On 6/17/12, Sunday, the Greece elections result in a win for Samaras, the conservative candidate, but only attaining about 30% of the vote. Tsipras, the main rival, who wants to repeal the austerity measures, attained about 28% of the vote. Particularly interesting and worrisome is that the older folks voted for Samaras while the younger folks leaned towards Tsipras. These generational battles, old versus young, should increase in countries all around the world since the older generations have sold out their kids and grandchildren. 40% of eligible Greece voters did not bother voting, instead going to the beach to lounge and pass the lotion. Nonetheless, traders breathe a sigh of relief since the desired outcome, where Greece will want to stay in the euro, results causing an S&P futures jump of about 10 points.
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On 6/18/12, Monday, the Greece election boost does not last. European bond yields are climbing again with Spain at 7% once again. The S&P futures turn negative at 4 AM EST and deteriorate to about a fifteen point negative swing after the Greece election initial pop. Fitch rating agency downgrades India’s outlook to negative. The opening bell rings and the markets sell off. Keystone’s NYA 40-Week MA Cross Indicator immediately turns bearish. The markets languish indecisively sideways. Spain 10-year yield blows out to another record high above 7.17%. Italy is over 6%. Keystone’s SPX:VIX Ratio Indicator moves above 68 signaling a strong bullish move is on tap. The European banks are selling off today. The markets finish flat. The G-20 politico’s said they would be working late into the night but the meeting is a dud with some big players not attending.
On 6/19/12, Tuesday, the Spanish bank audit results are now delayed until September. FedEx, an important barometer for the global economy, reports disappointing results, and Housing Starts are weak, but the markets yawn. The opening bell rings and the markets leap vertically. Keystone’s NYA 40-Week MA Cross Indicator immediately turns bullish and the SPX:VIX ratio moves well into the 70’s, also very bullish. Banks are up big today with BAC gaining well over 5%. The VIX drops under 18 and the SPX punches up thru the 50-day MA. Semiconductors help push markets higher. Utilities are weak despite the large up day. The G-20 meeting is a non-event. The group wants to lower Eurozone borrowing costs but Merkel remains against the Eurobonds concept. The two-day FOMC Meeting begins. The day ends with markets coming off the peaks. The SPX is up 13 points, 1%, to 1358. The Dow Industrials are up 95 points, 0.8%, to 12837.
On 6/20/12, Wednesday, markets are flat waiting on the Fed announcement at 12:30 PM EST. Chairman Bernanke extends Operation Twist and stands ready for further measures. This disappoints traders who expected far more stimulus and even QE3. Markets knee-jerk lower on the news, then recover into the Chairman’s press conference where they roll over again. Markets move erratically and finish flat on the day. Bernanke is channeling Harry Houdini since the traders that think QE3 are coming, still do, and the traders thinking QE3 is not coming, still do. AAPL experiences down time for users today but the problems are fixed after a few hours. Apple loses a patent lawsuit against Samsung and also reports that employee wages are being bumped higher. There are recent labor problems at Apple stores as employees are forced to work more night time and weekend hours. Not a good day for the mighty Apple. BBBY disappoints with earnings after the bell.
On 6/21/12, Thursday, China PMI falls for eight straight months. The German and Eurozone PMI’s are flat to lower as well showing manufacturing weakness continuing in Asia and Europe. Europe is China’s number one customer so the contagion is apparent. The weak manufacturing news takes oil, miners and basic materials lower. Keystone’s SPX 30-Minute 8 MA and 34 MA Cross Indicator turns bearish after the open. Economic data at 10 AM EST is weak, especially the Philly Fed, which sends markets lower. Oil drops under 80 for the first time since October 2011. Semiconductors are weak. Volatility is spiking higher as traders hedge long positions. Keystone’s NYA 40-Week MA Cross Indicator shows the NYA falling under the 40-week moving average indicating bearish markets ahead. A morning note released by GS stating that investors should short the SPX to 1285 is creating market negativity. Gold drops 50 bucks. As the day continues, traders become increasingly worried about the imminent Moody’s bank downgrades. The financial sector, XLF, stumbles lower which takes the broad markets another strong leg lower. Keystone’s SPX 60-Minute 200 EMA Cross Indicator turns bearish. Keystone’s SPX:VIX Ratio Indicator drops under 68 indicating bearish markets ahead. The markets receive a severe beating today. The SPX lost 30 points, -2.2%, to 1325. The Dow Industrials lose 251 points, -2%, to 12573. The Nasdaq loses 71 points, -2.4%, to 2859. The small cap RUT loses 19 points, -2.5%, to 765. Spain releases results of its bank stress tests which result in a need of about 62 billion euro’s in a worst case scenario. Expectations were a worst-case at 70 to 100 billion so the Spanish banks move higher on the news.
On 6/21/12, after the close, Moody’s downgrades fifteen banks including the five large U.S. banks. Most banks receive downgrades of 1 or 2 notches. Credit Suisse receives the strongest downgrade. MS receives a two-notch downgrade when three notches were feared. MS is up 4% in the afterhours. The bank downgrades were expected for the last couple months and the news is somewhat anti-climactic.
On 6/22/12, Friday, Asia falls overnight in sympathy to the U.S. markets. The request for bank aid for Spain is expected to occur by Monday with funds provided in July. Germany IFO business sentiment is weak, at a two-year low. Italy sentiment is weak printing a record low. Oil and gold continue lower. Brent drops below 90. Oil in general is down about 25% from the top four months ago. The ECB relaxes rules on the collateral that banks offer in exchange for the loans they receive. This provides increased availability of ECB liquidity but also increases the risk on the ECB’s balance sheet. To no surprise, Germany’s Bundesbank disagrees with this decision and says “We’re critical of this.” Keystone’s SPX:VIX Ratio Indicator jumps above 68 indicating a bullish day ahead. Keystone’s SPX 60-Minute with 200 EMA Indicator turns bullish. The financials are on the positive side after the Moody’s downgrades and in the afternoon drive higher, only to tumble in the final minutes. The broad indexes gain from one-half to one percent today. Despite the large down day yesterday, the markets finish relatively flat on the week with the Nasdaq and tech sector actually finishing higher.
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On 6/25/12, Monday, the U.S. Supreme Court rules on Obamacare any day this week; healthcare stocks will react violently.
On 6/26/12, Tuesday, Consumer Confidence.
On 6/27/12, Wednesday, 5-Year Note Auction.
On 6/28/12, Thursday, Euro Summit. GDP.
On 6/29/12, Friday, EOM, EOQ2, EOH1. Consumer Sentiment. Chicago PMI.
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On 7/2/12, Monday, ISM Manufacturing Index.
On 7/3/12, Tuesday, markets close early due to the July 4th Independence Day holiday tomorrow.
On 7/4/12, Wednesday, markets are closed in Observance of July 4th Independence Day holiday.
On 7/5/12, Thursday, BOE and ECB Rate Decisions and Press Conferences. U.S. markets reopen for trading.
On 7/6/12, Friday, Jobs Report-3 weak reports in a row-5 reports remain including this one until the presidential election.
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On 7/11/12, Wednesday, 10-Year Note Auction. FOMC Minutes.
On 7/12/12, Thursday, 30-Year Bond Auction.
On 7/13/12, Friday the 13th, PPI. Consumer Sentiment.
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On 7/16/12, Monday, China GDP.
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