(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers.)
CHINA SLOWS, NORTH KOREAN ROCKET IS A DUD
March 13, 2012
Overnight a ton of data including GDP was released in China. Data was worse than consensus. Once again, our call that China was slowing down and to short China in ZYX Emerging Markets ETF Alert has proven spot on like every other call on China we have made in the last five years.
Negatives from China have been counter balanced with North Korean long-range rocket proving a dud. Going into today, several Asian markets were depressed on the prospects of North Korea getting long-range missile capability.
In the U.S., Consumer Price Index (CPI) came as expected.
JPM and WFC beat street expectations lending support to the stock market.
Gold futures are at $1668, silver futures are at $32.17, and oil futures are $103.18.
S&P 500 resistance levels are 1400, 1410, and 1424; support levels are 1368, 1358, and 1352.
DJIA futures are down 57 points.
WHIFF OF INFLATION
March 12, 2012
Core Producer Price Index (PPI) for March came at 0.3% compared to consensus of 0.2%. This is one of our leading indicators with heavy weight in our models.
Initial claims came at 380k vs 355k consensus. Prior week claims were revised to 367k from 357k. This is another one of our leading indicators. On the surface, there is deterioration in this data, however the deterioration may be due to seasonal adjustments.
10 year Spanish bond yield is flat at 5.82%. Italian 10 year bond yield dipped by six basis points to 5.44%.
The key question is if yesterday’s rally in the stock market will continue.
the Beige Book from the Federal Reserve was hawkish indicating very little hope of QE3 in the future.
Gold futures are at $1652, silver futures are at $31.52, and oil futures are $102.7.
S&P 500 resistance levels are 1368, 1380, and 1400; support levels are 1358, 1352, and 1348.
DJIA futures are up 8 points.
SUCCESSFUL ITALIAN BOND AUCTION LEADS TO HIGHER STOCKS
March 11, 2012
Italy sold 11 billion euro bills at an auction. Success of this auction has calmed investor’s nerves.
Spanish ministers have been making statements insisting that Spain will carry through deep spending cuts and will not ask for a bailout.
The stock markets were technically set up for a bounce as in the very, very short-term they were oversold.
Since 2009, there have been 19 instances of more than 1% consecutive back to back drop in S&P 500. After a drop similar to the last two days, S$P 500 on an average rises about 1% the day after.
Gold futures are at $1656, silver futures are at $31.64, and oil futures are $101.27.
S&P 500 resistance levels are 1368, 1380, and 1400; support levels are 1358, 1352, and 1348.
DJIA futures are up 81 points.
FLIGHT TO SAFETY IN EUROPE, RISK OF CORRECTION MAY RISE
March 10, 2012
The 2- and 5-yr yields German Bunds fell to respective record lows of 0.112% and 0.664%. The 10-yr Bund yield is just a couple of basis points above its September 23 record low of 1.636%.
Such flight to German Bunds is negative for stock markets across the world. After the Bund yield reached similar levels last year, stock markets fell in September and October of 2011.
It is important to look at the market in different time frames. In the very very short term the market is slightly over sold whereas in the short to medium term, the market is still overbought.
Stock market is due for a bounce. If a bounce does not occur, it will increase the probability of a correction from the currently forecasted probability of 65%.
Gold futures are at $1650, silver futures are at $31.61, and oil futures are $102.18.
S&P 500 resistance levels are 1380, 1400, and 1410; support levels are 1368, 1358, and 1352.
DJIA futures are up 1 point.
STOCK FUTURES DOWN BUT LESS THAN SOME EXPECTED
March 9, 2012
In the wake of bad employment number on Friday, DJIA futures are down 115 points. This is far less than some had expected.
Investors are bracing for the earnings season which starts in earnest this week.
Gold, silver and bonds are up as expected.
Gold futures are at $1644.4, silver futures are at $31.75, and oil futures are $101.63.
S&P 500 resistance levels are 1380, 1400, and 1410; support levels are 1368, 1358, and 1352.
