August 1st, 2012
in Gary's blogging
Midday Market Commentary For 08-01-2012
The markets dropped a few points from the 10 am reporting and then rose back up close to the opening numbers as we wait for the FOMC rate decision meeting at 2:15. Some economists are expecting the target level for the federal funds rate to remain unchanged between 0 and 0.25%, and others are expecting a continuation of low rates into 2015.
The consensus of further QE is unlikely after the central bank extended Operation Twist. The RRR** is untradeable at this time but our premium subscribers will be notified of important changes as they occur including the FMOC results. Hold on to your seats as I think the Fed meeting is going to move the markets even if the meeting itself is a bust. Investors are going to do something at 2:15, just what remains to be seen.
The 500 is at 1383 up 3.75 or 0.27%.
The $RUT is at 783.15 down 3.77 or -0.48%.
SPY is at 138.46 up 0.74 or 0.54%.
The trend is neutral and the current bias is neutral.
WTI oil is at 88.79 trading between 87.49 and 88.97 and the bias is positive.
Brent crude is at 106.17 trading between 104.10 and 106.32 and the bias is positive.
Gold is down today at 1603.66 trading between 1618 and 1594 with a positive bias.
Dr. Copper is at 3.37 down from 3.42 earlier.
Earlier the USD tumbled from 82.90 yesterday to 82.54 this morning and has recovered to 82.79. Unlike the markets it is moving upwards for the time being.
European markets closed mixed today. The FTSE 100 in London is up 1.38% while the German DAX is down -0.26%. The CAC 40 in France is up 0.91%. The Asian markets closed mixed with the Hang Seng up at 0.12. The Shanghai Composite up 0.94%. The Nikkei down -0.61%.
Leavitt wrote this morning about the possibility of the Fed's keeping the rates low into 2015. Remember 'Big Government' is here to help you.
“This, in my opinion, is the theft of the century…300+ million people earning no interest for so many years. Anyone who has savings is getting screwed…all so the banks can recapitalize their balance sheets. Of course if rates were moved up, the stock market would get clobbered. Not because higher rates would be such a drag but because fixed income would become attractive again. Heck, it’s attractive now (see bond yields). If rates were moved up, there would be a huge flow of money from the stock market to the bond market, and stocks would get pummeled.
At this point in time, this is probably the main reason the Fed can’t raise rates.
The Bank of London and European Central Bank also announce interest rate policy soon, and then we get the latest employment numbers on Friday. It’s been a slow week so far, but this is about to change.”
In other news, yesterday we saw the aftermarket fall like a brick off a 10 story ledge and is now being blamed on my favorite group to rag on, the HFT algo crowd. Somewhere, some how these algo machines are going to be throttled as they do ABSOLUTLTY nothing for the markets except screw them up. ALL TRANSACTIONS should have a buy/sell time of a minimum of 6 hours between the two.
Anyone who has had the displeasure of trading this market since the open will be well aware that the massive selling that started at 3:59:57 PM yesterday just as we showed, appears to have continued into today, after an algo, supposedly one impacting NYSE stocks this time, and proving that the entire market is a broken joke, not just Nasdaq and BATS, and one which is linked to Knight Capital, has continued this morning, sending countless stocks into the proverbial "batshit" formation, with moves of 10% higher and lower for no apparent reason.
That's ok: the SEC and various other regulators are all over it, and will guarantee that the markets "are fixed."
** RRR = Risk Reward Ratio
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Written by Gary