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Wednesday, July 28, 2010
The "Morning News Notes" as prepared by TL...US Treasury auction today, Shanghai Stock Exchange, action by Moody's on banks, US debt, Gulf oil, IMF sees signs of slowing in global economy, and gold tumbles.
Tuesday, July 27, 2010
The "Morning News Notes" as prepared by TL...BP, rules to govern global banking system, CDS pricing of Euro banks, stimulus debate heats up, state tax collections, home supply to increase, US Treasury yields, and US banks.
Monday, July 26, 2010
The "Morning News Notes" as prepared by TL...classified documents and the Afghan war, European Bank stress tests, confidence in US Banks, Federal budget deficit, Bush tax cuts, PIMCO moves into equities, GS, gold, and BP.
Sunday, July 25, 2010
Saturday, July 24, 2010
This is the bullish argument as put together by good friend TL. It is an excellent review of the bullish and bearish arguments facing investors today. Our analyst comes down on the side of the bulls as he finds monetary policy, valuations, and sentiment favorable. Thanks TL!
Friday, July 23, 2010
Figure 1 is a weekly chart of the Market Vectors Gold Miners ETF (symbol: GDX). The pink and black dots represent key pivot points or areas of support (buying) and resistance (selling). There are two bearish signs that point to GDX forming a market top.
Wednesday, July 21, 2010
Much has been made of the "Death Cross" that happened on July 2, 2010 in the S&P500. The "Death Cross" occurs when the 50 day moving average of price crosses below the 200 day moving average. Many interpret this technical "phenomena" bearishly, but as usual, folks are only reading the headlines and not critically looking at the numbers. There is more to this story. So what does the data say?
The "Morning News Notes" as prepared by TL...emergency jobless benefits, Obama's approval rating, retirement and social security benefits, German debt auction, European bank stress tests, US Housing market, financial regulation reform, options the Fed could pursue if economy double dips, North and South Korea, and deepwater rigs.
Tuesday, July 20, 2010
Monday, July 19, 2010
The "Morning News Notes" as prepared by TL...% of uninsured Americans, Buffett warns Obama on economy, Greenspan on the Bush tax cuts, downgrade of Irish debt, sovereign risks in Europe, financial regulation, BP, post 9-11 world, higher income Americans cut back on spending, German firms complain about business in China, cocoa, and Goldman settlement.
Sunday, July 18, 2010
Without buyers stepping in, extremes in bearish sentiment will be just that - extremes in bearish sentiment. Prices not only ended the week on a big down note, but they also failed to close above resistance levels despite probing above those levels all week. This was just pure selling. The smart money and company insiders continue to show little buying interest as well. Even the Rydex market timers appear to be sitting on their hands. The lack of volume on up days and the increased volume on down days is a lack of sponsorship - plain and simple. Buying has yet to surface, and until the markets clear the near by resistance levels on a weekly closing basis (i.e., 107.58 on the SPY and 45.01 on the QQQQ), this market remains suspect.
Friday, July 16, 2010
Every week I present the following chart in our sentiment round up. See figure 1. It is the Rydex total bull to bear ratio. The indicator in the lower panel of figure 1 measures all the assets in the Rydex bullish oriented equity funds divided by the sum of assets in the bullish oriented equity funds plus the assets in the bearish oriented equity funds. When the indicator is green, the value is low and there is fear in the market; this is where market bottoms are forged. When the indicator is red, there is complacency in the market. There are too many bulls and this is when market advances stall.
Thursday, July 15, 2010
File this article from Bloomberg under "the be careful what you wish for" column. The article highlights market sentiment data from Investors Intelligence, and for the first time since March, 2009, there are more bearish newsletter writers than bullish ones. While the article wishes this was a good thing, the entirety of the data series would suggest that it is not so simple.
Natural gas has been on our watch list since the beginning of the year, and I became more constructive on the asset on June 3, 2010 prior to a 20% plus move. Today we find natural gas, as represented by the i-Path DJ-UBS Natural Gas Total Return Sub Index Exchange Traded Notes (symbol: GAZ), having pulled back considerably and bouncing off support levels we identified 6 weeks ago.
The "Morning News Notes" as prepared by TL...initial jobless claims, US small business and lending, bond dealers, taxing airline fees, discontent with White House, FOMC minutes, BP, economic stats, and George Steinbrenner's return on his NY Yankee purchase.
Wednesday, July 14, 2010
The "Morning News Notes" as prepared by TL...Roubini on global economy, INTC earnings, BP, YUM, hedge fund start ups, business groups to confront White House, Port Traffic in Long Beach, CA, EXPD pre-announces, and Baltic Dry Index.
Tuesday, July 13, 2010
Monday, July 12, 2010
The "Morning News Notes" as prepared by TL...BP, notes from the RGE Monitor (Roubini), China's export trade, hiring on Wall Street, Obama and taxes, Mark Cuban, and high correlations between stocks in S&P500 -highest since 1987.
Sunday, July 11, 2010
Referring to a close below support levels, I stated the following last week: "There is always hope that the failed signal will just be a fake out. It has happened in the past, and such fake outs have led to very strong upward moves. This scenario seems less likely." Well here we are one week later and the "less likely" occurred as the S&P Depository Receipts (symbol: SPY) closed back above old support or resistance levels at 107.58. Of course, this reversal was on shrinking volume. However, leave it to the markets to do their best to frustrate the most. Investors continue to be bearish despite last week's romp higher. Both bulls and bears need to step up and make their case. The bulls need to prove that last week's low volume reversal was more than a "dead cat" bounce, and the bears need to show they can re-ignite the selling that gripped the markets for the last two months. Sentiment favors the bulls as the ranks of the bears continue to grow. In particular, two consecutive weeks of bearish sentiment is the sweet spot. Furthermore, reversals of failed signals can be particularly bullish. On the SPY, a second weekly close above 107.58 should be a positive; a close below 102.02 is a negative.
Thursday, July 8, 2010
With the economy softening and the Federal Reserve unable to provide a positive catalyst in the form of lower rates, the bond market has taken up of the slack producing lower yields. For example, mortgage rates have dropped over the past month enticing homeowners to refinance. It may not clear the glut of homes on the market or get us back to the old days of your house as an ATM machine, but lower rates do help. This appears to be a trend that will continue especially since Washington and the Fed no longer have the political will to expand the deficit.
The "Morning News Notes" as prepared by TL...initial jobless claims, Europe's weakened economy is threat to global recovery, AAII investor sentiment numbers, European bank stress tests, Geithner, mortgage applications, BP capping oil well?, and LeBron James.
Wednesday, July 7, 2010
The "Morning News Notes" as prepared by TL...Gallup Poll on President Obama's approval rating, China's central bank and inflation, European bank stress tests, and Chinese sovereign reserves.
Tuesday, July 6, 2010
The "Morning News Notes" as prepared by TL...Europe's bank stress test, Volcker rules, China and infrastructure spending, London Telegraphs: US trapped in depression, growing risk of municipal defaults in US, Italy the "ticking time bomb" of Europe, and correlations between EURUSD and S&P500.
Monday, July 5, 2010
Hope is never a good strategy, but hope is all the bulls seem to have left. This past week's failed signal is not a good sign for the bulls and could be particularly ominous. This is how bear markets start. On the other hand, there is always hope that the failed signal will just be a fake out. It has happened in the past, and such fake outs have led to very strong upward moves. This scenario seems less likely. Yet, the "dumb money" indicator has turned bearish and in general, this is a bullish signal. However, within the context of a failed signal, we need more supporting evidence, such as bullishness from the "smart money" or from company insiders, before we can make the call for our next "fat pitch".
Friday, July 2, 2010
On Thursday, the SPDR Gold Trust (symbol: GLD), which is the ETF that tracks the performance of gold, saw its worst one day performance since February, 2010. No one would deny that gold is in a bull market, but does this sell off represent a buying opportunity?