(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers.)
QE3 HOPES FADE
June 8, 2012
Bernanke indicated the U.S. economy is strong. Some market participants have been selling because their hopes of immediate QE3 have been dashed. Some investors were buying yesterday because of the rate cut in China. Today the same investors are selling because they realize the reason China cut rates is due to economic weakness.
The foregoing shows that there are a large number of investors in the markets who cannot see beyond their nose. This is good for us because it provides us with opportunities.
Gold futures are at $1577, silver futures are at $28.15, and oil futures are $82.44.
S&P 500 resistance levels are 1324, 1330, and 1339; support levels are 1300, 1296, and 1287.
DJIA futures are down 50 points.
ALL EYES ON BERNANKE
June 7, 2012
All eyes are on Bernanke. Bernanke will start speaking at 10:00 am EST. Please be aware that several times in the past contents of the speech leak out early. The speech will be a market moving event for stocks, bonds, gold, silver, and oil.
Stock markets world-wide are higher because Spanish bond auction went better than expected and China announced a 25 basis point rate cut.
Gold futures are at $1620, silver futures are at $29.41, and oil futures are $86.39.
S&P 500 resistance levels are 1330, 1339, and 1348; support levels are 1312, 1300, and 1296.
DJIA futures are up 64 points.
ECB RATE CUT HOPES DASHED
June 6, 2012
Stock futures ran up on hopes of ECB rate cut, however, ECB left rates unchanged. Now a massive short squeeze is underway. There are too many shorts in the market and those with less staying power are panicking as the market moves higher. Bias in the stock market is towards more gains. Bias in bonds is towards more losses.
Gold futures are at $1637, silver futures are at $29.60, and oil futures are $85.13.
S&P 500 resistance levels are 1296, 1300, and 1312; support levels are 1287, 1280, and 1272.
DJIA futures are up 65 points.
G7 HOLDS EMERGENCY CONFERENCE
June 5, 2012
G7 is a group of seven leading industrial nations. G7 is holding an emergency conference call to discuss eurozone problems.
Expect the day to be governed by rumors and news from Europe.
Gold futures are at $1619, silver futures are at $28.40, and oil futures are $84.25.
S&P 500 resistance levels are 1280, 1287, and 1296; support levels are 1257, 1248, and 1225.
DJIA futures are up 14 points.
DOOMSAYERS TRYING HARD TO MAKE THE SKY FALL
June 4, 2012
Over the weekend, the media was full of doom and gloom. Stock market gurus were out in full force claiming the sky will fall because on Friday the U.S. stock market broke the 200 day moving average.
There is nothing intrinsically magical about the 200 day moving average. The 200 day moving average derives its power only because a large number of market participants have bestowed the power of deciding bull and bear markets on this average. They consider it a bull market when the market is trading above the 200 day moving average, and a bear market when trading below the 200 day moving average.
Those who believe in the magic of 200 day moving average may start panicking and selling.
We have previously written,
There is growing discrepancy between the employment data and the GDP data. Assuming no change in productivity, an extrapolation of the employment data shows that the GDP should be growing at about 4%; the GDP data shows it is growing at about 2%. The two pieces of data can be reconciled if productivity is falling.
The anecdotal evidence does not support falling productivity thesis.
The manner in which the conflict between the employment data and the GDP data is resolved will have major effect on our models.
The employment data just released resolves the conflict. Employment is simply not growing as fast as the data at the beginning of the year showed. After crunching massive amounts of data, we have come to a very simple conclusion.
It turned warmer much earlier this year. Warm weather resulted in spiking employment and the spike was taken by some as a sign of strength, now the employment growth is back to what is to be expected with a 2% GDP growth. This means that the panic over Friday’s employment numbers is senseless.
Interestingly, stocks are up over 3% in Spain which is at the center of the current crisis.
Gold futures are at $1618, silver futures are at $28.35, and oil futures are $82.51.
S&P 500 resistance levels are 1280, 1287, and 1296; support levels are 1272, 1257, and 1248.
DJIA futures are down 4 points.
