On 6/29/12, Friday, EOM, EOQ2, EOH1. News from the Euro Summit, where banks may be allowed to recapitalize directly from the bailout funds, and Merkel is shown to comply and compromise, sends global equity markets catapulting higher. Spain and Italy teamed up to form a strong alliance and Merkel folded. Italy’s Monti gave Merkel the full monty. Spain 10-year yield falls under 6.7% heading lower. Italy drops under 6%. The euro jumps large. Spain indexes are up over 3%. U.S. futures show S&P’s up 17 handles and the Dow Industrials up 126 handles. The opening bell rings and the markets move up all day long into the close. Keystone’s SPX:VIX Ratio Indicator jumps over 68 and other indicators turn bullish. Keystone’s NYA 40-Week MA Cross Indicator turns bullish indicating a bull market moving forward. A historic up move occurs to end the month, quarter and first half of 2012. The SPX closes up 33 points, 2.5%, to 1362. The Dow Industrials are up 278 points, 2.2%, to 12880. The Nasdaq is up 86 points, 3.0%, to 2935. The Dow moved from a low on Thursday at 12450 to a high at 12880 today, a whopping 430 points in only two days time. The SPX moved from a low on Thursday at 1313 to a closing and intraday high today at 1362, almost 50 S&P handles in only two days time. Obviously the bulk of the move today is short-covering as the short-sellers got caught off base. For the quarter, Q2, the SPX lost 3.3%, the Dow lost 2.2%, and Nasdaq lost over 5%. Gold gained 48 bucks moving back towards the 1600 level. Oil ends over 9% higher today to 85 per barrel. F is weak due to growing losses from overseas.
On 6/30/12, Saturday, analysts are parsing thru the Affordable Healthcare Act decision to understand the market ramifications. More importantly, Merkel has to sell her decision to the German people that will not be happy to hear what she has to say. The weekend provides time to sort thru the Euro Summit decision and determine exactly what was said and what the plan is for Europe moving forward. The Barclay’s scandal over fixing Libor rates gains more news attention.
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On 7/2/12, Monday, China PMI is 50.2 only a tiny smidge above the expansion-contraction line but a better than the consensus estimate. Germany business activity is weak. Eurozone jobless rate is 11.1% the highest since records began. ISM Manufacturing Index is weak but markets continue along a happy path as the holiday approaches.
On 7/3/12, Tuesday, markets continue along with upward buoyancy as trader’s look forward to the early close 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, the BOE announces further easing measures as expected. The ECB cuts by one-quarter point as expected, moving under 1% to 0.75% for a record low. At the exact same time, China announces cuts and easing measures. The S&P futures jump seven points higher but minutes later China denies the news release. After the confusion ceases, China does lower the one-year deposit rate by 25 basis points. Thus, the BOE, ECB, China, Denmark and even Kenya all announce QE but the markets are meeting the positive news with a yawn. U.S. markets reopen for trading. Markets are flat since traders await the jobs data in the morning. The Barclay Libor scandal deepens. 800 trillion dollars in contracts are based off the Libor. JPM drops over 4%; BAC and C are down 3%.
On 7/6/12, Friday, IMF’s Lagarde says the European growth estimates will be lowered again. Germany’s 2-year yield goes negative where investors are willing to give up some money in return for receiving perceived safety for two years. In addition, other nations such as Belgium, Netherlands, Austria and Finland all see lower yields in recent days as investors look for additional safe havens. Finland’s 10-year yield drops under the U.K.’s now making Finland more attractive. Conversely, Spain’ s 10-year yield moves above 7%, wiping out any improvement from the Euro Summit, and Italy moves back above 6%. The all-important Monthly Jobs Report results in a paltry 80K jobs, well below the 100K consensus, with the rate remaining unchanged at 8.2%. This weak report marks the fourth in a row since the Good Friday debacle. Four reports remain until the presidential election. The futures immediately tumble on the news. Semiconductors and technology create significant weakness after the opening bell. Keystone’s proprietary algorithm, Keybot the Quant, flips short at SPX 1354. Keystone’s SPX 30-Minute 8 MA and 34 MA Cross Indicator turns bearish signaling weak markets moving forward. The broad indexes languish at the lows, ready to crack, until 2 PM EST when the Wall Street Journal posts an article by Jon Hilsenrath, “Weak Report Lifts Chance of Fed Action.” Mr. Hilsenrath is known to be perhaps a strong mouthpiece for the Fed, so traders immediately hit the buy button since more stimulus is likely on the way. With the thin volume, second lowest day of the year, it was easy for the markets to stage a comeback into the close. The SPX closed down 12 points to 1354. The Dow Industrials are down 124 points to 12772. The SPX and Dow are down on the week, the Nasdaq flat and the RUT up. The euro, XEU, prints lows not seen since June 2010.
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On 7/9/12, Monday, the Eurozone Finance Ministers meet to finalize Spanish bank rescue. Volume will return, or at least increase, as most traders return to work by Wednesday. Earnings season kicks off today with AA (6 cents; 5.83 billion revenue) after the closing bell—which provides insight into China. A large data dump occurs this week from China with GDP, CPI, Retail Sales and Industrial Production. GDP is key but is scheduled to not occur until Friday evening. The data will greatly affect companies such as GE and other multinationals and has the potential affect of taking global markets down if the numbers are weaker than expected. China Inflation data occurs today.
On 7/10/12, Tuesday, China Trade data.
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, JPM and WFC earnings. PPI. Consumer Sentiment. China GDP 10 PM although China’s schedules are always tentative; under 7.5% would create trouble.
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On 7/16/12, Monday, Retail Sales.
On 7/18/12, Wednesday, Housing Starts.
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On 7/26/12, Thursday, FB earnings.
On 7/27/12, Friday, GDP. Consumer Sentiment.
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On 7/31/12, Tuesday, EOM. FOMC Meeting Begins.
On 8/1/12, Wednesday, ISM Mfg Index. FOMC Rate Decision.
Business as ussual providednthis leg down continues i suspect it will be fast and furious
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