UTIL spikes skyward at the open tagging 453 then collapsing. Bulls are happy above 452.66, market bears are happy under. CRB drifting lower but remaining in the bull camp for now, a point above the 309.50 danger level. Buoyancy in the markets results in a HOD at SPX 1327 so far but bulls need 1330.50 to accelerate the upside. UTIL now falling under 450, bears smile.
The SPX is up 0.11% and the Nasdaq is up 0.22%, thus, those strong tech bulls continue to provide bull market strength. Watch to see if Nasdaq leadership fades, or not, today. Markets will maintain buoyancy as long as tech leads the upside. SPX:VIX ratio at 71.73 shows that bulls do not have to worry, unless the bears can push the ratio under 68.
Note Added 2/2/12 at 10:41 AM: The bulls are pushing UTIL up and over 452, they may be making a run for 452.66. If attained, strong bullishness for markets will occur. Bears must prevent 452.66 from printing. UTIL now printing 452.12..........452.10..........
Note Added 2/2/12 at 11:28 AM: The bulls could only push UTIL to 452.13 before the bears spanked the utes south. UTIL now printing 451.58 trying to launch another run upwards. Very simply, if the bulls move UTIL above 452.66, they win and markets will continue along bullishly. If the bears push CRB under 309.50, they win and markets will continue along bearishly.
Note Added 2/2/12 at 3:47 PM: The utilities, UTIL, are losing steam and would fail a descending triangle base line if it loses 449.70, which would help the bear case. SPX:VIX ratio is over 73 signaling that the market bulls are in full control. CRB made an attempt at 309.50 but recovered. Thus, the markets meander sideways ahead of tomorrow's all important Monthly Jobs Report before the opening bell.
Note Added 2/2/12 at 3:53 PM: The utilities, UTIL, failed the descending triangle base line at 449.70 but there are only a few minutes remaining in the session.
Thursday, February 2, 2012
Keystone's Morning Wake Up 2/2/12
Punxsutawney Phil, the groundog weather forecaster from this neck of the woods, the beautiful Laurel Mountains of Pennsylvania, sees his shadow a short time ago progosticating six more weeks of winter. So Phil predicts colder weather on the way. Perhaps Keystone's natty gas long position will work out afterall. No word as to whether Phil seeing his shadow equates to six more weeks of bullishness, however.
The bull's enjoyed another party day yesterday but failed to move the UTIL above 453. This is the only way that bullish market strength can be gained. The market bears are solidly in the game as long as UTIL does not move above 453, specifically 452.66.
The most important thing to watch today is commodities, the CRB Index. If CRB drops under 309.50, Keystone's algorithm, Keybot the Quant, will likely flip to the short side possibly ending the long six week market rally.
For the SPX today starting at 1324, the market bulls need to push above 1330.50 to ignite an upside market acceleration. The market bears need to drop the SPX under 1313, that would be an unlucky number, and the large block sellers will enter the markets accelerating a move south. A move thru 1314-1329 is sideways action.
The bull's enjoyed another party day yesterday but failed to move the UTIL above 453. This is the only way that bullish market strength can be gained. The market bears are solidly in the game as long as UTIL does not move above 453, specifically 452.66.
The most important thing to watch today is commodities, the CRB Index. If CRB drops under 309.50, Keystone's algorithm, Keybot the Quant, will likely flip to the short side possibly ending the long six week market rally.
For the SPX today starting at 1324, the market bulls need to push above 1330.50 to ignite an upside market acceleration. The market bears need to drop the SPX under 1313, that would be an unlucky number, and the large block sellers will enter the markets accelerating a move south. A move thru 1314-1329 is sideways action.
SPX Daily Chart Six-Month Channels Overbot Rising Wedge Negative Divergence Golden Cross
A move to 1333 would not be a suprise but this will only serve to officially lock in negative divergence and seal the move down. As price comes off the top watch the price movement in relation to the top rails and also the 20-day MA now at 1303 and rising. Price falling thru the 20 MA is very bearish. The Golden Cross is shown on the right hand side where the 50 MA has now crossed back above the 200 MA but as Keystone has previously mentioned, do not pay attention to it in relation to trading. If anything, the initial poke up thru typically corresponds to a short-term pull back in price.
The flat to negative-sloping 200-day MA does nothing to restore confidence, this is a bearish indication. Projection is that price is coming off the top currently, the 1333 would not be a surprise to see again, but lower prices are projected for the days and weeks ahead. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
BDI Baltic Dry Index Weekly Chart Epic Collapse H&S Channel Positive Divergence
Technically, the lower rail of the blue channel targets 300-600 as the bounce point. The teal lines show the positive divergence in place now that the lows have matched the 2008 lows. Thus, there is a light at the end of the tunnel. The red H&S pattern targets these price projections as well. The 20 week MA under the 50-week MA is a sign of weakness and although the 20 is above currently, the trajectory shows that the negative vibe will occur again. The 200-week MA is sloping negatively and that is very bearish, verifying the long-term sickness in place. The 200-week MA will likely not be able to slope positively for at least a couple of quarters (six months time).
After the positive divergence bounce occurs from 300-600, price will want to come back down again, with the BDI remaining in a sideways funk for many months ahead. This chart does not forecast a healthy world economy since the ships transport the building blocks of all strong global economies such as rubber, cement, grains, coal, iron ore, steel, etc... Thus, if the ship's are docked with the Captain laying on the beach on a lawn chair each day, with nothing to do, the joyousness in equities markets is cause for concern.
European Bond Yields 2/2/12
Spain and France auctions go off without a hitch this morning, a vast diffference to the concern from only a month or two ago. The Spain 10-year yield, however, is moving flat at 4.89%. France remains above 3% so the Euro woes continue. The bond auctions over the last two weeks, however, have helped to build some condidence and create calm.
Italy remains under 6%. Portugal 10-year yield has come down to 15.24%. On Tuesday it was over 17%. Yesterday, a Fitch rating agency representative mentioned that he sees Portugal to be of no threat to the euro.
Of interest is that Hungary is hanging flat at 8.88%, and remains elevated, not dropping the last couple days like its Portugal and Italy brethern. Hungary requires monitoring moving forward.
Italy remains under 6%. Portugal 10-year yield has come down to 15.24%. On Tuesday it was over 17%. Yesterday, a Fitch rating agency representative mentioned that he sees Portugal to be of no threat to the euro.
Of interest is that Hungary is hanging flat at 8.88%, and remains elevated, not dropping the last couple days like its Portugal and Italy brethern. Hungary requires monitoring moving forward.
Wednesday, February 1, 2012
Keystone's February Seasonality
Before taking a look at the seasonality factors for February trading, a quick look back at January is in order since it was the best January since 1997. The January Barometer says that however the market does in January, bullish or bearish, so goes the year. This adage is correct about two-thirds of the time. Also, if the markets are up the first day of January, which they were, the markets typically finish up 80% of the time. Thus, we were up the first day and also for the month so this predicts bullish fun this year. But, not so fast, last year, January 2011 was up and markets experienced the August crash only to recover to a flat line.
Seasonality is simply a current flowing behind daily trading, think of it as a breeze blowing gently, nudging markets one way or another. Simply knowing the seasonality factors is another edge that you have on another trader. 2012 is the fourth year of the Presidential Cycle. Last year was the third year of the cycle, typically the most bullish of all four years, but that did not live up to its seasonality reputation. Interestingly, if the third year of the cycle does not gain at least 10%, such as 2011, the fourth year the market is down 10%. The only time that markets were negative in the third year of the Presidential Cycle was twice--both in the 1930's Great Depression. This information dampens the bullish joyous spirit from Janauary.
The only three months of the year that average out to negative returns, and are obviously the most bearish months, are February, May and September. So February growls and is typically down -0.3%. The largest gains in the market are made from November thru April, flat returns May thru October. Since the 1950's, the returns for the quarters are Q1=2.1%, Q2=1.8%, Q3=0.6% and Q4=4.3%.
Markets are typically buoyant the two days in front of a three-day holiday weekend. February 20th is Washington's Birthday/Presidents Day and the markets are closed. Thus, 2/16/12 and 2/17/12 would be expected to be bullish. For the Friday Jobs Report 2/3/12, if the jobs number is weaker than expected, the industrials sector, XLI, and financials, XLF, will move more strongly lower than the broad markets. If the jobs number is a positive surprise, the XLI and XLY, consumer discretionary, will outperform the broad market to the upside.
For OpEx week, Monday tends to be bullish, which is 2/13/12, and markets tend to be bullish from Tuesday into Wednesday, 2/14/12 (Valentine's Day) into 2/15/12. The last two days of February markets are typically down -0.6%, and February performs the worst out of all months for the last two days of the month, so a weak finish to the month may be on tap. Congress is in session so markets tend to be bearish. The dollar tends to be stronger from January thru April as compared to the rest of the year. The commodities, copper, gold, oil and equities markets move opposite the dollar.
The Superbowl Predictor is if an original NFC team wins, markets will be bullish. If an original AFC team wins, the markets will be bearish. Funny thing, the Giants (NFC) won against the Pats (AFC) in the 2008 Superbowl. Do you remember what happened in 2008? Yes, an epic market crash, so always take it all with a grain of salt.
Shipbuilders typically move up in February and then UPS and FDX follow along. The Baltic Dry Index (BDI) has collapsed so perhaps a move up due to a washout adn also seasonality will be in order. Typically, February is a good month to buy cyclicals like steel, chemicals, etc... A low in oil price tends to occur in late February. Companies such as Hershey's, HSY, tend to top around Valentine's Day. The January rally was led by an uber strong technology sector and blow-out AAPL earnings that makes up a large protion of the Nasdaq. Tech is strongest in Q4 and traders typically exit the technology sector the second week of February. Traders not exiting technology in the second week then tend to exit between OpEx and the end of the month. At any rate, the technology joy in January will likely deflate in February.
Seasonality is simply a current flowing behind daily trading, think of it as a breeze blowing gently, nudging markets one way or another. Simply knowing the seasonality factors is another edge that you have on another trader. 2012 is the fourth year of the Presidential Cycle. Last year was the third year of the cycle, typically the most bullish of all four years, but that did not live up to its seasonality reputation. Interestingly, if the third year of the cycle does not gain at least 10%, such as 2011, the fourth year the market is down 10%. The only time that markets were negative in the third year of the Presidential Cycle was twice--both in the 1930's Great Depression. This information dampens the bullish joyous spirit from Janauary.
The only three months of the year that average out to negative returns, and are obviously the most bearish months, are February, May and September. So February growls and is typically down -0.3%. The largest gains in the market are made from November thru April, flat returns May thru October. Since the 1950's, the returns for the quarters are Q1=2.1%, Q2=1.8%, Q3=0.6% and Q4=4.3%.
Markets are typically buoyant the two days in front of a three-day holiday weekend. February 20th is Washington's Birthday/Presidents Day and the markets are closed. Thus, 2/16/12 and 2/17/12 would be expected to be bullish. For the Friday Jobs Report 2/3/12, if the jobs number is weaker than expected, the industrials sector, XLI, and financials, XLF, will move more strongly lower than the broad markets. If the jobs number is a positive surprise, the XLI and XLY, consumer discretionary, will outperform the broad market to the upside.
For OpEx week, Monday tends to be bullish, which is 2/13/12, and markets tend to be bullish from Tuesday into Wednesday, 2/14/12 (Valentine's Day) into 2/15/12. The last two days of February markets are typically down -0.6%, and February performs the worst out of all months for the last two days of the month, so a weak finish to the month may be on tap. Congress is in session so markets tend to be bearish. The dollar tends to be stronger from January thru April as compared to the rest of the year. The commodities, copper, gold, oil and equities markets move opposite the dollar.
The Superbowl Predictor is if an original NFC team wins, markets will be bullish. If an original AFC team wins, the markets will be bearish. Funny thing, the Giants (NFC) won against the Pats (AFC) in the 2008 Superbowl. Do you remember what happened in 2008? Yes, an epic market crash, so always take it all with a grain of salt.
Shipbuilders typically move up in February and then UPS and FDX follow along. The Baltic Dry Index (BDI) has collapsed so perhaps a move up due to a washout adn also seasonality will be in order. Typically, February is a good month to buy cyclicals like steel, chemicals, etc... A low in oil price tends to occur in late February. Companies such as Hershey's, HSY, tend to top around Valentine's Day. The January rally was led by an uber strong technology sector and blow-out AAPL earnings that makes up a large protion of the Nasdaq. Tech is strongest in Q4 and traders typically exit the technology sector the second week of February. Traders not exiting technology in the second week then tend to exit between OpEx and the end of the month. At any rate, the technology joy in January will likely deflate in February.
SPX 30-Minute Chart Overbot Negative Divergence Channel Megaphone
The chart is overbot and negatively diverged as shown by the red lines. Note the megapone pattern shown in red shouting "I need to see a ride to 1295." The blue upward-sloping channel shows price bumping up against the top rail, another reason for a pull back. The negative divergence is not a strong divergence, however, it justifies a pull back but the MACD histogram, for example, is very flat from price high to price high. This hints that a pull back is needed but do not rule out another move to the top rails of the megaphone and channel, where more drastic negative divergence should appear and confirm the coming roll over.
The chart shows that if you did not enjoy the long run up on the bull side this is not the time to jump in. Price moves above 1333 and higher will negate this analysis. Projection is sideways to sideways down moving forward targeting the 1290's to satisfy the megaphone pattern. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Keystone's Midday Market Action 2/1/12
Keystone's SPX:VIX ratio pop above 68, now printing over 70, so the bulls have control of the broad markets again. Bulls will remain incontrol unless the ratio drops under 68. CRB is remaining buoyant placing another feather in the bulls cap. The utilities, UTIL, however, bumped its head against 452 and fell back, for now, so market bears can take comfort in this action. If UTIL moves above 453, the bears will feel serious pain, barring that, the market upside may be limited.
The SPX is leading the upside as compared to the Nasdaq so this should limit the market up move as well. The SPX moved above the 1321 level so the upside was quickly ignited, but, as this is typed the 1321 handle is printing again. Typically, for any levels that Keystone forecasts, the level should be held from 7 to 10 minutes or more, to lock in the projected result. The opening maket pop with SPX moved above 1321 and then back down in about eleven minutes. Sometimes the guidelines have to be relaxed and this is one of those times. Watch the SPX, if it stays above 1321 for the following ten minutes or so, it should seal the upside move in place today. Bears need to push hard if they want to rain on the parade. UTIL already backing down to a 450 handle.
Note Added 2/1/12 at 10:19 AM: SPX rockin' higher, it took out the 1321 and held support so it launched, now printing over 1326. SPX:VIX ratio is over 71, almost 72, signifying full bull control. Watch UTIL, however, now with a 451 handle. The move upwards in the broad indexes will only serve as a spurt, unless, UTIL moves above 453. UTIL above 453 will signal a much stronger bull leg upwards on tap.
Note Added 2/1/12 at 1:40 PM: SPX is up 1.34%, just printing the HOD at 1330.52 minutes ago. The Nadaq is up 1.40%. Note the change where this morning tech did not provide leadership but tech is now leading upwards again like the whole month of January so the broad indexes are propelled higher, this tech strength providing the additional push skyward over the last couple hours. Oil inventories came in higher than expected so oil price sold off. Gasoline usage is at the lowest level since September 2001, a bad harbinger for the retail sector, so the RTH is lagging the broad market today. If folks are leaving their cars parked in the driveway they certainly are not spending any money to help the economy. SPX:VIX ratio is at 73 verifying the bullish fun; bears will not be happy until the ratio moves under 68. UTIL is now printing 451.67, so one buck under the critical 452.66 level. Today's HOD is 452.19, within 47 cents of the 452.66 which would trigger bullish euphoria and a new leg higher for bulls. For now, despite the large up day for the indexes, the market bears remain in the game--as long as UTIL does not exeed 452.66.
The SPX is leading the upside as compared to the Nasdaq so this should limit the market up move as well. The SPX moved above the 1321 level so the upside was quickly ignited, but, as this is typed the 1321 handle is printing again. Typically, for any levels that Keystone forecasts, the level should be held from 7 to 10 minutes or more, to lock in the projected result. The opening maket pop with SPX moved above 1321 and then back down in about eleven minutes. Sometimes the guidelines have to be relaxed and this is one of those times. Watch the SPX, if it stays above 1321 for the following ten minutes or so, it should seal the upside move in place today. Bears need to push hard if they want to rain on the parade. UTIL already backing down to a 450 handle.
Note Added 2/1/12 at 10:19 AM: SPX rockin' higher, it took out the 1321 and held support so it launched, now printing over 1326. SPX:VIX ratio is over 71, almost 72, signifying full bull control. Watch UTIL, however, now with a 451 handle. The move upwards in the broad indexes will only serve as a spurt, unless, UTIL moves above 453. UTIL above 453 will signal a much stronger bull leg upwards on tap.
Note Added 2/1/12 at 1:40 PM: SPX is up 1.34%, just printing the HOD at 1330.52 minutes ago. The Nadaq is up 1.40%. Note the change where this morning tech did not provide leadership but tech is now leading upwards again like the whole month of January so the broad indexes are propelled higher, this tech strength providing the additional push skyward over the last couple hours. Oil inventories came in higher than expected so oil price sold off. Gasoline usage is at the lowest level since September 2001, a bad harbinger for the retail sector, so the RTH is lagging the broad market today. If folks are leaving their cars parked in the driveway they certainly are not spending any money to help the economy. SPX:VIX ratio is at 73 verifying the bullish fun; bears will not be happy until the ratio moves under 68. UTIL is now printing 451.67, so one buck under the critical 452.66 level. Today's HOD is 452.19, within 47 cents of the 452.66 which would trigger bullish euphoria and a new leg higher for bulls. For now, despite the large up day for the indexes, the market bears remain in the game--as long as UTIL does not exeed 452.66.
Keystone's Morning Wake Up 2/1/12
January starts the year on the bull side, the SPX up over 4% and Nasdaq up over 8% on the month. Markets moved up on the commodities sector, copper, gold and silver moving up strongly due to front running the anticipated China triple R ease. But, China has not announced the ease yet and in fact they are hesitant now and want to move slower. China is concerned over the creation of asset bubbles due to their easing. They see the commodities bubble that Chairman Bernanke created with QE2, and the subsequent pop, where copper collapsed in 2011. Look no further than December-January to see this story playing again, commodites, copper, gold, silver-it's best start in 30 years, alll up large, not even on the actual China ease but on the hope of an ease.
Markets pulled back since last Thursay due to this China hesitation on the easing. At the same time, Europe has been somewhat quiet so it has added neither negative effects, or positive effects, on market action in January. The other factor that caused the large January run-up is due to one stock, AAPL. The blow-out Apple earnigns propelled the Nasdaq higher and if tech leads the broad markets, the markets in general have no where to go but up. Financials remain buoyant as well since they are a large consumer of technology. As February begins, the China easing measures are now more of a mystery and the AAPL earnings are ancient history. Europe will return to the front burner.
AMZN earnings laid an egg last evening and this is hurting the Nasdaq futures this morning. Hurting only in the context that the Nasdaq futures are up less than the S&P futures. Thus, an opening pop is projected for markets at this juncture but since tech is now not leading the upside today, the upside should be limited. ADP Employment report hits at 8:15 AM EST so note the futures in about 45 minutes.
China PMI was key last night and came in a smidge above consensus at 50.5, but below the whisper, and above last months 50.3. Above 50 shows an economy in expansion, below 50 in contraction. The HSBC China PMI, considered more reliable since it includes smaller Chinese companies, and also is more independent then the manufactured numbers from the government, remains in contraction at 48.8 only a hair improvement from last month's 48.7. Thus, a little for everyone. Markets perceive it as good news, however, since equities futures are higher and oil, gold and copper are all higher.
To keep it simple today, watch SPX:VIX ratio 68, UTIL 453, CRB 309.50 and SPX 1307 and 1321. The bears have the advantage since the SPX:VIX ratio is below 68, and a large down day would be expected. However, with the futures up strongly, the ratio may jump back above 68 once again negating the projected market bearishness, as it has for the last two trading days. So watch SPX:VIX as the bell rings. Bears have a long day ahead if the ratio pops back above 68.
Broad market direction will also be determined by utilities and commodities today. If UTIL jumps above 453 this signals that the bulls have resumed full control of the markets and continued upside is ahead. If the CRB drops under 309.50 this signals that the bears have gained control of the broad markets and extended downside is ahead. Since the China PMI's are perceived positively, with oil, gold and copper running higher, the CRB is sure to follow along higher dampening the bearish outcome.
For the SPX, starting at 1312, a pop of about 8 points is projected at this juncture. Interestingly enough, this is exactly in the area that bulls need to push the markets higher. If the bears can push the SPX up and over 1321, the large block buyers will enter the markets and the upside will accelerate. The bears need to push the SPX down under the 1307 level and the downside will accelerate. A move thru 1308-1320 is sideways action.
In addition to these technical's described, the ADP number is important. A market pivot point may occur at 10 AM with Construction Spending and ISM data. Construction Spending is an excellent gauge on employment. ISM is always released the first of the month and energy traders are fixated on this number. Watch the energy markets, such as XLE, and individual tickers in the oil and gas area, XOM, COP, etc.... Oil Inventories at 10:30 AM are also important. Anecdotal data shows that China is bringing less oil into the country. How then does China PMI project wine and roses moving forward? Many cross currents are occurring in markets now. The low volume, low volatility markets are adding to the chaos.
Earnings continue to play an important role. Many companies are barely coming in line with lowered estimates and guidance is ratcheting down. WHR missed this morning which places the housing recovery, that even the cab drivers now say is guaranteed, in jeopardy. Appliances and furniture should fly off the shelves if the housing sector is as good as many pundits say. In fairness,WHR provides strong guidance. Since the cross currents of economic data, Europe news, China mixed signals and earnings are making for a smorgasbord of confusion, as always, it is best to use the technical's to guide the path forward.
Markets pulled back since last Thursay due to this China hesitation on the easing. At the same time, Europe has been somewhat quiet so it has added neither negative effects, or positive effects, on market action in January. The other factor that caused the large January run-up is due to one stock, AAPL. The blow-out Apple earnigns propelled the Nasdaq higher and if tech leads the broad markets, the markets in general have no where to go but up. Financials remain buoyant as well since they are a large consumer of technology. As February begins, the China easing measures are now more of a mystery and the AAPL earnings are ancient history. Europe will return to the front burner.
AMZN earnings laid an egg last evening and this is hurting the Nasdaq futures this morning. Hurting only in the context that the Nasdaq futures are up less than the S&P futures. Thus, an opening pop is projected for markets at this juncture but since tech is now not leading the upside today, the upside should be limited. ADP Employment report hits at 8:15 AM EST so note the futures in about 45 minutes.
China PMI was key last night and came in a smidge above consensus at 50.5, but below the whisper, and above last months 50.3. Above 50 shows an economy in expansion, below 50 in contraction. The HSBC China PMI, considered more reliable since it includes smaller Chinese companies, and also is more independent then the manufactured numbers from the government, remains in contraction at 48.8 only a hair improvement from last month's 48.7. Thus, a little for everyone. Markets perceive it as good news, however, since equities futures are higher and oil, gold and copper are all higher.
To keep it simple today, watch SPX:VIX ratio 68, UTIL 453, CRB 309.50 and SPX 1307 and 1321. The bears have the advantage since the SPX:VIX ratio is below 68, and a large down day would be expected. However, with the futures up strongly, the ratio may jump back above 68 once again negating the projected market bearishness, as it has for the last two trading days. So watch SPX:VIX as the bell rings. Bears have a long day ahead if the ratio pops back above 68.
Broad market direction will also be determined by utilities and commodities today. If UTIL jumps above 453 this signals that the bulls have resumed full control of the markets and continued upside is ahead. If the CRB drops under 309.50 this signals that the bears have gained control of the broad markets and extended downside is ahead. Since the China PMI's are perceived positively, with oil, gold and copper running higher, the CRB is sure to follow along higher dampening the bearish outcome.
For the SPX, starting at 1312, a pop of about 8 points is projected at this juncture. Interestingly enough, this is exactly in the area that bulls need to push the markets higher. If the bears can push the SPX up and over 1321, the large block buyers will enter the markets and the upside will accelerate. The bears need to push the SPX down under the 1307 level and the downside will accelerate. A move thru 1308-1320 is sideways action.
In addition to these technical's described, the ADP number is important. A market pivot point may occur at 10 AM with Construction Spending and ISM data. Construction Spending is an excellent gauge on employment. ISM is always released the first of the month and energy traders are fixated on this number. Watch the energy markets, such as XLE, and individual tickers in the oil and gas area, XOM, COP, etc.... Oil Inventories at 10:30 AM are also important. Anecdotal data shows that China is bringing less oil into the country. How then does China PMI project wine and roses moving forward? Many cross currents are occurring in markets now. The low volume, low volatility markets are adding to the chaos.
Earnings continue to play an important role. Many companies are barely coming in line with lowered estimates and guidance is ratcheting down. WHR missed this morning which places the housing recovery, that even the cab drivers now say is guaranteed, in jeopardy. Appliances and furniture should fly off the shelves if the housing sector is as good as many pundits say. In fairness,WHR provides strong guidance. Since the cross currents of economic data, Europe news, China mixed signals and earnings are making for a smorgasbord of confusion, as always, it is best to use the technical's to guide the path forward.
European Bond Yields 2/1/12
10-year yields in Europe are all lower across the board. Portugal 10-year yield is at 16.09%, a 72 basis point drop in 24 hours. Hungary lost a few ticks but remains elevated at 8.89%. Italy 10-year is now under 6% at 5.75%. It is amazing to see this viewed as positive. Sure the yields are backing down but 5.75% is a lofty number. France remains above that pesky 3% level and will provide a gauge moving forward. Watch to see if the 3% level is maintained, or not.
Money continues to seek safety in the U.K., U.S. and Germany with 10-year yields of 2.01%, 1.82% and 1.83%, respectively. Watch to see if the U.K. drops under 2% to indicate a further move of money into the U.K.
Money continues to seek safety in the U.K., U.S. and Germany with 10-year yields of 2.01%, 1.82% and 1.83%, respectively. Watch to see if the U.K. drops under 2% to indicate a further move of money into the U.K.
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