July 2nd, 2012
in Gary's blogging
Closing Market Commentary For 7-2-2012
Volume levels during the early afternoon were lower than the already anemic levels experienced in the morning. Of course DaBoyz and the 'five-fingered-financiers' had their fingers in the slight melting up as always happens when the market volumes dry up. But it appears there was more bulls towards the end of the session as the green volume picked up and decidedly turned to heavy red. What is apparent is that many investors are sitting on their hands waiting for Frau Merkel to drop the hammer on the 'Hopium' heads which will surly come before the week is over.
Selling pressure has remained relatively subdued during the morning and afternoon sessions melting most major averages down mainly because of a lack of direction earlier in the session. As the session worn on into the afternoon this need for guidance still wasn't there and the markets wandered sideways in a very narrow price range. Then during the closing minutes extremely heavy red volume was seen but little movement in the DOW and a lot in the $RUT. RRR** remains narrow and trading is not advised, but tomorrow may promise to be a exciting day if the last minute profit taking today is any measure.
Judging by the market's response to the latest European bailout, the one associated with Germany supposedly 'folding' on austerity and being beaten down by her broke neighbors, and which according to the chart below had a half-life of one full day; the market has already priced in all the news and is now praying for more monetary morphine from the ECB and BOE this week.
It will almost certainly get those. Then what: a half life of 12 hours? 6 hours? Or zero (and will Torres come on with 45 minutes to the close to save the day?)
Elsewhere, the eurozone annual inflation remained unchanged at 2.4 percent in June, flash estimate released by Eurostat showed. Though the rate remained comfortably above the central bank's target, the European Central Bank feels that there is no inflation risk at present in the euro area. The June inflation rate was the lowest since February 2011 and was in line with economists' expectations.
Meanwhile, German retail sales fell unexpectedly in May for the second month in a row. Sales were down by real 0.3 percent month-on-month in May, marking a second consecutive monthly fall, the latest figures from the Federal Statistical Office showed. The outcome was in contrast to expectations for an increase of 0.2 percent and follows a 0.2 percent drop in April.
France is going to be the "mother and father of all EZ headaches" when the market finally stops picking on Greece, Ireland, Italy, Portugal and Spain, and starts focusing on eurozone heavyweights like France, writes Stephen Pope at Spotlight Ideas:
Oh my. The nightmare for the EZ is that as September 2013 (German Election) draws nearer France will be the principal power player on the political stage. The worrying sign is that France is run by career politicians that have never worked in a real world job and who simply do not understand that wealth never comes from the centre.
How it that France can boast so many is large companies, 35 in the top 500 of the world and yet appears to hold its nose when dealing with commerce and free business enterprise? Socialism is only good at spending other people’s money… and it does so badly.
[...] It is no wonder France has the lowest level of forecast business investment for 2012:
The DOW at the close is at 12871 down 8.70 or -0.07%.
The 500 is at 1365 up 3.35 or 0.25%.
$RUT is at 807.94 up 9.45 or 1.18%.
SPY is at 136.34 up 0.24 or 0.18%.
The trend is neutral and the current bias is up.
WTI oil is at 83.57 trading between 84.40 and 82.70 and the bias is neutral.
Brent crude is trading at 97.22 between 97.68 and 95.28 and the bias is positive.
Gold today at 1597, trading between 1602 and 1587 with a neutral bias.
Dr. Copper is at 3.47 down from 3.50 earlier.
The 500 at the close. In the red, but will it fall over to tomorrow's trading?
The $RUTat the close. We have seen this before and nothing came out of it.
The DOW at the close. Zero sum game today.
** RRR = Risk Reward Ratio
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Written by Gary