August 2nd, 2012
in Gary's blogging
Closing Market Commentary For 08-02-2012
Markets closed without to much fanfare accompanied by anemic volume that was mostly red and a spert of green at the close. I would have thought DaBoyz would have 'pumped up the volume' as they usually do but not until 2:40 the market starts melting up a few points on anemic volume and finally ended the session with a sort of recovery.
We have seen this type of daily decent several times before on 5-30, 6-20, 7-5, 7-20 including this week. Each time they all recovered going on to new highs, so this is nothing new and therefore wouldn't bet on tomorrows or Monday's outcome. I figure we have one more down day and we begin a new chapter in the book of 'Market Revelations And How To Lose Your Shirt'***. Remember we had a fake-out on July 24 when the markets slid below the trend line and the recovered with a new high 2 days later on the 27th so attentiveness in this crazy market is still warranted.
Until the major indexes proceed below the trend line shown in the charts below, if you can believe the charts, we are still in an up trend. Even though the longer term is bearish in the eyes of many financial analysts like myself.
Tomorrow could see another reversal to the upside if the NFP is positive and more downside if a negative report is announced. BUT, then again Mr. Market just may ignore whatever news is reported and do the opposite of what you think. I really hate markets like this. Cognitive Concord has some thoughts along my lines of thinking too.
“Tomorrow's jobs number could make some news, but that's about it.
Remember: Europe is every bit as a big a mess today as it was a few weeks ago. The U.S. economy is every bit as weak. The long-term fiscal-political trajectory is every bit as concerning.
Weeks like this should serve as a reminder that most of the time, the market drives the headlines. Quiet market? Boring headlines. Dynamic market? Bombastic headlines. Only when extreme, out-of-nowhere events occur do headlines actually drive the market. Hopefully this is all just academic for you, because attempting to trade the broad market on macro headlines is a recipe for disaster.”
The $RUT broke down and out of its triangle and trend line – bearish. It also has been lagging in any advancements of the large caps, also bearish.
“If it's a healthy sign when small caps (IWM) lead large caps (SPY) during a rally, then the recent move higher should come with a warning. Small caps failed to take out their July 19 high and instead made a series of lower highs that month, writes Joe Bell. Actually, the S&P outperformance has been going on for longer than 4 weeks.”
The DOW Utilities have a shooting star and a possible breakout down through its trend line if confirmed tomorrow. Also bearish.
The DOW at 4:00 is at 12878 down 92.18 or -0.71%.
The 500 is at 1365 down 10.32 or -0.75%.
The $RUT is at 798.64 down 2.47 or -0.32%.
SPY is at 136.69 down 0.89 or -0.65%.
The trend is neutral with a bearish slant and the current bias is up.
WTI oil is at 87.26 trading between 89.60 and 87.00 and the bias is negative.
Brent crude is at 105.95 trading between 107.28 and 105.05 and the bias is neutral.
Gold is down today at 1589 trading between 1613 and 1585 with a positive bias.
Dr. Copper is at 3.30 down from 3.38 earlier and falling.
Earlier the USD tumbled from 83.20 to 82.24 and shot up to 83.60 and recovered later to 83.42 and the bias is positive.
The 500 at the close.
The DOW at the close. Notice it sits near the trend line?
SPY at the close. Again nothing conclusive in reading the tea leaves and only gamblers will bet on this one.
The Telegraph reports:
“Poor old Draghi. Once again he's been thwarted in his plans to do whatever it takes to save the euro. He's promised just enough to prevent immediate meltdown, but slow death by a thousand cuts, which is the present outlook, is scarcely a better prospect.”
Very bearish as paper is about to cut off Draghi's nose in spite of his face!
Ambrose Evans-Pritchard doesn't see the ECB move as the markets do, he writes that the central bank has opened the door to a blitz of bond purchases and fully-fledged quantitative easing in a radical shift of policy - but only once it is triggered by new bail-outs:
The Draghi plan is on hold until eurozone leaders activate the EU’s twin bail-out funds (the EFSF and ESM), which requires Spain – and perhaps Italy – to request a formal rescue and sign a memorandum ceding control over fiscal policy. “It is a necessary condition. Governments have to go to the EFSF. It is up to the relevant countries,” said Mr Draghi.
The eurozone is now in limbo, with intense pressure building on Spain’s premier, Mariano Rajoy, to fall on his sword and request the EFSF package needed to set the Draghi plan in motion. Mr Rajoy said the proposals had “positive aspects” but deflected further questions.
*** Includes underwear, shoes, socks and money clip.
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Written by Gary