(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers.)

MARKET FALLS ON FISCAL CLIFF FEARS AFTER BOEHNER PLAN FAILS

December 21, 2012

Boehner abandoned his ‘Plan B’ apparently after facing a rebellion.  The concern among market watchers is that the composition of the Republican caucus in the House is such that it simply cannot be led.  All the futures are down sharply, it is nothing like what happened after TARP rejection in the House; then futures were down over 500 points.

Any continued weakness will be a buying opportunity.

Gold futures are at $1649, silver futures are at $29.90, and oil futures are $89.20.

S&P 500 resistance levels are 1439, 1444, and 1450; support levels are 1415, 1410, and 1400.

DJIA futures are down 194 points.

WHY GOLD AND SILVER FALLING AGAIN

December 20, 2012

Yesterday evening after the fiscal cliff talks broke down, the momo crowd successfully ran up gold to over $1671 but could not overcome the micro resistance at $1672. Gold fell back under $1669 and the momo crowd tried to run it up again. When the run up failed the second time around $1671, the Smart Money slammed it from the short side. Gold traded as low as $1653 and is now trying to recover.

Silver simply followed gold.

Our short-term rating on silver is negative and on gold it is mildly negative. However it is worth pointing out that both gold and silver are very over-sold and there is support at $1650. If there is a bearish overshoot, the next big support is $1620 – $1630. Support level after that is $1592 – $1607.

Expect the stock market to move based on the brinkmanship game that is going on in Washington.

Gold futures are at $1653, silver futures are at $30.34, and oil futures are $89.72.
S&P 500 resistance levels are 1444, 1450, and 1465; support levels are 1424, 1415, and 1410.

DJIA futures are down 12 points.

MARKET WATCHERS AND WASHINGTON INSIDERS SPLIT ON FISCAL CLIFF

December 19, 2012

Market watchers have all but concluded that the fiscal cliff issue will be resolved over the next few days.  On the other hand experienced Washington insiders believe there is only about one-third chance that the issue will be resolved in a meaningful manner over the next few days.

Under these circumstances it is best to not get carried away with optimism.

Even if there is a successful resolution, the possibility of ‘Sell the News’ cannot be ruled out.

Gold futures are at $1668, silver futures are at $31.20, and oil futures are $88.32.

S&P 500 resistance levels are 1465, 1472, and 1480; support levels are 1444, 1439, and 1424.

DJIA futures are up 39 points.

KEY CONCESSIONS FROM BOTH SIDES MAKE FISCAL CLIFF AGREEMENT IN SIGHT

December 18, 2012

Both Democrats and Republicans have made the key concessions needed.  Obama has moved from his position of higher taxes on people making $250,000 to $400,000.  Boehner has moved from no higher tax rates to higher tax rates for people making over $1 million.  Both sides are inching towards an agreement.

Any dip in the market will be a buying opportunity.

Gold futures are at $1697, silver futures are at $32.37, and oil futures are $87.70.

S&P 500 resistance levels are 1439, 1444, and 1450; support levels are 1424, 1415, and 1410.

DJIA futures are up 23 points.

WILL JAPAN RISE AGAIN?

December 17, 2012

After a miraculous growth since World War II, Japan has been mired in deflation and low growth.  In a major development the Liberal Democratic Party (LDP) won election in Japan with a landslide.  This is in line with out expectations but much better than expectations of some observers.  LDP captured 294 seats in the lower house of parliament out of 480 seats.

Shinzo Abe, the leader of LDP is likely to become the next Prime Minister.

Abe’s plan is to coordinate the fiscal policy, the monetary policy and the regulatory policy to say goodbye to deflation.  If successful, Japanese stocks will do well and yen will continue to go lower.

As a full disclosure, in ZYX Global Multi Asset Allocation Alert we are short yen using an inverse ETF and this is our trade of the decade; we are also long iShares MSCI Japan Index ETF (EWJ).

In the U.S. there seems to be some progress towards resolving the fiscal cliff.  Boehner is reported to have floated the idea of raising tax rates for those earning over $1 million.

The stock market is in the mode of a slow grind up if there is no major news.  However, expect swings based on the news and rumors related to the fiscal cliff.

Gold futures are at $1697, silver futures are at $32.27, and oil futures are $87.

S&P 500 resistance levels are 1424, 1439, and 1444; support levels are 1415, 1410, and 1400.

DJIA futures are up 31 points.

FREE: SUBSCRIBE TO ‘GENERATE WEALTH’ NEWSLETTER