June 25th, 2012
in Gary's blogging
Midday Market Commentary for 06-25-2012
By 11 am the volume moved up to the low to moderate area as more profit taking and late-comers decided to leave the market. The trend currently is slow-motion melt down on low volume. TLT is up from 126.36 to 126.92 showing some movement to a 'safe haven' but I wouldn't place any bets right now. Gold is still not indicating any movement either that I can see forecasting a rise in the making. Even the UD dollar is higher than it has been for some time, but not high enough to spell out a direction. The volume leaders at noon are SPY down at 131.13, BAC down at 7.60 and NOK down at 2.17. The expected market mover for the day was predicted to be the Supreme Court's decision of Obama Care, but now that has been moved to tomorrow along with the US Consumer Confidence (JUN) at 10 am.
I sit here watching and listening to the brain dead politicians trying to save their own butts while the EU is quickly sliding towards a recession, with several nations already there. I also see the EU profits of large multinationals US Companies slip creating what I am sure is havoc with their financial balance sheets. I am afraid this is just a warmup of things to come.
I'll stay with my earlier observation that ALL of the indexes are too high and need to reset lower before any meaningful chart data can be gleaned. I claimed a year ago that we would see markets plummet to new lows not seen since 2009, but it never happened because of Hopium, Delusionol and just plain stupid politicians printing money. I have always been ahead of the game as I tend to discount sneaky politicians and greedy market manipulators. But in the end the markets will reset. Until then my friend is the trend.
The DOW is at 12492 down 156 or -1.23% right where it was.
The 500 is at 1311 down 23.08 or -1.73%.
$RUT is at 761.85 down 13.31 or -1.72%.
SPY is at 131.11 down 2.33 or -1.75%.
The trend is down and the current bias is neutral.
WTI oil is at 78.57 trading between 79.20 and 78.32 and the bias is positive.
Brent crude is at 90.18 trading between 90.65 and 90.00 and the bias is negative.
Gold is up at 1583, trading between 1576 and 1587 with a positive bias.
Dr. Copper is at 3.31 up from 3.29 earlier.
James Kostohryz and I share the same conclusions in that something big is about to happen in his foretelling article below. I take issue with some of the conclusions, but for the most part they are accurate to this point. I tend not to be so pessimistic as James and place most of the financial blame squarely on the shoulders of the Keynesian politicians running the various countries. James has the same problems predicting outcomes as most but at least doesn't talk out of both sides of his mouth.
I too foresaw the gigantic unsolvable problems facing the EU, China and the US. and I predicted that 950 was a likely goal for the SP500 and it hasn't happened yet. This has been mostly the manipulations of Governments propping up its financial institutions. We would have been at that level a long time ago if the QE's had not been implemented. The QE's have saved the banks but the taxpayers are going to pay for this financial foolishness. If you have doubts as to the outcome of the markets you need to read the following.
The Start Of The 2012 End Game Is Upon Us by James A. Kostohryz
“My main thesis has been that the economies of the PIIGS would enter into a "death spiral" characterized by rapidly contracting economic activity, exacerbated by fiscal austerity measures, which in turn would produce even wider (and frighteningly unsustainable) fiscal deficits. . . The next Euro summit on June 28 and 29th is being widely perceived as perhaps the last chance for Europe to avoid the sort of full-scale crisis . . . at this point, the hope that a full-scale European crisis can be averted is merely wishful thinking, bordering on naiveté. . . the German government and the Bundesbank have very carefully, meticulously and painstakingly articulated a very clear and coherent rejection of global demands that they support debt mutualization either through Eurobond issuance or via ECB sovereign bond purchases. . . the market as a whole has adopted a posture of willful disbelief regarding the German position and its consequences.
The overwhelming market consensus has been . . . the Germans and/or ECB will do whatever it takes to avert a Europe-wide crisis. This earnest faith is very soon to be exploded as it will become clear after June 28-29 that the Germans are not willing to do enough and/or fast enough to avert a horrific economic and fiscal crisis in Southern Europe. And this, in turn, means that a full-fledged Europe-wide economic and fiscal crisis is inevitable.
How The Global Crisis Will Unfold
The first major focal point for the coming global crisis, outside Europe, will be China. . the Chinese economy is headed for a hard landing. . . sharp slowdown in China will reverberate throughout Asia and will cause sharp recessions. Global commodity prices will be devastated. Commodity-dependent countries in the Middle East and Latin America -- as well as Canada and Australia will experience sharp economic contractions.
The die has been cast in Europe and globally. A global economic and financial crisis is now virtually inevitable and the S&P 500 index will likely drop to the 950-1020 region before any sort of credible reflation measures by global central banks can be brought to bear.
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Written by Gary