(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
BOJ ACTION MAY LEAD TO NEW HIGH IS STOCKS, GOLD AGAIN SHOWS ITS TRUE COLORS
Overnight Bank of Japan (BOJ) acted decisively. BOJ will accelerate purchases of government bonds to increase at an annual rate of 80 trillion yen which computes to about $725 billion. This is the Japanese version of QE.
BOJ will also triple its purchases of ETFs and REITs.
Japanese government pension fund will increase its allocation to Japanese equities.
Nikkei Index jumped about 5%.
Our very, very short-term early market indicator is strong positive.
On more money printing, gold should have gone up but instead gold is falling and has now decisively broken the key support at $1182.
Oil is again under $80.
Interest rates are rising but they should have fallen on more money printing.
Gold futures are at $1165, silver futures are at $15.91, and oil futures are $79.64.
S&P 500 resistance levels are 2017; support levels are 2000, 1975, and 1950.
DJIA futures are up 176 points.
THE FED TURNS HAWKISH IN LINE WITH OUR MODELS
In the FOMC statement, the Fed turned hawkish compared to the consensus. However this is in line with our models. Our portfolios are correctly positioned for the post QE3 world.
Q3 GDP – Advanced came at 3.5% vs. 3.0% consensus.
In the last few days the rise in interest rates was too rapid, this morning there is a retracement.
Oil is having difficulty sustaining its rally.
Gold fell, as it should have, post FOMC statement and is now trying to hold major support at $1200.
Our very, very short-term early market indicator is negative.
Gold futures are at $1204, silver futures are at $16.62, and oil futures are $81.73.
S&P 500 resistance levels are 1975, 2000, and 2017; support levels are 1950, 1925, and 1900.
DJIA futures are down 34 points.
QE TO END, BATTLE OVER TWO WORDS BEGINS
FOMC will release its policy decision at 2:00 PM ET. The Fed is likely to announce the end of QE. Going forward, the battle over two words ‘significant’ and ‘considerable’ will determine the direction of the markets.
‘Significant slack in the economy’ and ‘considerable period of time for low interest rates’ are the two major areas of contention.
Gold and bonds are falling, and oil is rising ahead of FOMC minutes.
Our very, very short-term early market indicator is neutral.
Gold futures are at $1222, silver futures are at $17.17, and oil futures are $82.28.
S&P 500 resistance levels are 2000 and 2017; support levels are 1975, 1950, and 1925.
DJIA futures are up 24 points.
ALL EYES ON FED, WEAK DURABLE GOODS
Today FOMC is starting its two day meeting. FOMC will issue a statement tomorrow. The statement is likely to say that QE3 is ending.
Stock bulls are running up the stock market speculating that the Fed statement will be dovish.
Durable Goods ex Transports came at -0.2% vs. 0.5% consensus.
Gold is jumping on this number. However this is a very volatile series and our 30+ years in the markets have taught us to look at a moving average of this number and ignore month to month fluctuations.
Our very, very short-term early market indicator is positive.
Interest rates are range bound.
Oil has moved back up above $80.
Gold futures are at $1233, silver futures are at $17.36, and oil futures are $81.51.
S&P 500 resistance levels are 1975, 2000, and 2017; support levels are 1950, 1925, and 1900.
DJIA futures are up 58 points.
ROUSSEFF WINS BRAZIL, OIL FALLS BELOW $80
Dilma Rousseff wins Brazil’s presidential election in a close race. Rousseff is a leftist, markets do not like her win. Brazilian stocks are down double digits and casting a negative shadow on the U. S. stocks this morning.
In early trade, oil has broken the major support at $80.
Interest rates and gold are range bound.
Our very, very short-term early market indicator is negative.
Gold futures are at $1231, silver futures are at $17.14, and oil futures are $79.63.
S&P 500 resistance levels are 1950, 1975, and 2000; support levels are 1925, 1900, and 1875.
DJIA futures are down 74 points.
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