On 8/10/12, Friday, Hong Kong’s GDP is a paltry 1.1%. China’s exports stall on weaker global demand and the internal domestic demand is weakening as well. Hopes that China’s domestic demand would carry their economy forward appear misplaced. The IEA projects lower oil demand verifying the global economic slowdown. The euro drops under 1.23. The Crop Report projects multi-year lows for corn and soybean yields per acre due to the drought, which creates a negative impact on a weak economy. The markets drop at the open but experience a late day surge. Keystone’s SPX 30-Minute Chart with 8 MA and 34 MA Cross Indicator turns bearish at the opening bell and remains bearish at the close, albeit by a few pennies, which forecasts bearishness for the hours and days ahead. The SPX closes at 1406, Dow Industrials at 13208, Nasdaq at 3021 and RUT at 802. The markets were flat on the week, very indecisive and directionless. The VIX drops under 15 showing complacency rampant in the markets.
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On 8/13/12, Monday, markets are non-responsive to the Paul Ryan vice presidential pick. BOE’s King says the euro problems are ongoing with ‘no end in sight’. Japan shows slower growth. China automobile sales languish due to high pressure sales tactics turning customers off. The domestic economy is not able to replace the decreased global demand so the auto sales tactics hint at China desperation. The Nook tablet price is decreased perhaps showing that the back-to-school sales are more fizzle than sizzle. Gasoline prices surge higher taking the biggest two-week jump this year. The NYSE experiences very light volume, decade low volume; the markets are moving higher on fumes and vapors. The Dow Industrials are down 10 of the last 11 Monday’s. Nasdaq finished in the green today with the Dow and SPX on the negative side. VIX prints a 13 handle, 13.70, showing continued trader complacency, there are no worries that the markets will sell off. SPX 1400 and VIX 14.00 is a numbers pair worth remembering for the future. Keystone’s SPX 30-Minute Chart with 8 MA and 34 MA Cross Indicator flips to the bullish side, then back to the bearish side, then bullish to end the day, verifying the ongoing intense bull-bear tug-o-war, with the bulls now winning again.
On 8/14/12, Tuesday, France and Germany surprise with slightly better than expected GDP numbers, thus, growth is slowing less than expected. German ZEW sentiment, however, is the worst since December 2011. The Retail Sales are up strongly reversing a three-month downtrend. The happy news encourages bullish traders. Additionally, news wires say that Spain is near requesting a bailout—for the umpteenth time. But traders run with the news and send equity markets higher but finish the day flat.
On 8/15/12, Wednesday, the SPX continues thru an indecisively sideways range of 1399-1406. SPLS earnings disappoint showing that businesses are not spending money. The utilities sector continues to roll over which is a very ominous market signal should it continue. The markets travel flat today in a low volume summer session.
On 8/16/12, Thursday, China’s Wen says easing inflation allows more room to move with easing measures. Copper bounces on the news. European inflation is flatish which is friendlier for the ECB to provide stimulus. Housing Starts drop over one percent but Permits are up and the futures choose to remain on the positive side. WMT earnings disappoint. As trading proceeds, Merkel says she fully supports the ECB and the plans for Europe moving forward. The stock market rallies higher ignoring Merkel’s additional comment that ‘time is pressing’. Spain’s bad loans are now 9.4% of total lending, a worrisome number. Unemployment data shows that the folks out of work for less than six months have a 25% chance of getting a job while those out of work greater than six months have only a 10% chance of getting a job. This is direct proof that the U.S. unemployment problem is a structural problem that will affect families and individuals for years and decades to come. But, the equity markets drive higher taking out the May intraday high for the SPX at 1415. The day ends with the SPX up 10 points, +0.7%. The Dow Industrials are up 85 points, +0.7%, to 13250. The Nasdaq is up 31 points, +1.0%, to 3062. The RUT is up 9 points, +1.1%, to 813. The rise in Treasury yields is dramatic; the 10-year Treasury ($TNX) printing a high at 1.865% today which is a nearly 40 basis point rise from the 1.4% low only 17 days ago.
On Thursday, Finland’s foreign minister Tuomioja says “Finland must face openly the possibility of a euro break-up.” The comments place European leaders in a tizzy so Finland later releases a statement that “Finland is totally committed to the euro.” Perhaps news that will receive trader’s attention is that the Wall Street bonuses are projected to be lower for this year. The lower bonuses will negatively impact the New York real estate market in late 2012 early 2013.
On 8/17/12, Friday, Consumer Sentiment remains in the 72-73 area for the last four months not worsening, but not getting any better. The repeated chatter about Merkel supporting the euro and that Spain is about to ask officially for a bailout continue to encourage the market bulls and the broad indexes float upwards testing the April 2012 highs and 2007 highs. AAPL sets a record surpassing 600 billion market cap closing at 648.11 with a 607.54 billion market cap larger than many countries in the world. Global drought concerns continue. Stocks gain for the sixth week in a row. The S&P 100 ($OEX) takes out the April 2012 highs matching 2007 levels when the broad market top occurred but the S&P 500 (SPX) is a few points short of taking out its April highs. The SPX is at 1418, Dow Industrials 13275, Nasdaq 3077, RUT 820. The VIX prints at five years low, a phenomenal 13.45 showing complete uber complacency in the markets. Long traders feel there is no need to buy protection since Bernanke and Draghi have a permanent put under the market. The complacency and fearlessness is further evidenced by the CPC put/call printing in the 0.7’s. Traders simply do not see the markets moving down under any scenario—and this is typically the point in time when markets will surprise you drastically. At the same time, major indexes and sectors are at key technical inflection points and volume is printing the lowest numbers of the year (ignoring the half-day holiday trading days). Hang on to your hat going forward.
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On 8/20/12. Monday, RBA Minutes.
On 8/21/12, Tuesday, Fed’s Lockhart speaks.
On 8/22/12, Wednesday, Fed’s Evans speaks. Existing Home Sales. FOMC Minutes. HSBC China Flash PMI.
On 8/23/12, Thursday, Hollande and Merkel dinner meeting. New Home Sales.
On 8/24/12, Friday, Durable Goods Orders.
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On 8/28/12, Tuesday, Consumer Confidence.
On 8/31/12, Friday, EOM. Consumer Sentiment. Jackson Hole conference begins-does Bernanke hint at QE3, or not? (3-day weekend ahead)
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On 9/3/12, Monday, U.S. Markets are Closed in Observance of Labor Day.
On 9/4/12, Tuesday, U.S. Markets Reopen for Trading.
On 9/6/12, Thursday, ECB Rate Decision and Press Conference.
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On 9/10/12, Monday, Congress is back in session so the childish behavior begins again.
On 9/11/12, Tuesday, Anniversary of the U.S. Terrorism Attacks. Euro Banking Union proposals.
On 9/12/12, Wednesday, German vote on the ESM (European Stability Mechanism). FOMC Rate Decision and Press Conference. AAPL releases new iPhone5.
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