(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
DANGEROUS LEVEL OF COMPLACENCY CREEPS INTO STOCKS, GOLD, OIL AND BONDS
According to our proprietary indicators complacency in stocks, gold, oil and bonds has reached a very high level. If complacency goes further to an extreme level, the probability of a correction will be better than 80%. The reason this occurs is that when investors become complacent, they are all buyers. Once they are done with their buying, the buying fire power is exhausted and even a little bit of selling can start a correction.
It is worth repeating that complacency is not yet at extreme levels but approaching the extreme.
Our very, very short-term early stock market indicator is neutral.
Gold futures are at $1205, silver futures are at $16.45, and oil futures are $50.61.
S&P 500 resistance levels are 2100 and 2150; support levels are 2063, 2038, and 2017.
DJIA futures are up 21 points.
RELIEF OVER GREEK PAYMENT, THE FED REMAINS CONFUSED
Greece has repaid IMF 450 million euros. Greek bond yields have fallen as the markets are relieved.
Iran’s Supreme Leader pushes for lifting of all sanctions at the time of signing the deal, oil prices are pushing higher in response.
Mom and pop frenzy to buy stocks in China has reached a bubble stage.
Initial weekly unemployment claims came at 281K vs. 285K consensus.
Chinese sold gold overnight but American momo crowd is aggressively buying gold this morning.
Fed minutes show that the Fed is confused. This poses a big risk to the markets.
Our very, very short-term early stock market indicator is neutral.
Gold futures are at $1199, silver futures are at $16.25, and oil futures are $51.08.
S&P 500 resistance levels are 2100 and 2150; support levels are 2063, 2038, and 2017.
DJIA futures are down 23 points.
OIL INVENTORIES AND FOMC MINUTES WILL BE THE MARKET MOVING EVENTS
FOMC minutes will be released at 2:00 pm ET. The market is positioned for very dovish minutes. If the minutes are hawkish, expect stocks to fall.
DOE will release oil inventories at 10:30 am ET. Yesterday at 4:30 pm ET API crude oil inventories came at 12M compared to consensus of 3M. Oil fell from about $54 to under $53.
There has been heavy selling of gold in Asia and Europe but the major support of $1200 is right below. Expect gold to react violently if Fed minutes are different from the position of market participants.
Interest rates are falling.
Our very, very short-term early stock market indicator is neutral.
Gold futures are at $1206, silver futures are at $16.79, and oil futures are $52.77.
S&P 500 resistance levels are 2100 and 2150; support levels are 2038, 2017, and 2000.
DJIA futures are up 16 points.
THE DUDLEY MAGIC
Yesterday the stock went from a triple digit loss to a triple digit gain on a dovish statement by William Dudley, president of Federal Reserve Bank of New York and vice-chairman of the Federal Open Market Committee.
Seven years after the financial crisis, this market’s dependence on the Fed has reached a dangerous proportion. This is a reason to be cautious but still stay overall bullish.
Interest rates are ticking up.
Smart Money slammed gold around $1224.
Short squeeze in oil appears to be easing.
Our very, very short-term early stock market indicator is mild negative.
Gold futures are at $1211, silver futures are at $16.89, and oil futures are $51.32.
S&P 500 resistance levels are 2100 and 2150; support levels are 2063, 2038, and 2017.
DJIA futures are up 13 points.
IS THE UGLY EMPLOYMENT DATA AN INFLECTION POINT?
Employment report released Friday, a holiday, showed non-farm private payrolls increasing by 129K vs. 245K consensus. However, hourly earnings rose by 0.3% vs. 0.2% consensus, this is an indication of strong employment.
Digging below the surface, seven points become obvious.
- There were a lot of layoffs in oil and gas but these layoffs are slowing.
- There was significant impact of rising dollar, but lately, the strength in dollar has reversed.
- Bad weather contributed to the ugly number but the bad weather is behind us.
- The number is significantly below the recent strong job growth of about 200K per month.
- The number is inline with very long-term average job growth per month.
- There are some indications that the U. S. may be close to full employment for practical purposes.
- This is a lagging indicator.
The conclusion is that it is more likely than not this employment number represents a temporary soft patch and does not portend the start of a bear market.
Interest rates are falling in response to the weak report.
The momo crowd is aggressively buying gold and silver, the thinking is that the Fed will not be able to raise interest rates.
A massive short squeeze in oil is in progress.
Our very, very short-term early stock market indicator is negative.
Gold futures are at $1219, silver futures are at $17.11, and oil futures are $50.12.
S&P 500 resistance levels are 2063, 2100, and 2150; support levels are 2038, 2017, and 2000.
DJIA futures are down 130 points.
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