(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
NEGOTIATIONS START IN WASHINGTON BUT IT IS NOT A DONE DEAL
October 11, 2013
Yesterday the morning capsule proved to be spot on. Negotiations have started in Washington but there may still be hiccups in getting a deal done.
Expect the day to be influenced by rumors related to the deal. Also expect short covering going into the weekend.
Gold is falling. Interest rates are falling, and oil is falling.
Stocks are near unchanged.
Gold futures are at $1289, silver futures are at $21.61, and oil futures are $101.78.
S&P 500 resistance levels are 1700, 1710, and 1725; support levels are 1675, 1650, and 1635.
DJIA futures are up 1 points.
TENTATIVE OUTLINE OF A DEAL IN WASHINGTON EMERGES, GOOD FOR STOCKS BAD FOR GOLD
October 10, 2013 A tentative outline of a deal in Washington is emerging. Republicans appear to be giving up on blocking Obamacare. Democrats appear to be willing to agree on a process to cut the deficit in exchange for a short-term, four to eight weeks, continuing resolution (CR). Stock market is likely to go up. Gold is likely to go down. Gold futures are at $1303, silver futures are at $21.95, and oil futures are $102.04. S&P 500 resistance levels are 1675, 1700, and 1710; support levels are 1650, 1635, and 1625. DJIA futures are up 127 points.
OBAMA SET TO NOMINATE JANET YELLEN AS THE FED CHAIR
October 9, 2013 Obama is set to nominate Janet Yellen as the Fed Chair. She will be the first woman Fed Chair and the most powerful woman in the world. The Senate is likely to confirm her. She is a dove and likely to keep present easy monetary policies for a long time to come. Yellen belongs to the school of the late Nobel laureate James Tobin, who further developed ideas of Depression-era economist John Maynard Keynes that support government policies to counter poverty and unemployment. Yellen nomination is positive for stocks and bonds. In theory, it is a big positive for gold and silver because precious metals are inversely correlated to interest rates. In the recent past, gold used to run on speculation of Yellen’s nomination. However, as of this writing, gold and silver are falling on the news of Yellen nomination. Gold futures are at $1304, silver futures are at $21.88, and oil futures are $103.34. S&P 500 resistance levels are 1675, 1700, and 1710; support levels are 1650, 1635, and 1625. DJIA futures are up 21 points.
NO PROGRESS IN WASHINGTON
October 8, 2013 There is no progress in Washington but stock market participants remain optimistic. The consensus is that the U. S. will not default and a deal will be reached before October 17 deadline. If consensus turns out to be wrong, there is 7 to 10% downside in this market. On the other hand, if a deal is reached in a manner that is positive for the long-term, the market can easily spike up 4 to 6%. Gold futures are at $1323, silver futures are at $22.41, and oil futures are $103.78. S&P 500 resistance levels are 1675, 1700, and 1710; support levels are 1650, 1635, and 1625. DJIA futures are up 15 points.
MARKETS GIVE UP FRIDAY’S SHORT SQUEEZE GAINS
October 7, 2013 In Friday’s morning capsule we wrote, “There is a potential for an upside spike because many investors sold short predicting a government shut down. Such investors have been proven right but the market has not fallen. Now these investors are subject to a short squeeze to the upside.” The call turned out to be correct. According to our algorithms, all the gain in the market Friday was due to short squeeze. For the moment the short squeeze is over; the market is giving up the gains it made Friday. Gold is showing some movement to the upside. On Friday there was also a short squeeze in interest rates. Just like the stock market, interest rates are giving up Friday’s gains and are now falling. On Friday oil ran up on short squeeze and now in early trading is giving up those gains. Gold futures are at $1319, silver futures are at $21.97, and oil futures are $102.85. S&P 500 resistance levels are 1675, 1700, and 1710; support levels are 1650, 1635, and 1625. DJIA futures are down 115 points.
