(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers.)
DOLLAR STRENGTHENS IN PERVERSE MARKET ACTION, GOLD VOLATILE
March 1, 2013
Today is the day that sequestration sets in. Many had expected the dollar to fall, but in a perverse action the dollar is strengthening. Earlier today euro briefly broke 1.30 but as of this writing has bounced back to 1.3007.
Usually there is an inverse relationship between the dollar and gold. In other words, when the dollar goes up, gold goes down. Earlier in the morning this relationship was very visible in the gold market as gold fell on the strengthening dollar. However, the momo crowd stepped in to buy gold aggressively on the dip and now gold is rebounding as of this writing. The theory behind buying gold is the dysfunction in Washington is good for gold.
Stock market participants seem to be finally noticing that sequestration is here. This is pushing down stock futures. However there is no telling if the momo crowd will try to push stocks up again.
This is also the first day of the month when a lot of new money comes into the market. Such new money pushes the market up.
There is no change in our cautious stance and recommendation to keep powder dry for better opportunities that are likely to emerge in the near future.
Gold futures are at $1583, silver futures are at $28.60, and oil futures are $90.84.
S&P 500 resistance levels are 1517, 1530, and 1537; support levels are 1500, 1480, and 1474.
DJIA futures are down 50 points.
SEQUESTRATION STARTS, LOWER GDP, AND INFLATION RISES BUT MARKET DOES NOT CARE
February 28, 2013
Sequestration starts tomorrow; Washington continues to be dysfunctional.
Second estimate of fourth quarter GDP came at 0.1% vs. consensus of o.5%.
GDP Deflator came at o.9% vs. 0.6%.
There is a fair amount of material bad news this morning, but the momo crowd does not care they are simply buying the market on momentum.
Unless new data supports that aggressive buying is prudent, we will continue to maintain a cautious stance, buy selectively, and keep powder dry to buy on dips.
Gold futures are at $1593, silver futures are at $28.90, and oil futures are $92.83.
S&P 500 resistance levels are 1530, 1537, and 1550; support levels are 1500, 1480, and 1474.
DJIA futures are down 6 points.
DURABLE GOODS ORDERS SHOOT UP
February 27, 2013
Durable Goods orders capture capital spending by businesses and consumer confidence. Generally consumers buy durable goods only when they are confident about their future. The transport component of this series is very volatile, therefore it is best to look at durable goods ex-transport.
In January Durable Goods ex-transports shot up. The number came at 1.9% vs. 0.2% consensus. If this strength persists, it means economy is getting stronger.
Gold futures are at $1607, silver futures are at $29.15, and oil futures are $92.49.
S&P 500 resistance levels are 1500, 1517, and 1530; support levels are 1480, 1474, and 1465.
DJIA futures are up 11 points.
STOCK REBOUNDING
February 26, 2013
Stocks are rebounding this morning after yesterday’s drubbing.
Bond yields in Italy dramatically rise after election stalemate. Any big dip in the market based on Italian elections will be a buying opportunity.
The first test will be the strength of market internals on a dip of S&P 500 to the zone of 1474 to 1480. Yesterday S&P futures dipped to 1481.72. The market internals were very negative. However for our models to give a more definitive direction we needed the market to dip under 1480, which did not happen.
The best course of action is to wait and see how market internals behave if there is another dip. In the meanwhile, it is best to maintain a cautious stance.
Gold futures are at $1595, silver futures are at $28.90, and oil futures are $92.92.
S&P 500 resistance levels are 1500, 1517, and 1530; support levels are 1480, 1474, and 1465.
DJIA futures are up 46 points.
THE U.K. DOWNGRADED BUT MOMO CROWD BUYS GOLD AND STOCK
February 25, 2013
Moody’s downgrades the UK’s sovereign debt rating to Aa1 from Aaa. The momo crowd is aggressively buying both stocks and gold this morning. Our back tests have shown that consistently following the momo crowd leads to losses over the long-term. Therefore, we are maintaining a cautious stance.
Gold futures are at $1586, silver futures are at $28.92, and oil futures are $93.67.
S&P 500 resistance levels are 1530, 1537, and 1550; support levels are 1517, 1500, and 1480.
DJIA futures are up 55 points.
