August 17th, 2012
in Gary's blogging
Midday Market Commentary For 08-17-2012
Noontime rolled around with the various markets generally doing nothing in moving one way or another mostly mixed. Moderate volume was mostly green up to 11 am, but the averages seemed to melt down fractionally anyway. Volume has now reached a level something below abysmal. Allowing the low market manipulators (HFT) to do their thing which is melting markets unrealistically higher. What goes up will eventually come down and I am putting my faith in the descending theory. However, if no one is trading can the markets move either way?
. . . Finland's Europe minister has said that the foreign minister's speculation on a break-up of the eurozone does not reflect the government's position. He adds that Finland remains '100pc committed' to the euro.
Finland's foreign minister, Erkki Tuomioja, . . . He warned that the country is preparing for a break-up of the eurozone. The Nordic state is battening down the hatches for a full-blown currency crisis as tensions in the eurozone mount and has said it will not tolerate further bail-out creep or fiscal union by stealth. Mr Tuomioja said:
We have to face openly the possibility of a euro-break up. It is not something that anybody — even the True Finns [eurosceptic party] — are advocating in Finland, let alone the government. But we have to be prepared. Our officials, like everybody else and like every general staff, have some sort of operational plan for any eventuality.
The RRR** at noon is still narrow and not conducive for profitable trading. Swing trading is also in doubt as we are near market tops and need to wait out the possibility of markets swinging either way. Today is another 'sit on your hands' day.
The DOW at 12:15 is at 13268 up 18 or 0.14%.
The 500 is at 1416 up 1.25 or 0.09%.
The $RUT is at 815.33 up 2.24 or 0.28%.
SPY is at 142.06 up 0.07 or 0.05%.
The trend is up and the current bias is neutral with a bearish slant.
WTI oil is at 95.63 trading between 94.95 and 95.92 and the bias is positive.
Gold is up today at 1640.30 trading between 1612.14 and 1619.20 with a negative bias.
Dr. Copper is at 3.42 up from 3.38 earlier.
Earlier the USD tumbled from 82.55 to 82.37 then skyrocketed up to 82.81 and is currently at 82.72.
With U.S. stocks blithely on the rise against a darkening global economic picture, we keep telling ourselves it’s only a movie, it’s only a movie, it’s only a movie.
Except that it isn’t a movie. It’s an epochal tide of delusion; it is quite real; and if it hasn’t yet reached flood levels, it will soon, inundating stock markets around the world. For now, though, even as those once-tireless engines of growth, China, India and Brazil, grind their way toward economic limbo and the growing likelihood of synchronous global recession . . .
AFP is reporting that Spain's government will shortly request a first payment for its banks from a eurozone rescue line. A spokesman for the economy ministry told AFP that "the request will be sent shortly", but declined to specify the exact amount or timing for the request, which is to be made by the Bank of Spain.
Michael Hewson at CMC Markets commented that "market complacency looks set to continue", pointing out that markets continue to drift higher on expectations of the prospect of additional central bank easing:
The absence of any good news has failed to dampen expectations; if anything it has reinforced the expectation that the authorities will take the necessary action to mitigate any problems in the coming weeks. The VIX certainly seems to reflect the complacency of the markets, trading as it is at 5 year lows.
The economic outlook in Europe remains pretty bleak with a recent poll suggesting that the Eurozone isn't likely to grow in any meaningful way until 2013. If anything I would suggest that even that prognosis remains optimistic. With most of the economic numbers from Europe unlikely to show a pickup any time soon it suggests that this particular rally is built more on hope than expectation and the volumes certainly reflect that.
Markets certainly are placing an awful lot of their chips on ECB President Mario Draghi being able to pluck a rabbit out of the proverbial hat at the next meeting in September.
Banks, companies and investors are preparing themselves for a collapse of the euro. Cross-border bank lending is falling, asset managers are shunning Europe and money is flowing into German real estate and bonds. The euro remains stable against the dollar because America has debt problems too. But unlike the euro, the dollar's structure isn't in doubt. By Martin Hesse more...
** RRR = Risk Reward Ratio
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Written by Gary