(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
THE THREAT OF DEFLATION IS REAL
May 9, 2014
A big task for investors is to be alert to scenarios that are not discounted in the prices. Our main focus has been to protect against inflation. However, the recent data including performance of bonds across the world shows that the threat of deflation is real. In other words, portfolios need to be protected not only against inflation but also deflation. The only way to accomplish this is through a diversified portfolio where some positions benefit from inflation while others benefit from deflation. Going forward it will be especially important not to be concentrated heavily in one or two positions, and not to engage in helter-skelter trading. Consider taking a wholesome portfolio approach both on the long side and the short side.
Early trading is quiet in stocks, bonds, gold, and oil. However, due to the situation in Eastern Ukraine, there may be some fireworks as the day progresses.
Gold futures are at $1290, silver futures are at $19.18, and oil futures are $100.79.
S&P 500 resistance levels are 1875, 1900, and 1925; support levels are 1850, 1837, and 1825.
DJIA futures are down 12 points.
YELLEN MAGIC AND CHINA DATA IGNITES OPTIMISM BUT TROUBLESOME WEEKEND AHEAD IN UKRAINE
May 8, 2014
Statement from the Fed Chair, Yellen, to keep interest rates low and that stocks were not overpriced ignited optimism in the market yesterday.
After a string of disappointing economic data, China finally reported a positive number. Exports in April rose 0.9% from 0.9% year on year compared to 6.6% decline in March.
The market seems to be ignoring potentially troublesome weekend ahead in Ukraine. The main pro-Russian groups have decided to defy Moscow and go ahead with a referendum on secession on Sunday.
ECB leaves interest rates unchanged.
In early trading, stocks are mildly higher, oil is mildly lower, gold is mildly higher, and interest rates are unchanged.
Gold futures are at $1293, silver futures are at $19.31, and oil futures are $100.57.
S&P 500 resistance levels are 1900 and 1925; support levels are 1850, 1837, and 1825.
DJIA futures are down 6 points.
MARKET JUMPS ON RUSSIAN PEACE TALK BUT IGNORES BAD INFLATIONARY DATA
May 7, 2014
In early trading stocks are jumping on peace talk indications coming from Russian related to Ukraine.
Two of the factors that lead to inflation are higher unit labor costs and low productivity. Q1 unit labor costs rose 4.2% vs. 2.5% consensus. Q1 productivity came at -1.7% vs. -1.2% consensus.
Gold is pulling back slightly, oil is rising, and interest rates are beginning to tick up.
Gold futures are at $1303, silver futures are at $19.48, and oil futures are $100.33.
S&P 500 resistance levels are 1875, 1900, and 1925; support levels are 1850, 1837, and 1825.
DJIA futures are up 35 points.
STOCKS STAGE A REMARKABLE TURN AROUND
May 6, 2014
Yesterday after being down over 100 DJIA points, stocks staged a remarkable recovery. The characteristics of this recovery are similar to the ones that precede upside breakouts.
Stocks, gold, oil, and interest rates are range bound in quiet early trading.
Gold futures are at $1307, silver futures are at $19.60, and oil futures are $99.92.
S&P 500 resistance levels are 1900 and 1925; support levels are 1850, 1837, and 1825.
DJIA futures are down 21 points.
RED ARROWS IN STOCKS, GOLD BREAKS ON THE UPSIDE
May 5, 2014
Gold has broken on the upside. It is worth careful watching if there is a follow through to the early strength. Gold often stages false breakouts.
Interest rates are at their lows.
Oil is range bound.
Gold futures are at $1313, silver futures are at $19.61, and oil futures are $99.64.
S&P 500 resistance levels are 1875, 1900, and 1925; support levels are 1850, 1837, and 1825.
DJIA futures are down 87 points.
