(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
SMART MONEY SLAMS JOHNNY-COME-LATELYS
Yesterday morning less informed investors got excited about the Retail Sales number that we shared with you in the Morning Capsule. Stock market ran up over 200 DJIA points. However, due to the fall in oil prices, consumers have more money in their pockets. For this reason, good Retail Sales was not a surprise to the Smart Money. When the stocks were up over 200 points, Smart Money first selectively started slamming high fliers and then selling in futures brought the whole market down.
This morning, those who follow traditional technical analysis are likely to sell.
Oil and interest rates are falling.
The momo crowd is aggressively buying gold and silver.
Gold futures are at $1223, silver futures are at $17.08, and oil futures are $58.75.
S&P 500 resistance levels are 2038, 2063, and 2100; support levels are 2017, 2000, and 1975.
DJIA futures are down 98 points.
WILL UNDERPERFORMING MONEY MANAGERS STEP UP TO HALT STOCK MARKET DECLINE?
This year about 85% of money managers have underperformed their benchmark. Historically, underperforming money managers quickly jump to buy aggressively on any decline in December. Will the historical pattern hold this time? The probability is high that the answer is a ‘yes’. However, there is a big negative this year that was not present in previous such years. The negative is that on a fundamental basis the stock market is fully valued.
Retail Sales came out much stronger than the consensus, this is giving a lift to the market. Interest rates should have moved up on the Retail Sales number but they have not due to heavy demand for U. S. Treasury by foreigners.
Oil is giving up the gains made in a short covering bounce yesterday afternoon.
Gold is breaking strong support at $1225. Silver is still holding above support at $17.00.
Our very, very short-term early stock market indicator is neutral.
Gold futures are at $1217, silver futures are at $17.02, and oil futures are $60.31.
S&P 500 resistance levels are 2038, 2063, and 2100; support levels are 2017, 2000, and 1975.
DJIA futures are up 59 points.
NEW DEFLATIONARY DATA FROM CHINA, OIL STOCKPILES RISE BUT GOLD OBLIVIOUS TO THE NEW DATA
Overnight the new data from China is deflationary. CPI (consumer prices) declined 0.2% month over month. PPI (producer prices) declined 0.5% month over month.
The American petroleum Institute statistics show that U. S. oil stockpiles rose 4.4 million barrels in the week ending December 5th. Consensus was for a rise of 2 million barrels.
There are more jitters in Greece.
Yesterday gold reacted positively to data from China as it should have. Today’s deflationary data from China is negative for gold and so are the increasing oil stockpiles. However, the momo crowd is oblivious to the new data. Earlier, slight selling was seen by the Smart Money when gold hit $1235.
Smart Money has been selling oil this morning.
Interest rates are range bound.
Our very, very short-term early stock market indicator is negative.
Gold futures are at $1230, silver futures are at $17.14, and oil futures are $62.36.
S&P 500 resistance levels are 2063 and 2100; support levels are 2038, 2017, and 2000.
DJIA futures are down 35 points.
CHINA TAKES AWAY THE PUNCH BOWL FOR STOCKS BUT SPIKES IT FOR GOLD
China’s securities clearing house overnight raised the threshold for corporate bonds to qualify as collateral for repos. In plain English, junk bonds can no longer be used for collateral for repurchase agreements, this is a move to strengthen the financial system. The Chinese stock market fell 5.4%, the biggest one day drop since 2009.
European markets are jittery on the move in China. It did not help that Greek shares dropped 11% on snap election and the possibility of a radical left party, Syriza, coming to power.
China’s action has spiked the punch bowl for gold. This is a major change in hard data and may change gold ratings from our models.
Interest rates are falling on China’s action.
Oil has bounced off from support at $63.
Our very, very short-term early stock market indicator is strong negative.
Gold futures are at $1217, silver futures are at $16.74, and oil futures are $63.44.
S&P 500 resistance levels are 2063 and 2100; support levels are 2038, 2017, and 2000.
DJIA futures are down 147 points.
RATE HIKE SPECULATION WILL DRIVE THE MARKETS
After Friday’s strong jobs report speculation on when the Fed will raise rates is about to go into full swing. This speculation will be one of the major factors driving the markets over the coming months.
Japan’s Nikkei crossed 18,000 for the first time since 2007 before pulling back even though GDP came at less than consensus.
Shanghai composite ran over 3,000 for the first time since 2011.
Oil is being sold.
Momo crowd is aggressively buying gold and silver.
Interest rates are unchanged.
Our very, very short-term early stock market indicator is negative
Gold futures are at $1195, silver futures are at $16.34, and oil futures are $64.72.
S&P 500 resistance level is 2100; support levels are 2063, 2038, and 2017.
DJIA futures are down 40 points.
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