China Cuts Rates, US Pre Markets Futures Rise

Premarket Commentary For 06-07-2012

Another up day in the making as the SP500 spiked up to 1327.72 falling slightly to 1324. The DOW is up 63.00 and the NASDAQ is up 18.50. The European markets are sharply higher with Germany leading. The DAX is up 3.75% while France’s CAC 40 is up 3.60% and London’s FTSE 100 is up 1.56%. The Hang Seng closed up at 0.74% while the Shanghai Composite closed down -0.70%. China cut interest rates today sending the US and European market up following a dismal Sunday report China Non-manufacturing PMI (MAY) came in lower at 55.2 from the previous reported 56.1.

The key for new high confirmation today will be volume and lots of it. Otherwise it will not count much when the markets test the recent lows again in the near future. As it stands now, all kinds of chart lines can be drawn to show a continuing downtrend to those that indicate supports being protected. The decent below the 200 day MA’s of many indexes over the past few sessions is very bearish, but so is the rising back above it bullish. It has happened before that indexes have ‘bounced’ off the ~200 day MA and continued to climb.

The difference this time are the ‘Black Crosses’, where the 50 day MA crosses the 100 day MA, have been created by DOW and the Russell 2000 with the SP500, SPY, SSO and many others that are just hours behind.

My daily analysis is neutral with a distinct bearish bias for the near term. I am closely monitoring the markets for possible setups, again high volume is key.

WTI oil has traded as low as 84.48 this morning and moving up to 86.50 trading currently at 86.38. Brent started out at 96.33 and moved it way up to 102.30 settling at 102.09. Gold started out at 1612 and now is at 1625 sliding down from 1628. Dr. Copper is doing well this morning moving up from3.33 to 3.42 settling at 3.42.

@dailyfx:

U.S. Initial jobless claims fell to 377k last week vs. 378k expected. Prior revised to 389k from 383k.

U.S. Continuing claims (May 26) rises to 3.29 million vs. 3.25 million expected. Prior revised to 3.26 million from 3.24 million.

@foxnews:______

China’s central bank cut its benchmark interest rate by 0.25-percentage point to 3.25% as it looks to keep the economic expansion there from cooling down too quickly. U.S. stock-index futures rallied on the news, with Dow futures climbing some 70 points.

The Bank of England held its main interest rate and size of its quantitative easing program steady following its monetary-policy meeting.

@SA

“China’s rate cut means this weekend’s data dump is going to be very bad, says Bloomberg’s Michael McDonough, who adds the move implies more substantial measures to help growth are coming. Allowing banks to offer a 20% discount to the official rate suggests the country is moving closer to interest rate liberalization.”

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Written by Gary