(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers.)
PHILLY FED INDEX CAUSES MASSIVE SHORT SQUEEZE IN GOLD AND SILVER
May 18, 2012
The Philly Fed Index is a monthly survey by the Federal Reserve Bank of Philadelphia of manufacturing firms in the Philadelphia region. The index, which was released yesterday came a -5.8 vs consensus of +10. Some market participants believe that such an extremely negative reading may prompt the Federal Reserve to do more monetary easing. This started short squeeze in gold and silver which built on itself and continues this morning.
Here is our take. We previously wrote that gold and silver were very oversold and a bounce was likely. Philly Fed was simply an excuse to ignite the short squeeze. America is a big country, manufacturing firms in Philadelphia form a tiny part of the American economy. The Fed is not likely to move unless similar data is also seen from other regions.
When the stock market was at the recent top, we started telling you that there was 65% probability of correction. Now the stock market is in the zone we had been predicting. The next move in the stock market will be determined by the news from Europe and economic data. Please note that two other strong support levels are nearby.
Smart Money is beginning to step in gingerly at these levels to buy stocks and sell bonds.
No significant Smart Money actions were seen yesterday and this morning in gold and silver.
Gold futures are at $1588, silver futures are at $28.28, and oil futures are $92.41.
S&P 500 resistance levels are 1300, 1290, and 1285; support levels are 1312, 1324, and 1330.
DJIA futures are up 38 points.
ECB STOPS LENDING TO GREEK BANKS
May 17, 2012
ECB has stopped lending to certain Greek banks. The reason appears to be the reports of a run on Greek banks. There are big jitters in the markets.
Wal-Mart is a bell weather and it reported blowout earnings. This may help the U.S. stock market stage a bounce. As a full disclosure, ZYX Buy Change Alert is long on WMT.
Gold, silver and oil are staging an oversold bounce. In the end the trading in various markets will be determined by how euro holds up against the U.S. dollar.
Gold futures are at $1554, silver futures are at $27.60, and oil futures are $93.55.
S&P 500 resistance levels are 1312, 1300, and 1290; support levels are 1324, 1330, and 1339.
DJIA futures are up 11 points.
RADICAL LEFTIST SYRIZA LEAD IS NOT A GOOD NEWS
May 16, 2012
The radical leftist anti-bailout Syriza party is beginning to widen its lead in Greek opinion polls. Syriza may become the biggest party in parliament after next elections now scheduled for June 17th.
The rise of Syriza is likely to deepen European debt crisis. Such a development portents further downside in stock and commodities markets around the world.
In the very, very short-term, stocks, gold, silver, oil, and copper are oversold; U.S. Treasury bonds and German bunds. We may see a small trend reversal to relieve overbought and oversold conditions.
Gold futures are at $1541, silver futures are at $27.46, and oil futures are $92.95.
S&P 500 resistance levels are 1339, 1348, and 1352; support levels are 1330, 1324, and 1312.
DJIA futures are up 52 points.
GERMANY SAVES THE DAY
May 15, 2012
In the middle of a constant stream of depressing news, there is good news from Germany. GDP in Germany expanded 0.5%, a much stronger growth than the consensus. In contrast, France reported zero growth and Italy reported 0.8% fall.
Spanish and Italian bond yields remain near recent highs.
In the United States May Empire Manufacturing Index was encouraging as it came at 17.1 vs consensus of 8.4; April Retail Sales x-auto 0.1% vs 0.2% consensus; and April Core CPI 0.2% vs 0.2% consensus.
Gold futures are at $1560, silver futures are at $28.28, and oil futures are $95.22.
S&P 500 resistance levels are 1348, 1352, and 1358; support levels are 1339, 1330, and 1324.
DJIA futures are up 58 points.
SYRIZA TURNS MARKETS SOUR
May 14, 2012
It was not long ago that most investors had not heard of Syriza. Syriza is the largest anti-bailout party in Greece. Over the weekend, Syriza rejected appeals for it to join a unity government. Now Greece faces new elections. Markets are contemplating exit of Greece from the eurozone.
New economic data from China was very weak. The government responded by lowering bank reserve requirements. Bulls expected this move to ignite a big rally. However, the trading action shows how wrong bulls on China are. As a full disclosure, ZYX Emerging Markets ETF Alert is short on China.
Another day, more bad news and gold plunges. As a full disclosure, ZYX Short Sell Change Alert is short on gold.
The time to buy gold and silver will be when trading is no longer controlled by the momo crowd.
Gold futures are at $1560, silver futures are at $, and oil futures are $94.15.
S&P 500 resistance levels are 1339, 1330, and 1324; support levels are 1348, 1352, and 1358.
DJIA futures are down 100 points.
