(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers.)
FORTUITOUS CALL ON TUESDAY AHEAD OF THURSDAY DROP
June 22, 2012
On Tuesday, June 19th, we wrote
Aggressive investors who bought QQQ, FEU, MS, USO, and GREK on Friday may consider taking profits in all these positions with the exception of FEU and exiting them here.
Those investors who do not have enough dry powder because they either did not take enough profits in March and April when we were aggressively taking profits or did not hedge may take some profits here to generate dry powder.
On Thursday, the stock market experienced the second biggest drop of the year.
Now the overbought condition we have been talking about is almost relieved. Normally a bounce should be expected from here, but this time a number of forces are acting against such a bounce. Goldman has come out with a call that S&P 500 will go to 1285. The Wall Street is like sheep. After Goldman’s call, several others have also repeated Goldman’s prediction. Sometimes such calls by a large number of analysts become self-fulfilling prophecies as followers of such analysts sell en mass.
Gold and silver are at weak support.
Oil has broken strong support and is now oversold.
Expect markets to move based on the news and rumors relating to the European summit.
Gold futures are at $1567, silver futures are at $26.80, and oil futures are $78.13.
S&P 500 resistance levels are 1324, 1330, and 1339; support levels are 1312, 1300, and 1296.
DJIA futures are up 42 points.
CHINA DISAPPOINTS PLENTY OF BUYERS FOR SPANISH BONDS
June 21, 2012
Spain sold 2.22 billion euro worth of medium term bonds. Interestingly the planned maximum amount was 2 billion euros. Bid to cover ratios, a measure of demand were better than expected. The point is that plenty of investors were willing to step up and buy Spanish bonds.
China manufacturing contracted for the eighth month in a row. Export orders contracted the fastest since March 2009.
There are a large number of cross currents in all markets we follow. Most of these cross currents may cancel out each other leaving us with muddling markets.
Gold futures are at $1590, silver futures are at $27.62, and oil futures are $80.67.
S&P 500 resistance levels are 1358, 1368, and 1380; support levels are 1348, 1339, and 1330.
DJIA futures are up 9 points.
GOLD AND SILVER FALL AHEAD OF THE FED ANNOUNCEMENTS
June 20, 2012
Yesterday we told you that gold and silver had an ideal set up to fall. However we did not recommend short selling because of the risk involved. This morning gold and silver are falling hard. Interestingly, momo crowd continues to buy aggressively. Therefore there is no change in our recommendation from yesterday. It is best to maintain an arbitrage position between gold and silver because that lessens the risk.
Please be alert this afternoon as the Fed announcements may provide opportunities.
Gold futures are at $1605, silver futures are at $28.11, and oil futures are $83.82.
S&P 500 resistance levels are 1358, 1368, and 1380; support levels are 1348, 1339, and 1330.
DJIA futures are up 15 points.
WAIT AND SEE FOR G20 AND THE FED
June 19, 2012
Markets are in the wait and see mode ahead of a statement from G20 and FOMC decision which is due for tomorrow. G20 statement is expected to focus on Europe.
Gold futures are at $1628, silver futures are at $28.72, and oil futures are $83.42.
S&P 500 resistance levels are 1348, 1352, and 1358; support levels are 1339, 1330, and 1324.
DJIA futures are up 31 points.
GREEK RALLY FADES
June 18, 2012
The New Democracy party wins in Greece. Stocks, commodities and the euro moved up strongly in Asia on the news of pro-bailout party winning. It is not uncommon for traders to buy the rumor and sell the news. Traders bought going into the Greek election, now the market is overbought in the very, very short-term.
New data shows that property prices continue to fall in China.
There was a disappointment in India as the Reserve Bank of India did not cut rates.
The yield on 10 year Spanish bonds has crossed 7% and is now at 7.13%. Now all eyes are on Fed that meets tomorrow and Wednesday.
Gold futures are at $1618, silver futures are at $28.25, and oil futures are $82.86.
S&P 500 resistance levels are 1312, 1324, and 1330; support levels are 1296, 1287, and 1280.
DJIA futures are down 64 points.
