Live market comments for 04-11-2012

After the close: I am calling 1300 on the SP500 before the beginning of June.

The markets traded in a tight zone today and recovered some of yesterday’s losses, but remained below the floor of the important previous support started on 3-13. Many pundits this afternoon are handing out praise that the markets have recovered after yesterday’s pull-back and everything is O.K. for further gains.

Not quite, in fact not even close. The problems that were here on Monday are still here at the close today. Alcoa’s nice reporting yesterday needs to be looked at carefully as they are DOWN 66% on actual earnings from Q1/11 to Q1/12. That hasn’t been overlooked by the looks of it.

The Long-term investors may accumulate shares, but there is limited upside to the market right now (SP500 is probably within 10-20% of its high for the next half decade). 

@zerohedge:

“Here is a number for you: 70% That is roughly how many economic reports have missed their mark in the last month “

@telegraph:
Why has the market decided in recent days that the eurozone crisis hasn’t really gone away? The BBC’s economics editor Stephanie Flanders offers a nice explanation – there are two reasons: economics and politics.

@SA

At the close: Dow +0.72% to 12807. S&P +0.78% to 1369. Nasdaq +0.71% to 3012.
Treasurys: 30-year -0.61%. 10-yr -0.25%. 5-yr -0.11%.
Commodities: Crude +1.54% to $102.58. Gold -0.11% to $1658.85.
Currencies: Euro +0.19% vs. dollar. Yen +0.31%. Pound -0.25%.

Market recap: Stocks bounced back after a five-day slide, bolstered by Alcoa’s strong start to earnings season and a drop in Spanish and Italian borrowing rates. Financials, hit hard yesterday, led as all sectors finished higher; home builders rallied. Crude oil futures rose 1.7% to $102.70; yields on 10-year Treasury’s jumped to 2.03%. NYSE gainers led losers nearly four to one.

The Beige Book Report:

“Reports from the twelve Federal Reserve Districts indicated that the economy continued to expand at a modest to moderate pace from mid-February through late March.”

And will we have more QE? Not according to the Dailyfx folks.

@dailyfx:

“$FED Beige Book reiterates outlook of improving manufacturing conditions. Overall, little reason to assume more QE on first glance. “

U.S. MONTHLY BUDGET DEFICIT WAS $198.2B IN MARCH VS. $196.0B PREDICTED, PREVIOUSLY 188.2B

“The federal budget gap grew to $198 billion in March from $188 billion the year before. On a cumulative basis, the deficit is running $50 billion lower this fiscal year than last. “

The 500 at the close.

The $RUT at the close. I expect the markets to open up once again with the Russell leading the way. Pay attention when it declines.

The DOW at the close.

The Indexes at the close.

All in all, there isn’t much to celebrate just yet. I believe we are going to see more decline in the VERY near future. In fact, I call 1300 on the SP500 before the beginning of June.

Midday Report:

The markets are moving sideways in a seriously slow, lackluster day. Volume is anemic mostly red, but the markets are just about where they were after the opening (After the ‘Read More’). Mr. Market has not decided just what to do but I think it is a reasonable guess that we will see more of the same tomorrow while the markets adjust to the pull-back of yesterday.

Barry Ritholtz asks two important questions:

The two-fold question is: 1) When do the fundamentals trump Fed liquidity? 2) What will the Fed do in response to a falling market?

Market Opening:

The markets opened up slightly from yesterday’s close as expected and is continuing melting upwards at a very slow rate. The DOW opened up 106 points / 0.84% at 12818. The SP500 opened up 12.67 points at 0.92% at 1370. The Russell 2000 ($RUT) opened 8.27 points up at 1.05% at 792. SPY, like several others, fell down yesterday and out of its Bollinger bands. I would expect the markets as a whole to consolidate sideways for the next several sessions.

Currently the 20 minute volume is mostly red and higher than normal carrying a note of authority. What green volume there is a third of the sellers. The markets are now trending in a choppy but negative fashion as the ‘Dippers’ are getting hoof marks around the head and shoulders (pun intended). The DOW is at 12810, the 500 is at 1370 and the $RUT is at 791. All are trading in a tight narrow range.

Gold is at 1657, SLV is at 30.70, GLD is at 160.91, SPY is at 137.09 and SSO is at 55.30.

We are constantly watching the volume for indications of market direction. The higher the volume the more strength of movement conviction it carries. At this juncture, one might expect today to be an up day only because of yesterday’s decline, but nothing is assured as weakness is apparent in the red volume. A correction up today is the ‘normal’ after a pull-back like yesterday, but this market is anything but normal and the opening ½ hour isn’t looking good for the bulls.

This morning “Import prices rose 1.3%, topping estimates for a 0.8% increase, while export prices rose 0.8%, coming in higher than the 0.4% increase expected. Both gains represented the largest month-to-month increases since April 2011.“

Today is definitely a wait and see trading session as we watch the bulls and bears duke it out.

PREMARKET

The premarket was up as expected because of Alcoa’s surprise earnings.

@SA

“Alcoa (AA): Q1 beats estimates across the board. Q1 EPS of $0.10 beats by $0.13. Revenue of $6.01B (flat Y/Y) beats by $240M. Net profits were actually lower Y/Y however, as higher productivity and better market conditions were largely offset by higher costs. “

The big thing to notice in the premarket action is that it wasn’t up all that much. The DOW was up 76.00 / +0.60%, NASDAQ up 18.25 / +0.68 and the SP500 up 10.20 / +0.75. This indicates Mr. Market was indeed happy about Alcoa’s earnings, but the ‘original’ weakness is STILL there! Typically as the premarket moves toward the opening, up or down, one way or the other, solidifying for a bearish or bullish slant for the day. This morning it is flat.

Copper is down, the oils are down with Brent trading at 119. Gold is up above lows several sessions ago, but trading today at 1657.

This morning the markets are elevated but flat with a choppy tone as the ‘Dippers’ and the sellers battle it out. I seriously won’t be surprised to see it go either way. To move down convincingly, more volume like yesterday is necessary. Leavitt has it right with his comments below.

@leavitt:

“I believe the long term trend remains up, but we don’t trade the long term trend. If the indexes pull back 5% or 10% (permissible within a long uptrend), many stocks will drop 20% or more. You can’t hold an individual stock until the indexes officially offer a sell signal. The short term trend is down.

Many stocks have broken down and will need some time to right themselves. Day traders can continue to play the ups and downs – whatever ups and downs there are considering half the market’s movement takes the form of an opening gap.

Swing traders are in a much tougher situation. I don’t want to go long, and it’s too late to go short. This means I lay low.

For me to aggressively swing trade, I need to be confident a trend will last a couple weeks, and this isn’t the current situation. Be defensive. “

To contact me with suggestions or deserved praise:

[email protected]

Written by Gary