June 14th, 2012
in Gary's blogging
Closing Market Commentary For 06-14-2012
The markets started out today with a lack of direction and falling volume. As the morning progressed equities moved about 1% higher on low volume and remained there for most of the afternoon. Almost like clockwork the markets repeated yesterday's action by retreating from the days highs at about the same time. I believe the decline was because Egan-Jones Ratings sliced France’s credit rating to BBB+ from A-, citing its expectations that “Europe’s No. 2 economy may have to act to support its banking sector and will see higher borrowing costs down the road”, according to FoxNews.
I have read in several reports that the unexpected increase in jobless claims, has led to optimism regarding the likelihood of further stimulus from the Federal Reserve which in turn helped the market rise today. I see that as completely false optimism and the likelihood of further QE is not going to happen for some time, if in fact it does happen at all this year.
Tomorrow is options expiration day and if the market remains flat or with a positive bias will be enough to cause the most pain to the option holders. With that in mind and the Greek outcome I may look into entering the market towards the late afternoon. Here is the current opinion on who wins the Greek elections. Follow up:
Follow up:The news that the Global central banks are preparing a coordinated action to provide liquidity to financial markets following the Greek election on Sunday if it becomes necessary, according to a report by Reuters, citing unnamed G20 sources. The markets and the euro rallied on the news and the Dow jumping 180 points to 12698. Then just a quickly fell close to the mid-afternoon lows. Lots of volatility during this brief period with the market recovering moving to new highs for the day.
My opinion, just more 'Hopium', plain and simple as the 'unnamed G20 sources' are deeply worried about their own hides getting caught up in the fallout. Plus, one tiny issue and that is the Central Banks NEVER announces its intentions in advance, it's a big fat rumor. Too bad I didn't take a short or 2, but the odds that the market would rise tomorrow anyway and this is just a good excuse.
Back to Greece, first, if the voting is close we may not have a consensus until Tuesday – at the earliest. Which in turn will delay any meaningful market movements. Second, look for a curve ball. Something will throw, what is being labeled as a 'normal' election, into chaos and is almost guaranteed.
“Greek stocks rallied the most in more than nine months, while a gauge of banks jumped 21 percent, amid speculation that New Democracy, the party that backs an agreed bailout for the nation, may win the June 17 elections.
The Athens Stock Exchange Index (ASE) climbed 10 percent to 550.1 at the close, the biggest jump since Aug. 29, as economists at EFG Eurobank Ergasias SA (EUROB) said Greece is on course to meet its budget-deficit target for 2012. The gauge pared this year’s decline to 19 percent. The FTSE/Athex Banks Index (ASEDTR) soared 23 percent to 224.21 today.”
“Bwin.Party Digital Entertainment Plc showed New Democracy as odds-on favorite to win the vote. Speculators betting on the party's victory will get 1.45 pounds, if successful, for each pound of investment, according to the company's gambling site. Those betting on Syriza will get 2.55 pounds for each pound."
The DOW closed at 12651 up 155 or 1.24%.
The 500 closed at 1329 up 14.22 or 1.08%.
The $RUT closed at 762 up 9.96 or 1.32%.
SPY closed at 133.85 up 1.77 or 1.34%.
The trend is neutral and the current bias is up.
WTI oil is now at 84.27 trading all day in the 83.00 zone.
Brent crude is at 97.00 it too traded in a narrow zone of 96 to 97.
Gold is up today at 1625, trading between 1611 and 1627 with a neutral bias.
The SP500 at the close.
The $RUT at the close.
The DOW at the close. Notice, today's high is at the resistance. Any bets that it won't go any higher? This is a very weak market.
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Written by Gary