July 18th, 2012
in Gary's blogging
Closing Market Commentary For 07-18-2012
Markets closed up and on VERY low volume. After the markets rolled off the high for the day, around 1:30, green volume dropped even lower than it had been before with red spikes thrown in to help melt the indexes down. Toward the end of today's session the 'BTFD dippers' still high on QE3 hopium once again rolled in to take advantage of the late afternoon dip with some minor profit taking following.
Hopium, like helium, can levitate bags of market folly only for so long. When the narcotic fantasy finally leaks out, it can only fall to the ground where it belonged in the first place. Eventually, though, gravity always triumphs over 'Hopium' and 'Delusionol'. These 'Hopium' addicts have a problem in that like the previous QE's, it bumped them up, but it became standard operating procedure. The problem with addicts is that after a while the dose has to be upped and I am afraid the next dose will be lethal.
The manipulators of this farcical market place need to be reigned in by the SEC, Congress and even perhaps Bernanke's team of 'doves' could help before the 'real' crisis becomes a real problem, but I am not holding my breath. Nor am I going to guess what is in store for the markets tomorrow.
Foxnews just reported, IBM reported second-quarter profits that were better than expected. The company’s adjusted EPS came in at $3.51, compared to estimates of $3.42. Revenue, however, came in shy of expectations at $25.8B, while Wall Street was looking for $26.28B. Also reported, that American Express and Ebay were shy on the revenue side. Here is where I see the problem, EVERYONE that counts is missing the revenue mark. That is a danger sign folks,.
The DOW at 4:00 is at 12908 up 103 or 0.81%.
The 500 is at 1372 up 9.11 or 0.67%.
The $RUT is at 805 up 5.61 or 0.70%.
SPY is at 137.35 up 0.99 or 0.74%.
The trend remains moderately positive and the current bias is neutral.
WTI oil is at 89.88 trading between 90.10 and 88.55 and the bias is positive.
Gold today at 1576 trading between 1584 and 1567 with a neutral bias.
Dr. Copper is at 3.47 up from 3.43 earlier.
The USD tumbled from 83.46 to 83.05 this afternoon and recovered to 83.08. The bias is negative.
The 500 at the close. Double top and rising channel point to a clash somewhere in the near future as the 50 day MA closes in on the 200 day MA.
The SPY at the close. Same thing and appears when have reached the top of the channel.
The DOW at the close. Not quite what I would call a double top, but close.
In an interesting Q&A of Bernanke’s time in front of the Finance Committee he admitted, speaking out of the side of his mouth, that additional QE may hurt the market.
“Some rather unexpected rational insight out of Bernanke responding to Patrick McHenry's question on whether and how much more QE the Fed can do:
"I assume there is a theoretical limit on QE as the Fed can only buy TSYs and Agencies"
"If the Fed owned too much TSYs and Agencies it would hurt the market"
But in closing:
"We still have some capacity at this point."
Perhaps the market was expecting that the Fed would admit it can buy ETFs and REITs like the BOJ, or that it can sell vol into the single digits, as its New York Fed trading desk is rumored to be doing, but this is hardly the stamp of endorsement to buy any stock come hell or high water that the algos now expect out of the Fed.”
Having brought up the 'Death Cross' in my last article pointing out the 50 Day MA crossing the 200 day MA hasn't quite happened yet. I see that Doug Short has done my homework for me and it is VERY interesting to say the least. (His charts show 11 points, mine show 22 points and closing.)
“James Ross, the University Architect at UNC Wilmington and an astute observer of the economy, called my attention to an amusing Business Insider piece published yesterday: The S&P Is On The Verge Of The Ultimate Death Cross.
The S&P 500 only dates back to March 1957. Since that time the 50-month MA has never crossed below the 200 month MA. The closest it came was the June 1978 monthly close, which gave us a 2.09 point spread between the 50-month (92.09) and the 200-month (90.00). During the 55-plus years that the S&P 500 has existed, there has never been an "Ultimate" Death Cross.
At the end of last month, the spread was a little over 11 points.”
In the end, this reading of the Beige Book had little effect on the markets.
The Fed's Beige Book was just released and for those looking for cliff-dropping and panic-driven views of the plunge in the economy, we are sorry. The Beige Book was, well, beige. Some headlines, via Bloomberg:
*FED SAW WEAKER U.S. MANUFACTURING, RETAIL SPENDING LAST MONTH
*FED SAYS LOAN DEMAND `GREW MODESTLY' IN MOST DISTRICTS
*FED SAYS MANUFACTURING EXPANDED `SLOWLY' IN MOST DISTRICTS
*FED: HOUSING MARKET REPORTS `LARGELY POSITIVE'
*FED SAYS DISTRICTS' BUSINESS CONTACTS `CAUTIOUSLY OPTIMISTIC'
“The Fed Beige Book doesn't sound like the sort of report suggesting the need for further monetary easing.”
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Written by Gary