After dropping 9 out of the last 10 trading days, the S&P 500 looks to be finding some footing as the positive trading mood overseas has US Stocks higher this morning. The German DAX was up over 2%, pushing back above the important 200 dma. The French CAC was up over 3%, but is still below its 200 dma. The British FTSE is in line with both Germany and France but the rally still has a ways to go to repair the recent technical damage done by the bears. Many traders watch the 200 dma and will get long for the intermediate term if those indices are above that important moving average.
The market appears to be starting a relief rally that may run the S&P 500 up to the May and June lows of 1040-ish. That level is important because it will either provide resistance and the market will decline again, OR, if the resistance does not hold then the shorts will get squeezed and nervous shorts will lift the market to the next key levels of 1050 and 1080. We are leaning towards the second scenario with a rally providing opportunities on the long side.
Gold and silver bullion should lag the broad equity market, but the metals and mining stocks may be the big winners in this relief rally.
Have a great trading day!
CTA Trading Desk Post-Close Report
After printing a Globex low of 1002.75 Monday evening, S&P futures rallied furiously in early morning trading printing a high of 1038.50, a strong Euro (FXE+0.58%) emboldening traders to go shopping for cheap stocks in the bargain basement bin. Much to the Bull’s chagrin, equities peaked shortly after the New York opening giving back nearly all their gains before a last-minute upward pop into the closing bell (S&P+0.54%).
Once again Bulls dropped the ball, failing to capitalize on the pre-market upward reversal in futures, with the failure to sustain a rally at support amid very oversold conditions especially disappointing to longs. This means institutions are still waiting in the wings to sell into rallies, making it difficult for advances to gain traction and follow through to the upside.
The US bond market (TLT+0.73%) strengthened even as stocks were gaining in early trade suggesting substantial sums of money are still fleeing risk, preferring instead the relative safety of government paper. This type of behavior is not exactly a ringing endorsement for equities and traders should closely monitor the inter-market money flows to give them a warning sign as funds seek shelter from the storm.
Next support targets S&P 945 with resistance now at 1050 and 1080.
Have a great evening.
Comments
Lost Comment
I had to make a quick change that lost the one comment on this post, so here it is:
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Anadarko shares trip new NYSE circuit breaker
Submitted by BillySundance (645 comments) on Tue, 07/06/2010 - 12:28 #65423
Interesting............................
Anadarko shares trip new NYSE circuit breaker
July 6 (Reuters) - Anadarko Petroleum Corp (APC.N) shares were halted on the New York Stock Exchange after they became the latest to trip the newly instituted "circuit breakers" for individual stocks.
The circuit breakers kick in when a stock in the S&P 500 .SPX index moves more than 10 percent in a five-minute period, resulting in a five-minute trading halt.
The NYSE said the pause was triggered when a trade of 200 shares took place on the NYSE Arca exchange at a price of $99,999.9999, well above the prior trade at $39.14.
http://tinyurl.com/243rqr3
Wall Street Whispers: Consumers are Dumb
http://www.thestreet.com/story/10799385/1/wall-str...
If we weren't all such fools, Wall Street wouldn't have to rob us...
abolishing income taxes
I definitely hear what Dr. S is saying regarding getting any meaningfully beneficial legislation through the existing process. I agree, that time is not yet come. The current system is too corrupt for anything reasonable to be accomplished. However, much like a market in decline, it will not decline forever. There may come a time when there will be the opportunity for real change; witness how England now has a new government, and they are talking about dramatic cuts in spending - suicidal cuts if they'd been proposed a short year back.
Was this possible in England in 2009, pre Greece? It was not. But now the entire country accepts the need for serious, dramatic change and suddenly, there it is.
It is tempting to project the current tragic US political trends forward into the future until doom strikes, the sun explodes, and the world ends in flame. Some parts of the soul delight in the thought of götterdämmerung, a corrupt system finally meeting its well deserved end. But it may not end up this way at all. Imagine that!
If the trend changes short of absolute zero, if we become England, and start on a more prudent path before its too late, I'd like to have a sense what might be done that have a chance of helping the situation - kind of like thinking ahead to what stocks to buy when prices finally come to you.
the tell today
Looking back, the tell today was the long bond. Even with the SPX up +24 points, TLT never went negative, and just kept climbing all day long. Without QE, how can the market rise in the face of a bond rally like that? Pity I didn't notice that until too late...
Re: the tell today
dave - it might be a blessing in disguise you didn't notice because the late day rally i think should give the bulls some hope. the bears for the first time in a long time dropped the ball.
Re: abolishing income taxes
davefairtex -
"If the trend changes short of absolute zero, if we become England, and start on a more prudent path before its too late, I'd like to have a sense what might be done that have a chance of helping the situation - kind of like thinking ahead to what stocks to buy when prices finally come to you."
Forget Armageddon. Armstrong and Sinclair tell us it will be a currency event, not an economic event, and both predict it coming in about a year and it will happen too fast for people to react as money velocity goes from 0 to 60 over one ominous weekend. Bill talks of the biggest market - currency - and how it dwarfs the stock and bond bourses. Kaimu talks of Confidence as the only prop to the burgeoning fiat paper. Add those two together and you've got a currency event forming. Once the paper game calamity happens BY DEFAULT via QE to infinity, to steal a phrase from Sinclair, debt will be washed away and few will be left whole but, rest assured, the world will not end and economies will reset in new ways we can't possibly predict. It's an age old story that repeats over and over again. I'm simply anticipating THE CURRENCY EVENT beyond anything we've experienced in the U.S. in our lifetimes and sincerely hope that the Republic and the Constitution can withstand its onslaught.
"experienced in the U.S. in
"experienced in the U.S. in our lifetimes and sincerely hope that the Republic and the Constitution can withstand its onslaught."
The constitution is already toast, and the republic is nothing without contract law.
Re: "experienced in the U.S. in
steveo -
Ah, but we still have the Constitution Convention and a heavily armed population. Chin up.
http://en.wikipedia.org/wiki/Convention_to_propose...
Cheers.
Austerity ? What austerity ?
Great column at Fleck tonight... Just like Bernanke's ' Exit Strategy ' hullaballo last year ( reeeeemember ? ), point is made about Europe talking a good game, but, well, basically blowing smoke up ......,,, anyway, good disagreement with Barton Biggs about selling Big Tech... not that Fleck is bullish ( far from it ), but if he had to bet ( and has, with MSFT ), Big Tech would be The sector to own for any Rally (and that is stretching the time frame).. but, like he says, although PE's are low, they damn sure can get lower ( I like that part ).. anywho, expect ( and I do ) QE II before any EU-A !! good trades to all.
Re: abolishing income taxes
Dr Strangelove,
It does seem a currency event is the likely tip of the scale. But currency is a pretty big structure, essential to all our our systems and if one system fails the like dominoes, the entire structure could collapse. When you say 'debt will be washed away' are we talking only the Fed and Friends debt or across the board?
.............
have mentioned ' energy/grid storage ' a couple of times, but this is a pretty good synopsis of the smaller equities... http://seekingalpha.com/article/212919-quarterly-r...
Re: abolishing income taxes
Dr. S - First you want me to forget about Capra, and now you want me to forget about Armageddon! That's too much forgetting for one day!
So I agree about the potential for a currency event. That's the track we're on, and I also agree that when the tipping point comes, it may be rapid, and there may be little time to react.
Yet you did not address what England is now doing, and whether or not the chance for a currency event there has appreciably diminished due to their movement towards austerity. I myself don't know (I'm not sure anyone does, really) but honestly all it takes for us to reverse course is finding the will for fiscal discipline. They are working on it, we can too, but will we? That's the question.
A lot of previously sacrosanct actors in this game will have to be thrown under the bus for this to happen. Is it likely? Probably only as a last resort, and only if we get some warning signs of imminent collapse. I think the world would prefer that we not go over the edge, and that might help, too.
This isn't a done deal, and you're acting like it's already happened. It hasn't. We're definitely on the track for it to occur, but it hasn't happened yet.
And I dare say, even if the currency event does occur, after all the sturm und drang we will still need a government AND a medium of exchange AND possibly even a capital market; taxes will be collected, stock may be traded, services will be performed, people will eat, etc, and a new world will be created from the ashes of the old. A Man with a Plan during a time of chaos can have an effect way beyond what is normally possible during a static situation.
What will that world look like? What do we want it to look like? I for one would like to see some social equity. And perhaps no super-complicated income tax, while we're at it.
Re: abolishing income taxes
I you own a home, believe me, the debt will stay. Enslave them with debt is the classic economic hit man approach and nothing has changed that strategy..
Re: "experienced in the U.S. in
Doctor, I humbly suggest that if the current Constitution is just bypassed, as it has been, that any amendments to the Big C would just be deception.
I do like the fact that the population is armed. I am aghast
http://en.wikipedia.org/wiki/Second_Amendment_to_t...
that I have never heard the proper interpretation, that surely our fore fathers envisioned and were spot on....
The right to "bear arms" being necessary to a "Free State". Lets get down to brass tacks right here.....what this means is that unless the people are allowed to bear arms, there will not be a free state. Can it get any simpler than that?
Re: abolishing income taxes
Well said!
BC, JCP, WHR didn't finish green
the stocks Bill suggested keeping an eye on. Banksters green yet credit cards red. Commodity heavyweights BHP and RTP leading the way, yet CLF closes red. FDX red and UPS green. Bears still hanging in there. Dow -32. at midnight.
Catching up on some Ambrose...
Shaking my head reading the recent antics in Fed and Congressional circles - you can't make this stuff up:
http://blogs.telegraph.co.uk/finance/ambroseevans-...
http://blogs.telegraph.co.uk/finance/ambroseevans-...
hi tobyt,
do believe your little adult cell bio will see a pop very soon... best wishes, baz.
5:25am ET Mkts
Forex $USD 84.294 up +0.27%, JPY up 0.54% all other currencies down
Gold down to 1187.10, along with silver and oil
Futures: DJIA 9620 -67, S&P 1017.25 -7.75, Nasdaq 100 1723.50 -12.25 (Finwiz)
Lumber -5.1 at the bottom
Re: "experienced in the U.S. in
Steveo & DR.
We seldom refer to the Declaration of Independence which, of course, predates and allowed for the Constitution. Perhaps those shoving their views down our throats "for our own good" should be reminded of this portion...
"Governments are instituted among Men, deriving their just powers from the Consent of the Governed, that whenever any Form of Government becomes destructive of these Ends, it is the Right of the People to alter or abolish it, and to institute new Government..."
Yes, "heavily armed" and with a government using increasingly "unjust powers".
Re: abolishing income taxes
davefairtex -
It's a new day, so you should forget AUSTERITY in the U.S. for now. Sinclair and all the Austrian School boys point out that once Quantitative Easing starts, it can't be stopped without loss to those in power. UK only went 75 billion pound sterling down the QE rabbit hole, so austerity has been initiated under new leadership with relative ease ... so far. Bernanke's Fed and the current Administration is committed to being hoisted by their own petard now. Expect to see Ben in a bomb vest with a detonator in his hand at the next FOMC charade. Can you just imagine the political backlash to a balanced budget proposal by the current U.S. Congress?! To whom is a union boss supposed to direct his bloc vote? Answer me that one.
loannetter -
"When you say 'debt will be washed away' are we talking only the Fed and Friends debt or across the board?"
Certainly, Fed and Friends debt will be inflated away or repudiated since it looms large and can't possibly be paid down now even with austerity measures (runaway taxation, cancellation of QE). As for personal debt, it's the old deflation/inflation debate. I figure housing will continue to deflate for a long, long time while food and energy inflate for now. Job recovery and personal income growth (and inflation) are the big mystery as the current Administration socializes production and ignores small business interests which make up the majority of GDP. Clearly, these issues put a lot of pressure on the private sector to service its underwater debt. Add in that interest rates eventually must rise, excelerating real estate's fall, and that will be an obvious signal that the QE runaway train is ending. Perhaps then we see the currency event, a hyperinflationary currency, and an easy conclusion to individual's mortgage debt that's properly locked without pre-payment penalty or an adj rate. All others will be re-sentenced to some form of debtor's prison with a term equal to the note's duration. Th on-going ramp up of 'default and walk' and the meaningless 7-year Fan/Fred stain-on-your-credit threat will become a badge of courage ... if Fan/Fred even exists much further past the Nov elections.