Opening Market Commentary For 07-16-2012
Markets opened down as expected on Friday. Any one day rise of 200 points on the DOW, like on Friday's session, will certainly open down at at least on the opening and I took advantage of that with a short. The opening red volume was low to moderate and not at all convincing that the market will stay down for long. By 9:45 volume was still red but merely a trickle as investors waited for the 10 am report of the medium importance US Business Inventories for May.
The US Business Inventories rose to 0.03% while economists were expecting 0.2% over the prior reporting of 0.04%. That moved the markets down further as investors are starting to head the previous warnings of failing economies in Europe and a marked slowdown in China. However, the RRR** is still narrow this morning and caution is advised because volume remains low and becomes the right recipe for DaBoyz to manipulate the markets higher.
Earlier the US Advance Retail Sales playing right into QE3 hopefuls as the US Empire State Manufacturing Index in at 7.39 for July while expecting 4.00 over the 2.29 reported prior. The US Advance Retail Sales falls to 0.5% in June while economists were expecting a 0.2% growth against a 0.2% drop previously. The premarkets were not not especially impressed one way or the other as the SP500 traded in a 3 point range and remaining down 10 points (1346) from Fridays close of 1356.
The world financial news over the weekend has been extremely negative which I will report on in the next article following the opening.
The DOW at 10:15 is at 12692 down 82.27 or -0.64%.
The 500 is at 1349 down 7.53 or -0.56%.
The $RUT is at 794.34 down 6.67 or -0.84%.
SPY is at 134.99 down 0.79 or -0.58%.
The trend is neutral and the current bias is down.
WTI oil is at 87.11 trading between 87.45 and 86.40 and the bias is negative.
Brent crude is at 102.94 trading between 103.29 and 102.06 and the bias is neutral.
Gold is up today at 1587, trading between 1591 and 1577 with a neutral bias.
Dr. Copper is at 3.47 down from 3.51 earlier.
The USD tumbled from 83.76 to 83.38 at 9 am and recovered to 83.45 at the opening of the US session.
Big Retail Sales Miss In Longest Collapse Streak Since 2008 Recession, Confirms US Consumer Zombification
Today's advance retail sales for June was simply abysmal, printing at -0.5% on the headline, and -0.4% ex autos.
Expectations were for a print of +0.2% on the headline and unchanged less autos. Gas was not the culprit either as ex autos and gas the miss was -0.2%, on expectations of a +0.2% print.
This was the third consecutive drop in a row: the longest since December 2008, when the US economy was flat out imploding. Expect furious Q2 GDP revisions imminently once the sellside community plugs this number into bean counter abaci.
Goldman will likely cut its recently downgraded Q2 GDP from 1.3% to 1.1% or even sub 1.0%, which is essentially stall speed. Finally, today's number confirms our biggest worry: the spike in May consumer credit was not for discretionary purchases: it was for staples.
Do the math. Finally, building material & garden eq. & supplies dealers down 1.6%, the biggest sequential drop aside from gas stations. At least housing has "bottomed." Of course, EURUSD spiking on expectations of more imminent NEW QE.
** RRR = Risk Reward Ratio
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Written by Gary