June 25th, 2012
in Gary's blogging
Opening Market Commentary for 06-25-2012
Late start – dentist for 6 month checkup. I did look at the futures at 7am and knew that we were in for a gap down for the cash crowd. After the opening one headline blamed it on the banking sector another on the bailout in Spain. I did not need to fret on going short on Friday, but the RRR** is still in a narrow range depicting caution for day trading. It is probably safe to jump in for a swing trade or 2 knowing there could be rally's that will put you in the red for a day or son.
The reality of today's decline is that the World finances are in a world of hurt and the Keynesian politicians are not making things better. We really need a crisis so these idiots can point fingers at each other and then we can start a 'REAL' recovery. Until these problems are allowed to come to fruition we will probably see the markets engage in a range bound short cycles followed by bursts of market deterioration. They could at least add some sugar to the Kool-Aid they are trying to get us to drink.
Follow up:Hopium and delusional has been the mainstay of the politicians for months and the party is ending and the hangover has started. Seriously, Kool-Aid is not a good remedy for financial doldrums but this is about all any politician can hand out. Bring on the crisis to FINANALY get us to a point where we can reset all the charts. For months I have warned to dump your dogs and have a cash reserve as I believe there are going to be some really great buys by September.
Today the Chicago Fed Nat Activity Index (MAY) was way down at -0.45 with -0.30 expected and the markets did fall a bit. Then the New Home Sales for May was up 369K and expecting 347K and for a moment the markets did rise. The problem with this number is that it is out of context, way out of context. The following chart shows that the new home sales is still in the dumps and the worst since 1960.
The Summer rally is over, the cash crowd has thinned out and the mattress money is taking a cruise in the Caribbean. There is no one playing the market as the volume levels have once again turned anemic. This low volume market place is a favorite for the market manipulators and one should keep this in mind. It is going to be interesting to see where the Pros and traders are going to put their monies come September.
Another day, another downgrade, writes Louise Armitstead. This time, if Reuters is right, Moody’s is set to downgrade Spain’s banks later today.
As ever, the timing is crucial. Today of all days Spain hoped that market sentiment over the banks would be boosted - only this morning Madrid formally accepted Brussels’ accepted Brussels’ offer of €100bn support for its banks.
On one hand, Moody’s downgrade doesn’t really matter: the banks are effectively being put on ECB life-support anyway so they don’t need the credit ratings to borrow.
But on the other, it will be a nasty blow to confidence in the banks. We’ll have to wait and see what reasons Moody’s gives for the action, but it’s a safe bet that the outlook for Spain as a whole will be in there. Spain has tried to present its problems as a banking - not a sovereign - crisis. But, as Open Europe has pointed out in a note today, the two issues can not reasonably be separated. The banks are loaded with toxic sovereign debt yet they can’t support the sovereign anymore than Madrid can afford to support its banks.
Regardless of Spain’s protestations, the market fears that the €100bn bank bail-out is 1) not big enough to support the banks 2) will further intensify the deadly inter-connection between Spain and its banks.
The DOW is at 12491 down 148 or -1.18%.
The 500 is at 1314 down 20.80 or -1.56%.
$RUT is at 761.97 down 13.20 or -1.70%.
SPY is at 131.36 down 2.10 or -1.57%.
The trend is down and the current bias is down.
WTI oil is at 78.62 trading between 79.20 and 78.32 and the bias is negative.
Brent crude is at 90.17 trading between 90.65 and 90.00 and the bias is neutral.
Gold is down today at 1573, trading between 1576 and 1566 with a positive bias.
Dr. Copper is at 3.29 down from 3.31 earlier.
** RRR = Risk Reward Ratio
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Written by Gary