Morning Financials Kick The Market Downward

August 28th, 2012
in Gary's blogging

Opening Market Commentary For 08-28-2012

Premarket SP500 futures was down to 1404 then rose to almost 1411 then down again as the markets opened. Another low volume day appears to be here again as the market waits for Ben Bernanke to speak on Friday. At the opening the 500 eased up 4 points, not a lot on low volume days, but a bit more than 'melting'. Green volume was still low by 10 am and quickly turned to red as nearly all gains were erased just before the Consumer Confidence and the Richmond Fed Manufacturing Index was announced moving the markets down.

Follow up:

The medium rated Consumer Confidence came in at 60.6, lower than the 66.0 expected and worse than the previous 65.4. and the Richmond Fed Manufacturing Index came in at -9, better than the -10 expected, and better than the previous -17.

Red low volume was prevalent after the reports and appears to be another do-nothing day in the making.

Foxnews reported earlier the low rated S&P/Case-Shiller composite index of 20 metropolitan areas shows home prices rose 2.3% in June from May on a non-seasonally adjusted basis, a bigger gain than the 1.6% expected. Prices were up 0.5% from the same period a year earlier in the first increase since September 2010.


Ouch. Conf Board Cons Conf printed below even the lowest of Bloomberg's economist estimates, lowest since November, 2011.”

The RRR** is again very narrow at the opening bell and any trades probably will end up on the unprofitable side if this market remains flat. Swing trading is at your own risk and being the market is at a crossroads of sorts, I would prefer to sit on my hands rather than risk guessing incorrectly.

The DOW at 10:15 is at 13097 down 26.86 or -0.20%.

The 500 is at 1407 down 2.76 or -0.20%.

The $RUT is at 810.79 up 0.40 or 0.05%.

SPY is at 114.24 down 0.32 or -0.23%.

The trend is neutral and the current bias is down.


WTI oil is at 95.60 trading between 95.15 and 96.45 and the bias is negative.

Brent crude is at 112.15 trading between 111.70 and 113.10 and the bias is neutral.

Gold is at 1669.30 trading between 1656.80 and 1669.45 with a positive bias.

Dr. Copper is at 3.46 down from 3.47 earlier.

Earlier the USD tumbled from 81.84 to 81.30 and is currently at 81.37.

One of the main events for the week is going to be the Jackson Hole Economic Symposium on Friday the 31st. Ben Bernanke is going to have his hands full and must speak VERY carefully as to not upset the market's apple cart. His speech could drive the equity markets to new highs when we are facing numerous bearish signs of an exhausted market place. The part I am afraid of is a rally on false sentiment and then crash even harder than it would otherwise.

James Brodie points out about Ben Bernanke, “. . . he faces a tough backdrop of exhausted equity markets and increasingly bearish signals for global growth from numerous diverse indicators.” Very true.


Bernanke Faces Exhausted Equities And Bearish Signals In Other 'Risk' Markets

. . . the S&P is right up against a strong resistance level with multiple tops at 1,419 and it's unable to close above there. It is also right at the top of 10 week trend channel, and is just starting to retrace towards the mean from extreme standard deviation levels (Bollinger bands).

Another concerning signal is the VIX at a 5 year low. Whenever this index has moved below the 15 level in that 5 year period, the S&P has always followed this with a sharp move lower.

There has also been a clear breakdown in the correlation between the S&P and the Copper price, both of which are regarded as barometers of future economic activity. Copper is trading heavily because the Chinese economy is slowing down, possibly even a hard landing. China has been the global growth driver since the financial crisis and for equities to blindly ignore this is dangerous.”

Comment section:

Prepare for the onslaught of 'bulls' eliciting in fine detail why your wrong, but I expect we'll roll-over soon. Sentiment has already shifted.”

** RRR = Risk Reward Ratio

To contact me with suggestions or deserved praise:

Written by Gary

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