Monday, June 24, 2013

Keystone's Morning Wake-Up 6/24/13; Cascading Global Sell Off

China says the current liquidity rates are ‘reasonable’ and the PBOC maintains a tight stance not providing liquidity relief for banks. China is attempting to reduce shadow lending.  The banks sell off as much as 10% or more. Oil and commodities are crushed on a slowing China economy.  Copper is at a 20-month low. Asia markets are punished. The Shanghai Index loses -5.3%, the worst day in about 4 years. The negativity cascades to Europe where all indexes are selling off and S&P and Dow futures are down -12 and -110, respectively. European indexes are down about -7% in June. The Spanish 10-year yield hits 5%. The EFSF (European Financial Stability facility) extends the loan maturities to seven years for Ireland and Portugal. U.S. Treasury yields keep climbing with the 10-year yield now over 2.60%. The dollar/yen drops under 98 to 97.82. At 6 AM EST, the S&P futures are -12, Dow -102 and Nasdaq -15.  The BIS (Bank for International Settlements), known as the central bank of central banks, says the uber loose monetary policies are hurting the global economy.  “Central banks cannot do more without compounding the risks they have already created.” The BIS wants to see governments encourage job growth.

Watch the levels provided by Keybot the Quant.  RTH 51.48 and XLF 19.25 are both creating bearish markets and the bulls need at least one to return to the bull camp.  SOX 456.35 is preventing further market downside so the bears are gunning for this number. Broad indexes will likely lose the SPX 1576-1579 strong support area if semiconductors fail.  At this writing, about two hours before the U.S. opening bell, S&P's are -16. Dow -127. Nasdaq -21.  The Chicago Fed National Activity Index is 8:30 AM. Dallas Fed Mfg Index is 10:30 AM. Fed’s Fisher (hawk) speaks at 1 PM..The global sell off continues to cascade around the world starting last Wednesday and Thursday and now on its second loop.

Note Added 7:33 AM:  Conditions continue to deteriorate. S&P -17.  Dow -137. Nasdaq -23. The 10-year yield is now up to 2.63%. Yield breaking up through the 2.59% resistance is a game-changer since yields are now back to levels from July 2011 two years ago, and the long-term inverted H&S pattern that targets 3.20% is in play.

Note Added 7:37 AM:  S&P -19.  Dow -152.  Nasdaq -26.  10-year yield 2.64%.

Note Added 8:39 AM:  S&P -17. Dow -143. Nasdaq -23. Gold 1282. Silver 19.64. Gold and silver are pushed lower this morning but are not slapped like the equity futures. 10-year yield 2.63%.

Note Added 9:06 AM:  S&P -11. Dow -99. Nasdaq -13. 10-year yield 2.62%.


  1. 1560 has to hold, or we'll go to mid to low 1500s. sold 2/3 of my SDS at $43 (long since $39); 1640-1565. May start to nimble on some longs actually. remaining 1/3 of my SDS is on tight trailing stop.
    Not getting greedy; will when I see a full market breakdown, but then we're talking <1500... with QE3 still pumping I am not too bearish yet.

  2. China is probably a much larger part of the picture now as compared to the Fed. A banking crisis in China would be a late 2008 redux.


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