(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
STRONG BUT INDECISIVE JOBS REPORT, STUNNING TORY VICTORY AND POUND SURGES
April Non-farm Private Payrolls came at 213K vs. 215K consensus, whisper numbers were all over the place from 150K to 300K. Analyzing this report beneath the surface, proves that our economic analysis over the last three months was correct in that the weakness in the economic data was related to transient factors.
The main point for investors is that the report is indecisive in that it is not going to help the stock market breakout of the tight range in which it has been fluctuating.
In a stunning election result, conservatives lead by Cameron swept to victory. Scottish National Party wins with a landslide deepening the rift between England and Scotland. Pound is surging. Election euphoria may cool as investors realize that there are two major tasks ahead. First, how to tame the Scottish lion. Second, a referendum on U. K. staying in EU.
Here are the positives of maintaining an investment in U. K. from the long-term perspective.
- U. K. is the fastest growing G7 economy.
- British are realizing that they are no longer rich and are on their way to living within their means.
- U. K. is also pulling back internally which is likely to be rewarding for the London stock market.
The momo crowd is aggressively buying gold.
Interest rates are slightly lower as investors who were short bonds take profits.
Massive short squeeze in oil seems to be temporarily abating.
Our very, very short-term early stock market indicator is mild positive.
Gold futures are at $1190, silver futures are at $16.48, and oil futures are $59.52.
S&P 500 resistance levels are 2122 and 2150; support levels are 2063, 2038, and 2017.
DJIA futures are up 155 points.
POSITION SQUARING AHEAD OF THE MOTHER OF ALL REPORTS
Stock market has been fluctuating in a very tight range. Sooner or later it is going to break either to the up side or to the down side. Our models show an equal probability of going in either direction. On the positive side is that the economy is improving. On the negative side is that stocks are expensive.
Tomorrow morning the U. S. Department of Labor will report April employment data at 8:30 am ET. This is a critical report and has the potential to trigger a big move.
Market participants will be position squaring ahead of tomorrow’s report leading to cross currants.
Overnight gold was sold aggressively in China.
Oil is acting weak, but WTI is still over $60 as of this writing.
Interest rates are hanging near their highs.
Our very, very short-term early stock market indicator is neutral.
Gold futures are at $1181, silver futures are at $16.27, and oil futures are $60.70.
S&P 500 resistance levels are 2100, 2122, and 2150; support levels are 2038, 2017, and 2000.
DJIA futures are down 25 points.
ADP FALTERS SECOND MONTH IN A ROW, GREEK REVERSES REFORMS, OIL APPROACHES $70
ADP Employment came at 169K vs. 189K consensus. This is the second month in a row that ADP data has faltered.
Greece reverses civil service reforms, workers who lost their jobs as part of the bail out will be rehired. In view of Greece running out of cash, the situation will come to a head in the coming days. However, the markets, at least for the time being are ignoring Greece and focusing on PMI data.
Spain PMI came at 60.3 vs. 57.4 consensus and Italy at 53.1 vs. 51. consensus. Eurozone came at 54.1 vs. 54.2 consensus.
Brent oil is approaching $70 on technical buying. Fundamentals are still against oil. There is still too much oil in the world compared to the demand. However, massive short squeeze continues. This is an example of market mechanics. Hedge funds whose analysis is correct and are short are incurring huge losses as they are forced to buy.
Interest rates are near their highs.
Gold has attempted to rally on weak ADP data and weaker dollar. As of this writing the rally is subdued.
Our very, very short-term early stock market indicator is neutral.
Gold futures are at $1193, silver futures are at $16.55, and oil futures are $61.83.
S&P 500 resistance levels are 2100, 2122, and 2150; support levels are 2063, 2038, and 2017.
DJIA futures are up 58 points.
GREEN SHOOTS IN EUROPE
The European Commission raises euro zone growth forecast for this year to 1.5% from 1.3%.
March U. S. Trade Balance balloons to -$51.4 billion vs. -$40 billion consensus.
Shanghai stock market finally falls over 4%.
WTI crude has pushed over $60.
The momo crowd is aggressively buying gold and silver, Smart Money is inactive.
Interest rates are hanging near highs.
Our very, very short-term early stock market indicator is mild negative.
Gold futures are at $1196, silver futures are at $16.61, and oil futures are $60.44.
S&P 500 resistance levels are 2122 and 2150; support levels are 2063, 2038, and 2017.
DJIA futures are down 21 points.
PARTYING OVER WEAK DATA
In China new factory orders hit one year low. After initially dropping more than 1%, Shanghai markets shrugged it off and closed higher.
In Europe, marathon talks over the weekend did not produce an agreement over Greek debt. Parties remain far apart on pension and labor reforms. In Europe markets have shrugged off Greece believing that ECB will use monetary policy to counter whatever happens with Greece.
In the U. S., there is early aggressive buying on hopes that the factory data released to be released later today will be weaker and postpone interest rate increase.
Gold, silver and oil are rallying on speculation of more central bank intervention.
Interest rates are slightly falling after rising last week.
Our very, very short-term early stock market indicator is mild positive.
Gold futures are at $1182, silver futures are at $16.43, and oil futures are $59.59.
S&P 500 resistance levels are 2122 and 2150; support levels are 2063, 2038, and 2017.
DJIA futures are up 55 points.
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