rate increasing they could still be vulnerable.
Greece, though, remains the favourite at 1/8 to be the first country to quit the euro...
Fitch Ratings has downgraded 18 Spanish banks' Long-term Issuer Default Ratings and 15 banks' Viability Ratings. Expects Spain to stay in recession in 2012 and 2013.
Swiss five-year bond yields go negative.
Dutch Finance Minister Jan Kees de Jager says eurozone situation is "far from stable". Spanish 10-year bond yield passes 6.7pc - €100bn doesn't buy much anymore, does it?!
Interesting afternoon read.
The Rally May Have Legs But It Has No Hope by David Urban
“If history is any indication the can has been kicked down the road a few months until the flames roar up again even worse than before."
Do not let this rally fool you as we are going to be heading lower and eventually test the December lows. Ask yourself what is being done to solve the structural problems of 25% unemployment in Spain and tax evasion in Greece. Until those questions are answered the uncertainty that currently exists in the global economy will continue grinding the recovery to a halt.”
Also, an entertaining read is the following article. It does have some political slants that may lift an eyebrow depending which side of the aisle you reside, but the theme is probably correct overall.
“The US, and much of the world, faces an unavoidable reality. There must be a severe economic collapse before we can proceed with the next period of sustained economic growth. This scenario is based on fundamental economic theory and a long history of what happens when the current economic conditions persist and are worsening. This reality is of utmost importance to any investor except one with a very short-term investment horizon.”
To contact me with suggestions or deserved praise:
Written by Gary