On 5/24/12, Friday, France-Germany and Spain-Germany 10-year spreads are decreasing which indicates some calmness returning in Europe. France 10-year yield drops to record low 2.49%. Italy’s Monti says Eurobonds can be placed in a short time frame and the majority of Euro nations favor Eurobonds. Obviously he leans to the socialistic France side as the other nations do, voicing their opinion of what Germany should do with their money. Markets weaken in front of the opening bell with the futures turning negative and drifting lower. A Euro official says it is foolish to not be prepared for a Greek exit. The markets are jerked around on every headline that comes across the wires. These are not free markets but rather casino’s where bets are placed daily on the Euro news flow, a far cry from the stock markets of years ago; these are not your Grandfather’s markets. The euro drops under 1.25 just before the opening bell when news hits that Spanish banks are having more serious funding issues. Markets drift lower all day closing moderately lower as the three-day holiday weekend begins. The SPX recovered this week moving up 1.7% to close the week at 1318.
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On 5/28/12, Monday, markets are closed in Observance of Memorial Day. Spanish 10-year yield climbs higher towards the 6.5% level after a bailout of Bankia occurs recapitalizing this trouble bank. Spain-Germany 10-year yield spread hits a euro record high. Bulls are keeping equity markets buoyant, however, on news that Greece elections are moving more towards a bailout-friendly government (staying in the euro).
On 5/29/12, Tuesday, China announces a cash for clunkers program and promises more stimulus measures that bounce Asian and European markets higher. The Spanish bank situation, however, only worsens and drags the Spain equity market lower. Greece is more bailout-friendly and wanting to stay in the euro which creates market buoyancy. The Asian and European markets enjoy gains focusing on the China stimulus talk and Greece news rather than Spain. China releases news saying that extensive stimulus measures are not planned. The Spain stock market is down about 27% so far this year. U.S. markets reopen for trading after the holiday weekend. Markets move higher following the Asian and European indexes. Traders that were short over the holiday weekend are forced to cover adding bull fuel. At 11:30 AM, continued negative European news drops the euro like a rock and the U.S. equity markets, gold and commodities all tumble in unison. But by the end of the day, the bulls win out and drive markets higher on very low volume with the SPX up 15 points, or 1.1%, to 1332. The Dow Industrials finish up 125 points or 1%, to 12581.
On 5/30/12, Wednesday, China reiterates that there are no plans for strong stimulus measures. This sends futures lower with miners hit hard, as well as the China and Australia (think commodities) markets. Futures are poised to give back about half of yesterday’s gains. Spain is dominating the news. Bankia bank continues to plummet. The Spain banking system has lost credibility and investor confidence. Germany 2-year note yield hits a record low 0.416%. Bank runs remain a major worry for Greece, Spain and now Italy. The 10-year yield prints a historic low at 1.6713% as traders seek safety driving note prices higher and yields lower. Markets tumble at the opening bell and at lunchtime the Tuesday gains are all gone plus some. All sectors are negative. Oil tumbles under 88 and is now in a bear market over 20% off its top this year. Global deflation takes a stronger hold. The 10-year yield prints a record low of 1.61%. The markets give up all of yesterday’s gains on stronger volume. The SPX drops 19 points, -1.4%, to 1313. The Dow Industrials drop 161 points, -1.3%, to 12420. The Nasdaq loses 34 points, -1.2%, to 2837. After the close, Danish banks are downgraded.
On 5/31/12, Thursday, Ireland votes to back the continued austerity program. Germany retail sales and unemployment both surprise on the positive side. Jobless Claims are at their highest level in a month. GDP is reported at 1.9% verifying a weak recovery in place. Markets drop after the open but news that the IMF is in talks with Spain to provide funding catapults markets higher. IMF officials, however, release news that discussions are only internal to the IMF and not with Spain dampening down expectations. The day ends with markets slightly red content on waiting for the Jobs Report in the morning. The month ends, EOM, with the SPX now down two months in a row.
On 6/1/12, Friday, the Germany 2-year note goes negative so investors are actually paying Germany to hold their money. China PMI disappoints, the HSBC China PMI is showing contraction in China for seven months in a row. China exports are falling. There is very little demand for lending from banks inside China verifying the slowdown. The U.K. 10-year note (gilt) drops to 1.50%. Brent Oil drops under 100. The Bloomberg website displays the “Greek Drachma (Post EUR) Spot” listing on a currency page. Bloomberg removes the listing and says it was only a dry run as they make contingency plans for any outcome. Reality sets in that the drachma may be here a lot faster than anyone thinks. Futures are red ahead of the Jobs Report released at 8:30 AM that reports a paltry 69K job gain and 8.2% unemployment rate. Futures markets immediately plummet with the S&P’s down 27, the Dow Industrials down 200 and Nasdaq down 50 points. The 10-year yield collapses to a 1.45%. Not only did the 69K number miss the 150K consensus estimate, but the prior month’s number, 115K, was lowered to 77K as well. There are no jobs and there is no economic recovery. The opening bell rings and the SPX immediately collapses thru the critical SPX 12-month MA at 1290-ish indicating that markets have fallen into a bear market. The SPX then falls thru the 200-day MA at 1284, a technical break down. The Dow turns negative on the year losing the 12218 level. The day ends with the Dow down 275 points, -2.2%, to 12119. The SPX loses 32 points, -2.5%, to 1278. The Nasdaq loses 80 points, -2.8%, to 2747. The 10-year yield is 1.46%. Oil is 83.26. VIX is 26.56. Dollar 82.909. Euro 1.2342. Dollar/Yen 78.12. The CRB is 268.38 signaling deflation firmly in place and that an announcement for quantitative easing is imminent and should occur anytime now thru 6/20/12, the FOMC meeting date. Gold is one of the few winners, up 59 today to 1633. Copper is 332. After the close, Egan-Jones rating agency downgrades Italy.
On 6/2/12, Saturday, Egypt’s former President Mubarak is sentenced to life in prison for his crimes against the people but his sons are acquitted. A scuffle results in the courtroom and riots begin on the street since the sentences appear too lenient. This adds to further Middle East instability potentially affecting oil and PM (precious metals) markets. The weak jobs report dominates the weekend news cycle.
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On 6/3/12, Sunday, the cable news outlets broadcast special Sunday evening shows to monitor the Asian markets and prepare traders for the intense week ahead.
On 6/4/12, Monday, U.K. markets are closed today and tomorrow for Queen Elizabeth’s Diamond Jubilee. The U.S. markets open and …………….. Lots of central banker and Fed talk is on tap this week. Full moon tonight.
On 6/5/12, Tuesday, RBA Rate Decision. BOC Rate Decision.
On 6/6/12, Wednesday, Beige Book. ECB Rate Decision and Press Conference.
On 6/7/12, Thursday, BOE Rate Decision. Chairman Bernanke speaks 10 AM.
On 6/8/12, Friday, ……….
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On 6/13/12, Wednesday, PPI, Retail Sales, 10-Year Note Auction.
On 6/14/12, Thursday, CPI, 30-Year Bond Auction.
On 6/15/12, Friday, Consumer Sentiment.
On 6/17/12, Sunday, Greece elections. The U.S. Supreme Court rules on Obamacare any day over the next two weeks—healthcare stocks will react violently.
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On 6/19/12, Tuesday, Housing Starts, FOMC Meeting begins. New moon.
On 6/20/12, Wednesday, FOMC Rate Decision and Press Conference-is there any mention of QE3 if it has not already occurred? If so, a rip-roaring equity rally will begin.
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On 6/26/12, Tuesday, Consumer Confidence.
On 6/28/12, Thursday, Euro Summit. GDP.
On 6/29/12, Friday, Consumer Sentiment.
Great options trading last week and this week to come Im looking at calls across the board on YINN bought alot of calls on TNA hopefully we will see at least an intraday bounce before 1250 is in the cards where i believe we will se some solid support.
ReplyDeleteHello MCAP, not familiar with YINN but see it is the China 3x bull ETF. It is set up with positive divergence on daily and weekly charts. The drop just occurring has momo to it but price should be basing and ready to bounce. Agree about 1250. Also 1268 is support, then the starting year number at 1258, also the 1260 level is the H&S target. So, either the markets bounce come Monday only to come back down to the 1250-1260 zone, or, bad news from Europe to start the week occurs and we head directly to 1250-1260 and bounce. QE3 is very close. If Japan currency intervention occurs overnight Sunday that should pave the way for QE coming at any time.
ReplyDeleteCant wait thank you.
ReplyDelete