(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers.)
INFLATION DROPS
March 16, 2012
Core Consumer Price Index (CPI) drops to 0.1% from prior 0.2%. Consensus was 0.2%.
Stocks and bonds are taking encouragement from lower inflation data. Obviously this is not good for gold and silver, but our algorithms show that even after release of lower inflation numbers, mom and pop momo crowd continues to aggressively buy gold and silver.
As we have previously written, in our models core PPI gets a heavy weight, and core CPI gets low weight. The concept is that producers see inflation before consumers. Expect option expiration related gyrations in the market today. Some of the recent up move in the stock market is related to option expiration.
Gold futures are at $1647, silver futures are at $32.40, and oil futures are $105.52.
S&P 500 resistance levels are 1410, 1424, and 1437; support levels are 1400, 1380, and 1368.
DJIA futures are up 38 points.
THE LOWEST INTEREST RATES IN A GENERATION MAY BE IN THE REAR VIEW MIRROR
March 15, 2012
The lowest interest rates in a generation in the United States may be in the rear view mirror. U.S. economy is getting better. If the economy continues to perform and there is no major global crisis, inflation will have a tendency to heat up. In such an event, the focus of the Federal Reserve Bank will shift to fighting inflation. The big stick against inflation that the Fed carries is its ability to raise interest rates.
Two leading indicators that have heavy weight in our models were released this morning. Initial weekly unemployment claims came at 351k vs 355k; in other words, fewer people are filing for unemployment.
Core Producer Price Index (PPI) came at 0.2% vs 0.2% consensus. The concept behind watching core PPI is that core PPI tends to lead consumer inflation. In other words, this is a good indicator to watch when inflation starts becoming a big concern.
In the very short-term stock market is overbought, gold and silver are oversold, and bond yields are breaking out.
Our models continue to show a 65% probability of a pull back.
Gold futures are at $1644, silver futures are at $32.20, and oil futures are $106.03.
S&P 500 resistance levels are 1400, 1410, and 1424; support levels are 1380, 1368, and 1358.
DJIA futures are up 16 points.
SMART MONEY AGGRESSIVELY SELLING GOLD AND SILVER
March 14, 2011
Our algorithms show that the smart money has been aggressively selling gold and silver since release of the FOMC statement yesterday.
The selling was particularly aggressive in Asia. Mom and pop momo crowd continues to buy gold and silver on the dips, but so far has not been able to contain institutional selling.
Gold is down about $50.
Gold futures are at $1647, silver futures are at $32.75, and oil futures are $106.07.
S&P 500 resistance levels are 1400, 1410, and 1424; support levels are 1380, 1368, and 1358.
DJIA futures are up 9 points.
BIG BANKS FACE DOMESDAY TEST
March 13, 2011
The Fed will release the results of stress test on 19 largest banks on Thursday at 4;30 pm.
The criteria is survival of banks if unemployment rate rises to 13%, stocks drop 50%, house prices decline 21%, and major economies of the world contract significantly.
The Fed has been conducting these test every year since 2009, but will release test results to the public for the first time.
These tests may bring several investing opportunities in banks. We will go to work on Thursday right after 4:30 pm when the results are released. One of the screens in our system is Fund Flows. We will be watch Fund Flows and Smart Money actions on Friday and Monday. Most likely time for new buy as well as short sell signals is Tuesday March 20th.
These tests may provide some of the best investing opportunities in 2012.
U.S. retail sales for February were strong. Retail sales x-auto came at 0.9% vs 0.6% consensus.
The Fed meets today. No policy change is expected. However, it pays to be alert for new signals from the Real Time Feed.
Gold futures are at $1685, silver futures are at $33.45, and oil futures are $106.59.
S&P 500 resistance levels are 1380, 1400, and 1410; support levels are 1368, 1358, and 1352.
DJIA futures are up 38 points.
CHINA TRADE FALLS DEEP INTO RED
March 12, 2012
China reports $31.5 billion trade deficit for the month of February. China became rich by persistently exporting more than it imported. Now there is a big trade deficit.
This data further adds to the proof that our big macro call in ZYX Global Multi Asset Allocation Alert in October 2011 of emerging markets slowing was spot on.
ZYX Emerging Market ETF Alert has maintained a sell rating for the long-term on China since last year. Recently, ZYX Emerging Markets ETF Alert downgraded short-term rating on China to sell, and medium-term rating to mild sell.
The slowing economy in China has major implications for investments.
Gold futures are at $1702, silver futures are at $33.85, and oil futures are $106.05.
S&P 500 resistance levels are 1380, 1400, and 1410; support levels are 1368, 1358, and 1352.
DJIA futures are down 8 points.
