Avid Trader Official Blog

Evening Market Update

noreply@blogger.com (Avid Trader) — Mon, 22 Aug 2011 22:32:00 +0000

Lack of Headlines Begets Lack of Conviction

Strength in technology stocks helped to push the blue chips into positive territory on the first trading day of the week. However, weakness in financials and little news for investors to grab hold of kept the gains in check, while the S&P 500 and Nasdaq finished mostly flat. As well, optimism over a potential end to the unrest in Libya faded amid the growing lack of economic confidence toward Europe and the US. Treasuries finished lower amid a dormant US economic calendar, while crude oil prices came in flat, gold continued its rally, and the US dollar was modestly to the upside. On the equity front, the strike of 45,000 workers at Dow member Verizon Communications has come to an end, Dollar Thrifty Automotive Group asked Hertz Global Holdings and Avis Budget Group to submit their “best and final definitive proposals” by early October, while Lowe’s Companies announced a repurchase program of up to $5 billion.

The Dow Jones Industrial Average gained 37 points (0.3%) to 10,887, the S&P 500 Index was unchanged at 1,124, and the Nasdaq Composite picked up 4 points (0.2%) to 2,345. In moderate volume, 1.2 billion shares were traded on the NYSE and 2.0 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.01 to $84.42 per barrel, wholesale gasoline was flat at $2.84 per gallon, and the Bloomberg gold spot price soared $43.10 to $1,895.17 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—was up 0.1% to 74.10.

A more than two-week strike at Dow member Verizon Communications Inc. (VZ $35), impacting 45,000 workers has ended, but the labor contract continues to be negotiated, as they reached an accord to work under the expired contract until a new labor agreement is reached. A VZ spokesperson said “both sides were making progress on local and regional issues,” and the Wall Street Journal reported that the unions said they decided to return to work because they had succeeded in getting VZ to take their concerns seriously and negotiate more equitably at the bargaining table. VZ was higher.

In M&A news, Dollar Thrifty Automotive Group Inc. (DTG $63) asked Hertz Global Holdings Inc. (HTZ $9) and Avis Budget Group Inc. (CAR $11), which already have issued competing bids to acquire DTG, to submit their “best and final definitive proposals” by early October. DTG said it believes that it is time to ascertain whether a transaction can be accomplished with HTZ and CAR or another party that is in the best interests of the company and its shareholders. DTG requested the takeover offer as it believes HTZ and CAR are both “well positioned to complete the regulatory process in a manner that would permit a combination to be completed with limited economic impact.” Shares of DTG were higher, while both HTZ and CAR finished lower.

In other corporate finance news, Lowe’s Companies Inc. (LOW $20) announced that it has authorized the repurchase of up to $5 billion of the company’s common stock. The world’s second-largest home improvement retailer said although this new repurchase authorization has no expiration date, the company expects to use the full amount over the next two to three years. Shares were higher.

GDP and Fed’s Jackson Hole gathering headline economic calendar this week

Treasuries finished lower as there were no major US reports scheduled for today’s economic calendar. The yield on the 2-year note was up 2 bp to 0.21%, the yield on the 10-year note was 3 bps higher at 2.10%, and the 30-year bond rate rose 2 bps to 3.41%.

Tomorrow, the US economic calendar will begin to yield data with the release of new home sales, forecasted to decline 0.6% month-over-month (m/m) in July to an annual rate of 310,000 units, after falling 1.0% in June. The new home sales report is considered a timely indicator of conditions in the housing market as it is based on signings, while existing home sales, which unexpectedly fell 3.5% m/m in July, uses closings. Meanwhile, durable goods orders will be reported on Wednesday, and weekly initial jobless claims will come out on Thursday, bridging the gap to the likely pinnacle of the week’s economic docket on Friday, where we will get the first revision to 2Q GDP and Federal Reserve Chairman Ben Bernanke’s speech in Jackson Hole, Wyoming.

Other releases on this week’s US economic calendar include: the Richmond Fed Manufacturing Index, the MBA Mortgage Applications Index, and the final University of Michigan Consumer Sentiment Index reading for August.

Conviction lacking in Europe amid continued unease toward eurozone crisis

Optimism regarding an end to the civil war in Libya, where opposition forces have reportedly taken control of the capital city of Tripoli and could be close to forcing out Muammar Qaddafi, lifted the mood across the pond. However, concerns surrounding the eurozone contagion crisis kept sentiment in check, exacerbated by German Chancellor Angela Merkel further dampening expectations of the creation of a Eurobond in the near-term. Merkel noted in an interview that bringing in Eurobonds at this time would further undermine economic stability, per Bloomberg. Meanwhile, traders are awaiting Friday’s speech in Jackson Hole, Wyoming, from US Federal Reserve Chairman Ben Bernanke, looking for any signs of further stimulus efforts amid the growing concerns about the possibility of a return to a recession. Also, European Central Bank President Trichet is expected to speak at the Fed’s annual gathering on Saturday, and traders will likely be looking for any comments by the ECB chief indicating how committed the central bank is to buying sovereign debt to help stabilize the financial markets until the expanded powers of the European Financial Stability Facility (EFSF) are ratified and can take over the region’s bond purchases. No major European economic reports were released today, but tomorrow, a plethora of PMI data in Europe, depicting manufacturing activity across the pond amid the backdrop of increasing eurozone recession worries, is on tap.

The eurozone debt crisis and worries about a recession in the US and Europe dampened sentiment in the Asia/Pacific region as well. Economic news in the region was also in short supply, with only a few reports of note. Thailand’s 2Q GDP unexpectedly contracted, declining by 0.2% q/q, after expanding by 2.0% in 1Q, while consumer prices in Hong Kong rose 7.9% year-over-year (y/y) in July—the fastest pace since 1995—compared to the 8.2% increase that was estimated, and an acceleration from the 5.6% y/y gain that was seen in June.

Tomorrow’s international economic calendar will be busier, with a number of PMI reports coming from France, Germany, and the eurozone. Meanwhile, Germany will also release its ZEW Economic Sentiment Survey, the eurozone will report consumer confidence, and retail sales will come from Canada. Further east, we will get China’s PMI, as reported by HSBC, as well as the nation’s trade balance.

Bearish Triangles Setting Up

noreply@blogger.com (Avid Trader) — Mon, 22 Aug 2011 19:25:00 +0000

By Mike Paulenof

"Triangle, triangle on the wall, what are thee telling us about market direction overall?" Neither the lack of European financial integration nor the imminent fall of Gadhafi have jogged the Euro and Brent crude oil futures out of their recent sideways ranges. Perhaps we should view the post August 8 pattern in the e-mini S&P 500 as a triangle pattern too? And, if so, what will that mean?

The vast majority of the time, triangles are trend continuation patterns, which suggests strongly that when the current patterns run their course, all of the enclosed price structures -- including oil and the U.S. Oil Fund ETF (USO) -- should resolve into new downlegs.

With regard to the emini S&P, I am thinking that all of the action off of the Aug 8 (overnight) low at 1077.00 through today is related within a large, wide-ranging but contradictory bearish digestion period attached to the major downleg off the 1373.50 high established on May 2. If such a pattern proves to be unfolding, then we should expect another rally attempt towards 1140/45 and possibly as high as 1160/65 prior to the resumption of intense weakness that presses the index to new lows beneath 1077.

Then again, if the e-SPU shows an inability to lift much at all and cannot even retest this morning's high at 1146.50, then the next downleg could be approaching much more rapidly than anticipated.

Morning Market Update

noreply@blogger.com (Avid Trader) — Mon, 22 Aug 2011 13:48:00 +0000

Stocks Pointing to a Solid Start to the Week

The US equity markets are following up last week’s steep declines with a strong start in early action, aided by a rebound in Europe and optimism that the civil war in Libya may be nearing an end as rebel forces are threatening running Muammar Qaddafi out of the capital of Tripoli. Treasuries are lower as there are no major economic reports scheduled for today, ahead of the first revision to 2Q GDP and Federal Reserve Chairman Bernanke’s speech at the end of the week. In equity news, Dow member Verizon Communications Inc reached an agreement to end the strike of 45,000 workers, while Dollar Thrifty Automotive Group Inc asked Hertz Global Holdings Inc and Avis Budget Group Inc to submit their “best and final definitive proposals” by early October. Overseas, Asia finished mostly lower, with South Korea continuing its slide, while European equities are being led to the upside by oil & gas issues.

As of 8:52 a.m. ET, the September S&P 500 Index Globex future is 20 points above fair value, the Nasdaq 100 Index is 41 points above fair value, and the DJIA is 174 points above fair value. WTI crude oil is $1.32 higher at $83.73 per barrel, and the Bloomberg gold spot price is up $11.42 at $1,863.50 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—is down 0.3% at 73.91.

A more than two-week strike at Dow member Verizon Communications Inc. (VZ $35), impacting 45,000 workers has ended, but the labor contract continues to be negotiated, as they reached an accord to work under the expired contract until a new labor agreement is reached. A VZ spokesperson said “both sides were making progress on local and regional issues,” and the Wall Street Journal reported that the unions said they decided to return to work because they had succeeded in getting VZ to take their concerns seriously and negotiate more equitably at the bargaining table.

In M&A news, Dollar Thrifty Automotive Group Inc. (DTG $62) asked Hertz Global Holdings Inc. (HTZ $10) and Avis Budget Group Inc. (CAR $12), which already have issued competing bids to acquire DTG, to submit their “best and final definitive proposals” by early October. DTG said it believes that it is time to ascertain whether a transaction can be accomplished with HTZ and CAR or another party that is in the best interests of the company and its shareholders. DTG requested the takeover offer as it believes HTZ and CAR are both “well positioned to complete the regulatory process in a manner that would permit a combination to be completed with limited economic impact.”

GDP and Fed’s Jackson Hole gathering headline economic calendar this week

Treasuries are lower in early trading as there are no major US reports scheduled for today’s economic calendar, with the yield on the 2-year note up 1 bp to 0.20%, the yield on the 10-year note 5 bps higher at 2.12%, and the 30-year bond rate rising 2 bps to 3.41%.

This week’s economic focus will likely begin with preliminary August PMI readings overseas, while the US will takeover late in the week with Thursday’s read on weekly initial jobless claims kicking things off, forecasted to decline slightly to 405,000, while Friday will bring the first revision to US 2Q GDP and the Federal Reserve’s annual gathering.

After the very disappointing first reading, traders may look to see the extent of revisions in the second reading of 2Q gross domestic product (GDP), due out on Friday. The consensus of a Bloomberg survey of economists expects 2Q GDP to be revised lower to a quarter-over-quarter (q/q) annualized rate of 1.1% growth from 1.3%, after inching ahead by 0.4% in 1Q. The largest component of GDP, personal consumption, is expected to be revised higher to 0.2% from the initially reported 0.1%, after advancing 2.1% in 1Q. The inflation readings are expected to be unrevised at a 2.3% rise for the GDP Price Index, and 2.1% for the core PCE Index, which excludes food and energy.

However, the main focus for the market is likely to be on Friday’s speech at the Federal Reserve’s annual gathering in Jackson Hole, Wyoming, by Fed Chair Bernanke at 10:00 am EST. Bernanke first hinted at QE2 at last year’s meeting, and investors may be wondering if central banks will pursue more accommodative policies with market volatility, weak economic data and a continued crisis of confidence in Europe potentially threatening economic growth.

Other releases on this week’s US economic calendar include: new home sales, the Richmond Fed Manufacturing Index, the MBA Mortgage Applications Index, durable goods orders, and the final University of Michigan Consumer Sentiment Index reading for August.

Europe rebounding from recent slide

European equity markets are solidly higher in afternoon action, with oil & gas stocks leading the way on optimism regarding an end to the civil war in Libya as opposition forces have entered the capital city of Tripoli and are making headway in forcing out Muammar Qaddafi. Meanwhile, financials are also gaining ground but are lagging behind as concerns about the eurozone contagion crisis remain, with German Chancellor Angela Merkel further dampening expectations of the creation of a Eurobond in the near-term. Merkel noted in an interview that bringing in Eurobonds at this time would further undermine economic stability, per Bloomberg. Meanwhile, traders are awaiting Friday’s speech in Jackson Hole, Wyoming, from US Federal Reserve Chairman Ben Bernanke, looking for any signs of further stimulus efforts amid the growing concerns about the possibility of a return to a recession.

Also, European Central Bank President Trichet is expected to speak at the Fed’s annual gathering on Saturday at 12:25 pm EST, and traders will likely be looking for any comments by the ECB chief indicating how committed the central bank is to buying sovereign debt to help stabilize the financial markets until the European Financial Stability Facility (EFSF) is ratified and can take over. There were no major European economic reports released today, but tomorrow, we will get a plethora of PMI data in Europe, depicting manufacturing activity across the pond amid the backdrop of increasing eurozone recession worries.

The UK FTSE 100 Index is 2.2% higher, France’s CAC-40 Index is gaining 2.5%, and Germany’s DAX Index is rising 1.4%.

Asia under pressure again, South Korea extends sell-off

Stocks in Asia finished mostly lower to begin the week with concerns about the eurozone debt crisis and worries about a recession in the US and Europe continuing to hamper sentiment. South Korea’s Kospi Index fell 2.0%, extending the sharp sell-off the equity markets have seen recently, led by solid weakness in oil & gas stocks and auto-related issues. Meanwhile, Japan’s Nikkei 225 Index declined 1.0%, Australia’s S&P/ASX 200 Index decreased 0.5%, and China’s Shanghai Composite Index fell 0.7%.

Elsewhere, Thailand’s SET Index inched 0.1% lower, as some late-day resiliency pared a large portion of losses that followed a report that showed the nation’s 2Q GDP unexpectedly contracted, declining by 0.2% q/q, after expanding by 2.0% in 1Q. However, Hong Kong’s Hang Seng Index rose 0.5%, aided by strength in telecommunications stocks, and India’s BSE Sensex 30 Index gained 1.2%, with oil & gas issues rising solidly to offset weakness in technology-related equities. In other economic news, Hong Kong’s consumer prices rose 7.9% year-over-year (y/y) in July—the fastest pace since 1995—compared to the 8.2% increase that was estimated, and an acceleration from the 5.6% y/y gain that was seen in June. The data was released after the closing bell in Hong Kong.

Corruption

noreply@blogger.com (Avid Trader) — Mon, 22 Aug 2011 13:38:00 +0000

by Larry Levin

If this isn't corruption then I don't know what is. As you will read, the banking mafia will stop at nothing to get what it wants.

Has Rep. Darrell Issa (R-CA) turned the House Oversight Committee into a bank lobbying firm with the power to subpoena and pressure government regulators? ThinkProgress has found that a Goldman Sachs vice president changed his name, then later went to work for Issa to coordinate his effort to thwart regulations that affect Goldman Sachs' bottom line.

In July, Issa sent a letter to top government regulators demanding that they back off and provide more justification for new margin requirements for financial firms dealing in derivatives. A standard practice on Capitol Hill is to end a letter to a government agency with contact information for the congressional staffer responsible for working on the issue for the committee. In most cases, the contact staffer is the one who actually writes such letters. With this in mind, it is important to note that the Issa letter ended with contact information for Peter Haller, a staffer hired this year to work for Issa on the Oversight Committee.

Haller, as he is now known, went by the name Peter Simonyi until three years ago. Simonyi adopted his mother's maiden name Haller in 2008 shortly after leaving Goldman Sachs as a vice president of the bank's commodity compliance group. In a few short years, Haller went from being in charge of dealing with regulators for Goldman Sachs to working for Congress in a position where he made official demands from regulators overseeing his old firm.

The full story can be read here...

http://thinkprogress.org/politics/2011/08/18/298485/exclusive-goldman-sachs-vp-changed-his-name-now-advances-goldman-lobbying-interests-as-a-top-staffer-to-darrell-issa/

Trade Date: 8/19/11

E-Mini S&P Trades*

(before fees and commissions):

1. No "Secrets" trades filled today.

2. Algorithm positions (10)

3. "Reading the Tape" positions (2) ...combined Secret's, Algo, & "Reading the Tape" total...+6.25

Sign up as an AvidTrader Member to receive "The Technician" Value Area's each day. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. Join and see how this technique can help you trade more successfully!

Negative Finish For The Week

noreply@blogger.com (Avid Trader) — Mon, 22 Aug 2011 01:27:00 +0000

By Harry Boxer, The Technical Trader

The stock market indices had yet another negative day on Friday after a mid-morning rally was completely given back, and then some. The day started out with a quick move down, then a sharp spike up that took it up nearly 120 points, reaching the highs for the day at 2102 on the Nasdaq 100 and 1154 on the S&P 500. They then dropped, consolidated in bear wedges, holding the support line for a couple hours, and then stair-stepped their way down for the rest of the day, closing down near the lows for the day and week.

It was certainly another bad day on Wall Street, to say the least.

Net on the day, the Dow was down 172.93 at 10,819.65, the S&P 500 down 17.12 at 1123.53, and the Nasdaq 100 down 34.81 at 2038.22.

Advance-declines were nearly 3 to 1 negative on the New York Stock Exchange with 1070 shares up and 2942 shares down, and a little better than 2 1/2 to 1 negative on Nasdaq with 724 shares up and 1864 shares down. Up/down volume on New York was 2 to 1 positive with total volume of 1.8 billion. Nasdaq traded 2.4 billion, with 550 million up and 1.8 billion to the downside, and had a 3 to 1 negative volume ratio.

TheTechTrader.com board was mostly lower, although there were some gainers today. Leading the way, of course, were the ultra-short ETFs. VelocityShares Daily 2x VIX ST ETN (TVIX) was up another 11% today, or 5.89, to 59.94. The Direxion Daily Financial Bear 3X Shares (FAZ) was up 3.43 to 69.22, Direxion Daily Large Cap Bear 3X Shares (BGZ) up 2.38 to 50.41, Direxion Daily Small Cap Bear 3X Shares (TZA) 2.66 to 57.90, and the iPath S&P 500 VIX Short-Term Futures ETN (VXX) 2.08 to 42.55.

In addition, Silicon Graphics International Corp. (SGI) jumped 3.17 to 15.10, or 26 1/2%. ARM Holdings plc (ARMH) gained 33 cents to 23.84, Marvell Technology Group Ltd. (MRVL) 71 cents to 12.68, and Clearwire Corporation (CLWR) 70 cents to 3.01, or 30%. MAKO Surgical Corp. (MAKO) was up 96 cents to 30.60, and Research In Motion Limited (RIMM) 93 cents to 26.69.

Those were the gainers on our board today.

On the downside there were quite a few losers. SodaStream International Ltd. (SODA) gave back 1.78 to 37.94, Caribou Coffee Company, Inc. (CBOU) 29 cents to 13.21, and Coffee Holding Co.Inc. (JVA) 29 cents to 15.35. ZAGG Incorporated (ZAGG) was down 42 cents to 14.48, Qihoo 360 Technology Co. Ltd. A (QIHU) 16 cents to 24.56, and Travelzoo Inc. (TZOO) 1.15 to 32.55.

Other losers of note included Apple Inc. (AAPL) down 10.02, Goldman Sachs (GS) 1.38 to 111.76, Amazon.com Inc. (AMZN) 3.59 to 178.93, and International Business Machines Corp. (IBM) 6.29 to 157.54.

Low-priced Molycorp, Inc. (MCP) lost 3.45 to 48.65, Brigham Exploration Co. (BEXP) 1.28 to 26.79, Global Crossing Ltd. (GLBC) 40 cents to 26.44, and Youku.com Inc (YOKU) 1.00 to 23.36.

Also on the downside was the Direxion Daily Small Cap Bull 3X Shares (TNA) down 1.93 to 36.24, and ProShares UltraShort DJ-UBS Crude Oil (SCO) down 1.55 to 61.60.

Stepping back and reviewing the hourly chart patterns, the indices were up early, rallying to the highs for the day in the first hour near 2103 NDX and 1154. S&P 500. The indices wedged for a couple hours, then stair-stepped lower to the lows for the day, closing on a very negative note for the day and the week.

After climbing as much as 120 points today, the indices ended down 172.93 points, or 1.6%, to end at 10, 817.65, which was down 4% from a week ago.

We'll have to see what happens next week.

Good Trading!

Harry

Free 15-Day Trial to Harry Boxer's Real-Time Technical Trading Diary

Weekend Market Update

noreply@blogger.com (Avid Trader) — Sat, 20 Aug 2011 19:51:00 +0000

Late-Day Retreat to End the Week

After hovering around the unchanged mark for most of Friday, stocks moved solidly lower in late-day action as trepidation regarding eurozone debt issues and a slowing global economy took hold. News from the corporate world offered little reprieve as the Wall Street Journal reported that Bank of America is planning a significant reduction in its workforce and weak guidance from Hewlett-Packard overshadowed any positives from the IT giant's M&A activity. In a day devoid of major economic releases, Treasuries were mostly flat. While on the earnings front, Marvell and Gap both topped analysts' expectations.

The Dow Jones Industrial Average dropped 173 points (1.6%) to 10,818, the S&P 500 Index fell 17 points (1.5%) to 1,124, and the Nasdaq Composite gave up 39 points (1.6%) to 2,342. In heavy volume, 1.5 billion shares were traded on the NYSE and 2.4 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.31 to $82.69 per barrel, wholesale gasoline picked up $0.08 to $2.87 per gallon, and the Bloomberg gold spot price added $24.25 to $1,848.15 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-was down 0.4% falling to 73.94. For the week, including dividends, the DJIA lost 4.0%, the S&P 500 Index shed 4.7%, and the Nasdaq Composite was down 6.6%.

Dow member Hewlett-Packard Co. (HPQ $24) announced that it has reached an agreement to acquire U.K. data-analytics firm Autonomy Corp. (AUTNY $42) for nearly $10.3 billion. Under the terms of the deal, AUTNY shareholders will receive 25.50 British pounds ($42.11) per share in cash, a 64% premium to Wednesday’s closing price, the last trading day before discussions of the deal were announced. The agreement comes after HPQ and AUTNY confirmed talks of a deal late yesterday, when HPQ announced fiscal 3Q results that were roughly inline with expectations, while lowering its 4Q and full-year guidance. Also, HPQ announced that it is exploring of strategic alternatives for its PC business, which could include either a 'full divesture or partial separation." Additionally, the company announced that it will discontinue operations for its webOS devices, including the TouchPad and webOS phones. HPQ finished down over 20% and AUTNY rallied in European trading.

Meanwhile, the Wall Street Journal is reporting that fellow Dow component Bank of America Corp. (BAC $7) is cutting 3,500 jobs in the current quarter, expected to be completed by the end of September, according to people familiar with the matter, with one person noting that at least 10,000 positions could be eliminated. BAC has not commented on the report. Shares finished lower.

In earnings news, Marvell Technology Group (MRVL $13) reported 2Q EPS ex-items of $0.38, one penny above the consensus estimate of analysts surveyed by Reuters, with revenues growing 12% quarter-over-quarter (q/q) to $898 million, exceeding the $889 million that the Street had projected. The chipmaker said its mobile and wireless business grew 18% q/q and it believes the headwinds that faced its mobile and wireless end market in the prior quarters "are mostly behind us," per Dow Jones Newswires. Shares ended the day sharply higher.

Finally, Gap Inc. (GPS $16) announced 2Q earnings of $0.35 per share, two cents above the Street’s forecast, as revenues rose 2% year-over-year (y/y) to $3.4 billion, above the $3.3 billion that analysts had estimated. However, 2Q same-store sales-sales at stores open at least a year-declined 2% y/y, while online activity had a positive impact of two percentage points. GPS reaffirmed its full-year EPS guidance. Shares finished higher.

Treasuries mostly lower following yesterday’s solid advance

Treasuries finished Friday mostly unchanged, with the yield on the 2-year note remaining at 0.19% and the yield on the 10-year note also staying put at 2.07%, while the 30-year bond rate fell 3 bps to 3.39%.

Bond yields fell again Thursday amid growing global economic concerns, fueled by a plethora of disappointing data, and as worries about the eurozone financial crisis resurfaced. The mere possibility of a problem-something that could be possible, even if it is not probable-becomes a target. European banks are highly reliant on short-term funding, which is only exacerbating the situation in our view. It seems unfathomable that European policymakers have not learned the lessons of past crises, but in our opinion, they seem to be in denial about the role of confidence in financial systems. Instead of taking the opportunity to calm nerves in their "emergency meeting" this week, German Chancellor Angela Merkel and French President Nicolas Sarkozy likely only added to uncertainties by raising the possibility of a new financial transactions tax, while downplaying the need to expand the European Financial Stability Facility (EFSF) that the market seems to be calling for and pushing off the possibility of common Eurobonds until sometime in the future.

Eurozone debt crisis and recession fears continue to plague markets overseas

It was a light day for economic news in Europe where German producer prices came in hotter than expected for July and UK public sector net borrowing unexpectedly fell. Equity markets rebounded from session lows, but stocks ultimately extended yesterday’s sharp sell-off on concerns regarding the health of the eurozone's financial sector and sovereign debt issuers. There needs to be large amounts of capital made available to give markets confidence that any potential problem can be addressed, regardless if it's a problem with a bank or a country in the eurozone. Similar to former US Treasury Secretary Hank Paulson's "bazooka," we believe the eurozone’s EFSF needs to be expanded multiple times over, and likely needs to come with the guarantee that private-sector investors will not face losses on their debt investments in banks. This may give investors the confidence that's now likely sorely lacking, to lend to banks and enable banks to raise their capital ratios.

Stocks in Asia finished broadly to the downside as the growing recession concerns in the US and Europe, along with continuing worries regarding the eurozone debt crisis, pummeled sentiment. Amid the downward moves in Asia, several nations offered comments aimed at calming sentiment, with Japan’s Finance Minister Noda saying the G-7 group of world finance ministers and central bank governors need "very close cooperation in coming weeks."

Soft data and lingering debt concerns fuel another volatile week

The US equity markets began the week extending the rally from the latter-half of last week, erasing the losses that accompanied the US credit rating downgrade. M&A activity, highlighted by Google Inc's (GOOG $495) agreement to acquire Motorola Mobility Holdings Inc. (MMI $38) for about $12.5 billion, aided sentiment, along with better-than-expected earnings from Dow members Wal-Mart Stores Inc. (WMT $52) and Home Depot Inc. (HD $32), as well as Target Corp. (TGT $50). However, as the week matured, the bulls’ work was undone as eurozone debt crisis concerns reared their ugly head, and fears of a recession in the eurozone and the US grew louder, resulting in a solid decline for the major equity markets this week. The uneasiness across the pond came as France and Germany held a meeting, which failed to evoke confidence of a timely and decisive action plan to solve the festering problems facing the region, while worries about liquidity problems in the European banking sector resurfaced to exacerbate sentiment.

Meanwhile, the global economic pessimism came as eurozone 2Q GDP showed smaller-than-forecasted growth, led by nearly flat expansion in Germany, the region’s largest economy. Elsewhere, a plethora of US data amplified the bears’ roar as the US economic calendar yielded disappointing reports showing jobless claims rose, inflation came in hotter than forecasted, housing remained lackluster. But the heaviest hit to the economy’s outlook came from a sharp drop in the Philly Fed Manufacturing Index to the lowest level since March 2009. The recessionary tone drowned out some favorable reports on industrial production and the Conference Board’s Index of Leading Economic Indicators.

Jackson Hole speeches by Bernanke and Trichet will be closely watched

The economic calendar will likely focus on preliminary August PMI readings overseas early in the week, as the US schedule starts slow, with Tuesday's new home sales report expected to show sales flat m/m in July at an annual rate of 312,000 units after falling 1.0% in June. The new home sales report is considered a timely indicator of conditions in the housing market as it is based on signings, while existing home sales, which unexpectedly fell 3.5% m/m, uses closings. Wednesday morning brings the volatile durable goods orders report, expected to gain 2.1% in July after falling by the same amount in June, while ex-transportation, orders are forecasted to have fallen 0.5% m/m after increasing 0.1% in June.

After the very disappointing first reading, traders may look to see the extent of revisions in the second reading of 2Q gross domestic product (GDP), due out on Friday. The consensus of a Bloomberg survey of economists expects 2Q GDP to be revised lower to 1.1% from 1.3%, after inching ahead by 0.4% in 1Q. The largest component of GDP, personal consumption, is expected to be revised higher to 0.2% from the initially reported 0.1%, after advancing 2.1% in 1Q. The inflation readings are expected to be unrevised at a 2.3% rise for the GDP Price Index, and 2.1% for the core PCE Index, which excludes food and energy.

However, the main focus for the market is likely to be on Friday's speeches at the Federal Reserve's annual gathering in Jackson Hole, beginning with Fed Chair Bernanke at 10:00 am EST, followed by European Central Bank President Trichet at 12:25 pm EST. Bernanke first hinted at QE2 at last year's meeting, and investors may be wondering if central banks will pursue more accommodative policies with market volatility, weak economic data and a continued crisis of confidence in Europe potentially threatening economic growth.

Other releases on the US economic calendar include the Richmond Fed Manufacturing Index, the MBA Mortgage Applications Index, weekly initial jobless claims, and the final University of Michigan Consumer Sentiment Index reading for August.

International economic releases due out next week include Japan's machine tool orders and CPI, Australia’s leading index, and China’s preliminary August PMI from HSBC, leading index and year-to-date industrial profits. Releases from Europe will include euro-zone preliminary services and manufacturing PMIs for August, consumer confidence, and industrial new orders, Germany's ZEW Survey of Economic Sentiment Index, Ifo Business Climate Index, consumer confidence, import prices, and retail sales, and UK home prices and consumer confidence. Back in the Americas, Canada releases retail sales, while Mexico announces retail sales, the trade balance and the unemployment rate, and Mexico’s central bank meets.

Morning Market Update

noreply@blogger.com (Avid Trader) — Fri, 19 Aug 2011 13:13:00 +0000

Bears Continue to Roar in Late-Week Action

Yesterday’s global sell-off is continuing on Friday, with the US equity markets lower in early trading and European stocks under broad-based pressure as concerns toward the eurozone financial sector and growing recession worries continue to apply pressure on sentiment. However, Treasuries are modestly lower despite the continued downward volatility in the equity markets, as there are no major US economic reports due out today. In equity news, Dow member Hewlett-Packard Co announced that it has reached an agreement to acquire U.K. data-analytics firm Autonomy Corp for nearly $10.3 billion, while fellow Dow component Bank of America Corp is reportedly cutting 3,500 jobs. In earnings news, Marvell Technology Group and Gap Inc both exceeded analysts’ 2Q expectations. Elsewhere overseas, Asian markets fell victim to the sharp declines seen in the US and Europe yesterday.

As of 8:51 a.m. ET, the September S&P 500 Index Globex future is 10 points below fair value, the Nasdaq 100 Index is 13 points below fair value, and the DJIA is 93 points below fair value. WTI crude oil is $0.75 lower at $81.63 per barrel, and the Bloomberg gold spot price is up $29.75 at $1,853.65 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—is down 0.4% at 73.93.

Dow member Hewlett-Packard Co. (HPQ $30) announced that it has reached an agreement to acquire U.K. data-analytics firm Autonomy Corp. (AUTNY $38) for nearly $10.3 billion. Under the terms of the deal, AUTNY shareholders will receive 25.50 British pounds ($42.11) per share in cash, a 64% premium to Wednesday’s closing price, the last trading day before discussions of the deal was announced. The agreement comes after HPQ and AUTNY confirmed talks of a deal late yesterday, when HPQ announced fiscal 3Q results that were roughly inline with expectations, while lowering its 4Q and full-year guidance. Also, HPQ announced that it is exploring of strategic alternatives for its PC business, which could include either a “full divesture or partial separation.” Additionally, the company announced that it will discontinue operations for its webOS devices, including the TouchPad and webOS phones.

Meanwhile, the Wall Street Journal is reporting that fellow Dow component Bank of America Corp. (BAC $7) is cutting 3,500 jobs, expected to be completed by the end of September, according to people familiar with the matter. BAC has not commented on the report.

In earnings news, Marvell Technology Group (MRVL $12) reported 2Q EPS ex-items of $0.38, one penny above the consensus estimate of analysts surveyed by Reuters, with revenues growing 12% quarter-over-quarter (q/q) to $898 million, exceeding the $889 million that the Street had projected.

Finally, Gap Inc. (GPS $16) announced 2Q earnings of $0.35 per share, two cents above the Street’s forecast, as revenues rose 2% year-over-year (y/y) to $3.4 billion, above the $3.3 billion that analysts had estimated. However, 2Q same-store sales—sales at stores open at least a year—declined 2% y/y, while online activity had a positive impact of two percentage points. GPS reaffirmed its full-year EPS guidance.

Treasury yields rise modestly following yesterday’s solid declines

Treasuries are modestly lower in early trading as there are no major US reports scheduled for today’s economic calendar, with the yield on the 2-year note unchanged at 0.19%, while the yield on the 10-year note is 3 bps higher at 2.09%, and the 30-year bond rate is rising 1 bp to 3.43%.

Bond yields are rebounding somewhat from yesterday’s decline amid growing global economic concerns, fueled by a plethora of disappointing data, and as worries about the eurozone financial crisis resurfaced. The mere possibility of a problem—something that could be possible, even if it is not probable—becomes a target. European banks are highly reliant on short-term funding, which is only exacerbating the situation in our view. It seems unfathomable that European policymakers have not learned the lessons of past crises, but in our opinion, they seem to be in denial about the role of confidence in financial systems. Instead of taking the opportunity to calm nerves in their "emergency meeting" this week, German Chancellor Angela Merkel and French President Nicolas Sarkozy likely only added to uncertainties by raising the possibility of a new financial transactions tax, while downplaying the need to expand the European Financial Stability Facility (EFSF) that the market seems to be calling for and pushing off the possibility of common Eurobonds until sometime in the future.

Pressure continues in Europe

The equity markets in Europe are under solid pressure after yesterday’s sharp sell-off as concerns regarding the health of the eurozone’s financial sector and festering debt crisis continues. Banking shares are among the biggest decliners amid growing fears about liquidity problems in the sector.

Also, increasing uneasiness regarding the potential for a return to recession for Europe and the US are exacerbating sentiment in the global markets, and European automakers are pacing today’s downward move, along with basic resource stocks. However, stocks are off of the worst levels of the day, with technology issues gaining solid ground as shares of Autonomy Corp are surging over 70% on the heels of the announcement that is has agreed to be acquired by Dow member Hewlett-Packard Co over $10 billion. In economic news in Europe, German producer prices came in hotter than expected for July, while UK public sector net borrowing unexpectedly fell in July.

The UK FTSE 100 Index is 1.8% lower, France’s CAC-40 Index is declining 2.0%, Germany’s DAX Index is falling 3.1%, Italy’s FTSE MIB Index is dropping 2.6%, and Spain’s IBEX 35 Index is 2.2% lower.

Selling pressure spills over to Asia

Stocks in Asia finished broadly to the downside as the growing recession concerns in the US and Europe, along with the exacerbated worries toward the euro-area’s debt crisis pummeled sentiment to weigh on the equity markets in the region. South Korea’s Kospi Index took the hardest hit, tumbling 6.2% on heavy selling of export issues, while Australia’s S&P/ASX 200 Index fell 3.5%, led by weakness in financials and mining stocks. Elsewhere, stocks in China finished solidly lower, with the Hong Kong Hang Seng Index dropping 3.1% and the Shanghai Composite Index declining 1.0%. Rounding out the sell-off, Japan’s Nikkei 225 Index fell 2.5%. Amid the deep downward moves in Asia, several nations offered comments aimed at calming sentiment, with Japan’s Finance Minister Noda saying the G-7 group of world finance ministers and central bank governors needs “very close cooperation in coming weeks,” per Bloomberg.

Bad Data

noreply@blogger.com (Avid Trader) — Fri, 19 Aug 2011 13:04:00 +0000

by Larry Levin

Thursday's market was hammered as the bad economic news just keeps on coming. Consider the Philly Fed Business Outlook, which clearly suggests that the US is already in recession.

The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The index is now at its lowest level since March 2009. The demand for manufactured goods, as measured by the current new orders index, paralleled the decline in the general activity index, falling 27 points. The current shipments index fell 18 points and recorded its first negative reading since September of last year. Suggesting weakening activity, indexes for inventories, unfilled orders, and delivery times were all in negative territory this month.

Firms' responses suggest a deterioration in the labor market compared with July. The current employment index fell 14 points, recording its first negative reading in 12 months. About 18 percent of the firms reported an increase in employment, but 23 percent reported a decrease. The percentage of firms reporting a shorter workweek (28 percent) was greater than the percentage reporting a longer one (14 percent). The workweek index fell 9 points.

Trade Date: 8/18/11

E-Mini S&P Trades*

(before fees and commissions):

1. No "Secrets" trades filled today.

2. Algorithm positions (16)

3. "Reading the Tape" positions (8) ...combined Secret's, Algo, & "Reading the Tape" total...+18.00

Nasty Day on Wall Street

noreply@blogger.com (Avid Trader) — Fri, 19 Aug 2011 08:55:00 +0000

By Harry Boxer, The Technical Trader

The stock market had a very nasty day today as the indices were weak all day session. They had big gaps down taking out key support, and then slid even sharper and lower very quickly before reaching the morning lows near the 2065 area on the Nasdaq 100 and just under 1135 on the S&P 500. Over the next couple hours they worked their way back, in what looked like, and turned out to be, bear flags.

Just before the noon hour they reached 2100 NDX and 1150 S&P 500, which was too formidable a level for them, and they began an afternoon decline that hit their new session lows with 15 minutes down around 2055 NDX, or about 125 points down on the day. At that point, the S&P 500 reached 1131, down 62 points, and the Dow was down about 540-50. But they did bounce in the last 15 minutes in what appeared to be short covering.

Net on the day, the Dow was down 419.63 at 10,990.58, the S&P 500 down 53.24, or more than 5%, to 1140.65, and the Nasdaq 100 down 108.59 to 2073.03, or down around 5% as well.

AAdvance-declines were as negative as they get on the New York Stock Exchange with 176 issues up and 2917 down. Advancing volume was 44 million, while declining volume was 1.57 billion, a huge negative volume ratio. On Nasdaq advance-declines were 236 up and 2400 down. Up/down volume was 64 million up and 2.7 billion down.

Those are astronomical numbers, and as a result the oscillators should be severely oversold. It’s probably one of the reasons they did some late short covering.

TheTechTrader.com board, as a result, was extremely negative, other than for the ultra-shorts. An example of how things were on our board today, Apple Inc. (AAPL) was down 14.39 to 366.05, International Business Machines Corp. (IBM) down 7.65 to 163.83, and Goldman Sachs (GS) down 4.11 to 113.14.

In addition, InterDigital, Inc. (IDCC) dropped 4.87 to 64.69, LSB Industries Inc. (LXU) 3.59 to 34.51, MAKO Surgical Corp. (MAKO) 3.04 to 29.64, Molycorp, Inc. (MCP) 3.60 to 52.10, Travelzoo Inc. (TZOO) 3.13 to 33.70, Youku.com Inc (YOKU) 2.75 to 24.26, Global Crossing Ltd. (GLBC) 3.22 to 26.84, and Brigham Exploration Co. (BEXP) 2.93 to 28.07.

The ultra-long ETF Direxion Daily Small Cap Bull 3X Shares (TNA) lost 8.03 to 38.17.

On the plus side, there were only a few fractional gainers. SodaStream International Ltd. (SODA) was up 92 cents today to 39.72, and Eastman Kodak Co. (EK) jumped 36 cents to 3.05, a nice percentage gain on patent speculation.

The ultra-short ETFs were the stand outs for the day. The Direxion Daily Small Cap Bear 3X Shares (TZA) jumped 8.25 to 55.24, the Direxion Daily Financial Bear 3X Shares (FAZ) was up 8.23 to 65.79, and iPath S&P 500 VIX Short-Term Futures ETN (VXX) added 6.94 to 40.47. The VelocityShares Daily 2x VIX ST ETN (TVIX), which is a new stock that we started trading today, exploded for 15.66 to close at 54.05, or nearly 41% today. That was the biggest gainer on our board today.

So, it was a very negative day today, and only the bounce at the close prevented it from closing at the session lows. Perhaps a retest of the lows, but we’ll have to see if we get any up side follow-through. Certainly the index is vulnerable to more downside.

We’ll have to see how it goes tomorrow.

Good Trading!

Harry

Free 15-Day Trial to Harry Boxer's Real-Time Technical Trading Diary

Evening Market Update

noreply@blogger.com (Avid Trader) — Thu, 18 Aug 2011 21:53:00 +0000

Stocks Tumble Deep in the Red

The US equity markets traded solidly lower today, as worst case scenario fears were stoked by ongoing concerns about the financial stability of Europe and a deluge of disappointing US economic data. Treasuries moved sharply higher along with the price of gold and the US dollar, as reports showed an increase in US consumer prices and jobless claims, while the Philly Fed Manufacturing Index fell to its lowest level since March of 2009. Rounding out the economic docket was an unexpected drop in existing home sales, while a larger-than-expected improvement in leading indicators provided the lone bright spot in an otherwise dark day. In equity news, Dow member Hewlett-Packard reported slightly better-than-expected earnings, along with plans to spinoff its PC business and possibly acquire U.K. software firm Autonomy Corp. Additionally, NetApp missed the Street’s revenue forecast, Sears Holdings reported a larger-than-expected loss, and Limited Brands topped analysts’ estimates.

The Dow Jones Industrial Average lost 420 points (3.7%) to 10,991, the S&P 500 Index fell 53 points (4.5%) to 1,141, while the Nasdaq Composite plunged 131 points (5.2%) to 2,380. In heavy volume, 1.6 billion shares were traded on the NYSE and 2.8 billion shares changed hands on the Nasdaq. WTI crude oil fell $5.82 to $81.76 per barrel, wholesale gasoline declined $0.09 to $2.78 per gallon, while the Bloomberg gold spot price rose $34.25 to $1,825.50 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—was 0.6% higher at 74.19.

Dow member Hewlett-Packard Co. (HPQ $30) reported 3Q EPS ex-items of $1.10, one penny above the Street’s estimate, while revenue of $31.2 billion matched expectations. The company also lowered its 4Q and full-year earnings and revenue guidance. Meanwhile, HPQ said it plans to announce that its board has authorized the exploration of strategic alternatives for its Personal Systems Group, which could include either a full divesture or partial separation though a spin-off. Additionally, the company plans to announce that it will discontinue operations for its webOS devices, including the TouchPad and webOS phones. Rounding out a busy day for the tech giant, HPQ confirmed that it is in discussions to acquire U.K. data-analytics firm Autonomy Corp. (AUTNY $38). AUTNY issued a statement confirming the discussions. Shares of HPQ traded lower, while AUTNY moved solidly higher.

NetApp Inc. (NTAP $36) reported fiscal 1Q EPS ex-items of $0.55, inline with the consensus estimate of analysts surveyed by Reuters, but revenues, although growing 26% year-over-year (y/y) to $1.46 billion, missed the $1.51 billion that the Street had anticipated. The storage and data management solutions firm said a “challenging macroeconomic environment” modestly impacted its revenue growth, but its gross margin came in better than expected. The company saw demand slow from its US government and financial services customers. NTAP issued 2Q guidance that matched expectations. Shares were sharply lower.

Limited Brands Inc. (LTD $34) announced 2Q adjusted earnings of $0.48 per share, two cents above the Street’s expectations, as revenues rose 9.6% y/y to $2.5 billion, above the $2.4 billion that analysts had projected. 2Q same-store sales—sales at stores open at least a year—gained 9% y/y. The specialty retailer said its focus on “managing inventory and expenses conservatively” yielded more full-priced selling and record results. LTD raised its August same-store sales and full-year EPS guidance. Shares finished lower.

Sears Holdings Corp. (SHLD $55) posted a 2Q adjusted net loss of $1.13 per share, wider than the $0.64 shortfall that analysts were expecting, while revenues, which declined 1.2% y/y to $10.3 billion, exceeded the $10.1 billion that the Street was anticipating. 2Q domestic same-store sales declined 0.7% y/y. The retailer said the decreases in sales were primarily driven by consumer electronics. SHLD moved solidly lower.

Inflation, home sales, jobless claims, and Philly Fed headline disappointing economic data

The Consumer Price Index showed prices at the consumer level were up 0.5% month-over-month (m/m) in July, more than the forecasts of economists surveyed by Bloomberg, which called for a 0.2% increase, while June’s 0.2% decline was left unrevised. Meanwhile, the core rate, which excludes the impact of food and energy, was 0.2% higher m/m in July, matching estimates, with June’s 0.3% increase unadjusted. On a y/y basis, consumer prices remained up 3.6% in July, above economists’ forecasts of a 3.3% increase, and the core CPI was 1.8% higher y/y, versus the 1.7% that was expected.

Elsewhere, existing homes sales fell 3.5% m/m in July to an annual rate of 4.67 million units, lower than the increase to 4.9 million units forecasted by economists surveyed by Bloomberg, and June’s figure was slightly upwardly revised to 4.84 million units. The median existing-home price fell 4.4% from a year ago to $174,000, and declined 0.9% m/m. The supply of homes fell by 1.7% m/m to 3.65 million units, equating to 9.4 months of supply at the current sales pace. Single-family home sales decreased 4.0% m/m, while multi-family was flat. Sales of existing homes reflect closings from contracts entered one to two months earlier. The National Association of Realtors, who issues the report, noted that “many buyers are being held back because banks are offering financing only to the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers.” The NAR added that financing conditions, combined with appraisal values coming in below the negotiated price, are contributing to high cancellations, which remain at the same level as in June.

The recent moves in the stock market, highlighted by the decline after the credit rating downgrade in the US, as well as the drop in shares of European banks, illustrate the role that confidence has in investing. However, there is also a corollary in the real economy, as consumers feel a negative wealth effect from the market drop, and then possibly pull back on spending, damaging prospects for businesses, who then retreat from spending and hiring, in a negative feedback loop.

Also, weekly initial jobless claims increased by 9,000 to 408,000, versus last week's figure which was upwardly revised by 4,000 to 399,000, and compared to the 400,000 level that economists had expected. However, the four-week moving average, considered a smoother look at the trend in claims, declined by 3,500 to 402,500, while continuing claims rose by 7,000 to 3,702,000, above the forecast of economists, which called for continuing claims to come in at 3,700,000.

Meanwhile, the Philly Fed Manufacturing Index tumbled back into contraction territory, falling from 3.2 in July to -30.7 in August—the lowest since March 2009—with a reading of zero the separating point between expansion and contraction. Economists had expected the index to decrease slightly to 2.0. The index turned sharply lower as new orders fell by 26.9 points to -26.8, shipments dropped to -13.9 from 4.3, and inventories fell 11.2 points to -9.8. Also, employment posted a 14.1 point decline to -5.2, while the prices paid component fell from 25.1 to 12.8.

Finally, the one bright spot from the economic front came in the form of the July Conference Board’s Index of Leading Economic Indicators (LEI) (chart), which rose 0.5% m/m, compared to the 0.2% increase that economists expected, and following June’s unrevised 0.3% increase. The index was led by positive contributions from the components pertaining to money supply, the yield curve, and jobless claims, which offset declines in the building permits and consumer expectations components of the data.

Treasuries moved solidly higher, as the yield on the 2-year note was unchanged at 0.19%, the yield on the 10-year note was 8 bps lower at 2.08%, and the 30-year bond rate lost 12 bps to 3.44%.

European banking and global growth concerns return to pressure the eurozone

Concerns about the health of the European financial system were amplified by a report from the Wall Street Journal that US Federal and state regulators are intensifying their scrutiny of the US arms of Europe’s biggest banks to try to avoid the eurozone debt crisis from spilling into the US banking system, citing people familiar with the matter. US regulators have not commented on the report. Also, reports that an undisclosed European bank borrowed $500 million (350 million euros) from the European Central Bank’s seven-day US dollar liquidity facility—the first loan issued by this facility since February—added fuel to the financial concerns in the region.

Meanwhile, global economic growth concerns also contributed to the soured sentiment across the pond, as Morgan Stanley (MS $16) cut its global GDP forecast to 3.9% from 4.2% for 2011 and 3.8% from 4.5% in 2012, noting that, “Our revised forecasts show the US and the euro area hovering dangerously close to a recession.” Moreover, UK retail sales came in below expectations for July, while construction output in the eurozone dropped in June.

In Asia/Pacific economic news, a report out of Japan showed foreign investments in Japanese stocks fell solidly last week, while the nation’s department store sales declined in July. Also, a separate report showed the nation’s exports fell more than expected in July. Finally, after the closing bell in Asia, Taiwan’s 2Q GDP was revised higher to a y/y growth rate of 5.02%, after growing 6.16% in 1Q, while Hong Kong’s unemployment rate moved lower from 3.5% to 3.4% for July.

After the flood of economic data reported today, there will be no releases on the US calendar tomorrow. The international docket will be quiet as well, with reports including German and Canadian PPI, as well as Brazil’s CPI.

Silver Heading Higher

noreply@blogger.com (Avid Trader) — Thu, 18 Aug 2011 20:05:00 +0000

By Mike Paulenof

From a big picture pattern perspective, all of the action in the iShares Silver Trust (SLV) off of the major April high at 48.32 has carved out a base-like "cup" formation from early May to late July, which has been followed by a correction that has taken the shape of a "handle."

The composite picture produces a "cup-and-handle" intermediate-term bottom formation, which should propel silver prices -- and the SLV -- considering higher in the upcoming days and weeks.

The first significant challenge to such a rally will be a confrontation with that April-Aug resistance line, now at 40.30. As long as the integrity of the "handle" remains intact at 38.90/80, I would want to be long the SLV.

Morning Market Update

noreply@blogger.com (Avid Trader) — Thu, 18 Aug 2011 13:43:00 +0000

European Concerns and Data Dampen Sentiment

Last week’s volatility appears to be returning in morning action, with US stocks trading solidly lower as European banking concerns are resurfacing, while the first dose of heavy US economic data is doing little to support sentiment. Treasuries are higher amid the declines in the equity markets, exacerbated by reports that showed US jobless claims and consumer prices rose. Meanwhile, we will get reads on US existing home sales, regional manufacturing, and leading economic indicators later this morning. In equity news, NetApp Inc posted inline earnings and guidance, and Sears Holdings Corp reported a larger-than-expected loss, while Limited Brands Inc topped analysts’ forecasts. Overseas, Asian markets came under broad-based pressure, while European equities are sharply lower, led by the region’s banks.

As of 8:49 a.m. ET, the September S&P 500 Index Globex future is 28 points below fair value, the Nasdaq 100 Index is 51 points below fair value, and the DJIA is 221 points below fair value. WTI crude oil is $2.48 lower at $85.10 per barrel, and the Bloomberg gold spot price is up $25.35 at $1,816.60 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—is up 0.4% at 74.03.

NetApp Inc. (NTAP $42) reported fiscal 1Q EPS ex-items of $0.55, inline with the consensus estimate of analysts surveyed by Reuters, with revenues growing 26% year-over-year (y/y) to $1.46 billion, compared to the $1.51 billion that the Street had anticipated. The storage and data management solutions firm said a “challenging macroeconomic environment” modestly impacted its revenue growth but its gross margin improved by nearly 22% y/y. NTAP issued 2Q guidance that matched expectations.

Limited Brands Inc. (LTD $34) announced 2Q adjusted earnings of $0.48 per share, two cents above the Street’s expectations, as revenues rose 9.6% y/y to $2.5 billion, above the $2.4 billion that analysts had projected. 2Q same-store sales—sales at stores open at least a year—gained 9% y/y. The specialty retailer said its focus on “managing inventory and expenses conservatively” yielded more full-priced selling and record results. LTD raised its August same-store sales and full-year EPS guidance.

Sears Holdings Corp. (SHLD $60) posted a 2Q adjusted net loss of $1.13 per share, wider than the $0.64 shortfall that analysts were expecting, while revenues, which declined 1.2% y/y to $10.3 billion, exceeded the $10.1 billion that the Street was anticipating. 2Q domestic same-store sales declined 0.7% y/y. The retailer said the decreases in sales were primarily driven by consumer electronics.

Consumer prices and jobless claims rise, while data continues later this morning

The Consumer Price Index showed prices at the consumer level were up 0.5% month-over-month (m/m) in July, more than the forecasts of economists surveyed by Bloomberg, which called for a 0.2% increase, with June’s 0.2% decline unrevised. Meanwhile, the core rate, which strips out food and energy, was 0.2% higher m/m in July, matching estimates, with June’s 0.3% increase unadjusted. On a y/y basis, consumer prices remained up 3.6% in July, above economists’ forecasts of a 3.3% increase, and the core CPI was 1.8% higher y/y, versus the 1.7% that was expected.

Weekly initial jobless claims increased by 9,000 to 408,000, versus last week's figure which was upwardly revised by 4,000 to 399,000, and compared to the 400,000 level that economists had expected. However, the four-week moving average, considered a smoother look at the trend in claims, declined by 3,500 to 402,500, while continuing claims rose by 7,000 to 3,702,000, above the forecast of economists, which called for continuing claims to come in at 3,700,000.

Treasuries remain higher in early action following the data and the flare-up in concerns toward European banks, with the yield on the 2-year note down 1 bp to 0.18%, the yield on the 10-year note 7 bps lower to 2.09%, and the 30-year bond rate losing 8 bps to 3.48%.

Later this morning, the US economic data continues to pour in, with the releases of existing homes sales, expected to increase 2.7% m/m to an annual rate of 4.9 million units in July, the Philly Fed Manufacturing Index, forecasted to decline from 3.2 in July to 2.0 in August, with a reading above zero denoting expansion, and the Conference Board’s Index of Leading Economic Indicators, with economists anticipating a 0.2% uptick for July.

European banking concerns return to pressure stocks in the eurozone

The equity markets in Europe are sharply lower in afternoon action, led by a steep decline in financials as concerns toward the health of the European financial system are resurfacing, with European banks finding the heaviest pressure.

Meanwhile in European equity news, shares of Holcim Ltd. (HCMLY $12) are sharply lower after the world’s second-largest cement maker, per Bloomberg, posted earnings that missed analysts’ forecasts. On the economic front across the pond, UK retail sales came in below expectations for July, while construction output in the eurozone dropped in June.

The UK FTSE 100 Index is down 2.7%, France’s CAC-40 Index is declining 3.0%, Germany’s DAX Index is falling 3.9%, Italy’s FTSE MIB Index is tumbling 4.1%, and Spain’s IBEX 35 Index is dropping 3.4%.

Asia falls amid data and weakness in technology issues

Stocks in Asia finished solidly lower, with technology stocks finding pressure following Dell Inc’s (DELL $14) lackluster outlook yesterday and as traders digested some economic data ahead of the flood of reports due out in the US today. Japan’s Nikkei 225 Index dropped 1.3% as reports showed foreign investments in Japanese stocks fell solidly last week and the nation’s department store sales declined in July. Also, strength in the yen exacerbated the pressure on Japanese stocks, along with a separate report showing the nation’s exports fell more than expected in July. Elsewhere, Australia’s S&P/ASX 200 Index declined 1.2%, South Korea’s Kospi Index dropped 1.7%, while China’s Shanghai Composite Index fell 1.6% and Hong Kong’s Hang Seng Index decreased 1.3%. In economic news after the closing bell in Asia, Taiwan’s 2Q GDP was revised higher to a y/y growth rate of 5.02%, after growing 6.16% in 1Q, while Hong Kong’s unemployment rate moved lower from 3.5% to 3.4% for July.

Regulatory Capture

noreply@blogger.com (Avid Trader) — Thu, 18 Aug 2011 13:29:00 +0000

by Larry Levin

If you have wondered why the banking mafia is never found guilty of any wrongdoing of any kind, you probably haven't heard of "regulatory capture." After all, the regulators are the ones that are employed with the duty of bringing charges against the banksters.

Regulatory capture refers to the fact that government regulators often become more concerned with protecting an industry than protecting the public that the regulation was designed to protect. Additionally, these government workers OFTEN leave their jobs, once they have "cosseted" these industries (think banksters), and take jobs with them as a payoff for looking the other way.

If you're not familiar with this concept, please read the full article from Matt Tiabbi at Rolling Stone:

http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file - "Hey, chief, didja know this guy had two wives die falling down the stairs?" No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations - "18,000 ... including Madoff," as one high-ranking SEC official put it during a panicked meeting about the destruction - has apparently disappeared forever into the wormhole of history.

Under a deal the SEC worked out with the National Archives and Records Administration, all of the agency's records - "including case files relating to preliminary investigations" - are supposed to be maintained for at least 25 years. But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term "Orwellian," devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation. Amazingly, the wholesale destruction of the cases - known as MUIs, or "Matters Under Inquiry" - was not something done on the sly, in secret. The enforcement division of the SEC even spelled out the procedure in writing, on the commission's internal website. "After you have closed a MUI that has not become an investigation," the site advised staffers, "you should dispose of any documents obtained in connection with the MUI."

Oh yeah, it's "free market" alright...free to loot and steal as much as the banking mafia wants from the US Treasury with the approval of Tax-Cheatin-Timmy, Ben Bernanke, and Mary Shapiro of the SEC.

Trade Date: 8/17/11

E-Mini S&P Trades*

(before fees and commissions):

1. No "Secrets" trades filled today.

2. Algorithm positions (2)

3. "Reading the Tape" positions (2) ...combined Secret's, Algo, & "Reading the Tape" total...-2.50

Evening Market Update

noreply@blogger.com (Avid Trader) — Wed, 17 Aug 2011 22:09:00 +0000

Technology Stocks Apply Pressure to Markets

Early gains in the US equity markets, courtesy of better-than-expected earnings reports from Target and Deere & Co, faded as technology stocks pressured the Nasdaq following a disappointing outlook from Dell, while blue chips ended the day only modestly higher. In other equity news, shares of Abercrombie & Fitch suffered after the teen retailer warned of cost pressures in the second half of the year, despite posting stronger-than-expected 2Q results. Meanwhile, yesterday’s eurozone debt crisis meeting between Germany and France had little impact on today’s action. Treasuries were mostly higher despite reports that showed a slightly larger-than-expected rise in producer prices and a gain in mortgage applications.

The Dow Jones Industrial Average rose 4 points (0.04%) to 11,410, the S&P 500 Index gained 1 point (0.1%) to 1,194, while the Nasdaq Composite declined 12 points (0.5%) to 2,511. In modest volume, 973 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil rose $0.93 to $87.58 per barrel, wholesale gasoline added $0.02 to $2.87 per gallon, while the Bloomberg gold spot price rose $9.70 to $1,794.70 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—was 0.4% lower at 73.72.

Target Corp. (TGT $51) reported 2Q earnings of $1.03 per share, above the $0.97 consensus estimate of analysts surveyed by Reuters, with revenues rising 4.6% year-over-year (y/y) to $16.2 billion, roughly inline with what the Street had forecasted. 2Q same-store sales—sales at stores open at least a year—rose 3.9% y/y. TGT issued full-year EPS guidance that topped expectations, and shares were solidly higher.

Dell Inc. (DELL $14) announced 2Q EPS ex-items of $0.54, exceeding the $0.49 that the Street was looking for, as revenues increased 1% y/y to $15.7 billion, compared to the $15.8 billion that analysts had expected. The company said growth in its enterprise businesses highlighted the quarter, with “solid demand” for its server, storage and services portfolio, while revenue for laptops and desktops rose 4%. However, DELL lowered its full-year revenue guidance, based on “strategic decisions to redirect resources from lower-to-higher value solutions and a more uncertain demand environment.” DELL was over 10% lower

Deere & Co. (DE $74) achieved fiscal 3Q profits of $1.69 per share, two cents above analysts’ forecasts, with net revenues increasing 24% y/y to $7.7 billion, exceeding the $7.5 billion that the Street had projected. The farm and construction equipment maker said it saw increased sales of large farm machinery, which “are having a major impact on Deere’s performance,” while construction-equipment sales are moving higher “in spite of weakness in the North American residential and commercial construction sectors.” However, the company noted that raw material prices increased. DE raised its full-year net income outlook, including a negative impact of the Japanese earthquake and tsunami, but said “concerns over the health of the global economy and recent turmoil in world financial markets have introduced an additional element of uncertainty into the near-term outlook.” DE traded lower.

Abercrombie & Fitch Co. (ANF $65) finished over 6% lower after the teen-apparel retailer reported that its 2Q gross profit margin fell 150 basis points (bps) y/y, due to an increase in average unit cost. Also, the company noted that “Costing pressures will be greater in the second half of the year, and macroeconomic uncertainty has increased.” However, ANF reported 2Q EPS of $0.35, five cents above expectations, and revenues that rose 23% y/y to $917 million, topping the $879 million that was forecasted.

Producer prices come in hotter than expected, while mortgage applications rise

The Producer Price Index showed prices at the wholesale level rose 0.2% month-over-month (m/m) in July, after falling by an unrevised 0.4% in June, and compared to the 0.1% increase that economists surveyed by Bloomberg had forecasted. Also, the core rate, which excludes food and energy, increased 0.4% m/m, above forecasts of a 0.2% gain, after rising an unadjusted 0.3% in June. On a year-over-year basis, headline producer prices were 7.2% higher, versus the 7.0% increase that was projected, and the core rate was up 2.5%, above expectations of a 2.3% rise.

The hotter-than-expected read on July prices at the wholesale level was led by a 2.8% increase in tobacco products, which accounted for nearly one-quarter of the increase in core prices, along with gains in prices for light motor trucks, pharmaceuticals, and food. However, prices for energy goods declined 0.6%, after falling 2.8% in June. Although the decline in energy prices—led by a solid decrease in gasoline prices—may be some good news out of today’s report, core prices, the measure that the Federal Reserve pays more attention to, increased for the eighth consecutive month, possibly handcuffing the Fed’s willingness to offer further stimulus efforts, known as QE3, to try to stave off an economic slip back into a recession.

Meanwhile, with next week’s speech by Chairman Ben Bernanke at the Fed’s annual economic conference in Jackson Hole, Wyoming—the site of Bernanke’s first signal of QE2 last year—looming on the horizon, the possibility of QE3 is likely to garner more attention among investors and economists with every piece of economic data leading up to the event. Tomorrow, we will get a plethora of reports including: the Consumer Price Index, with both the headline figure and the core rate, which excludes food and energy, forecast to rise 0.2% m/m during July, weekly initial jobless claims, expected to rise to 400,000 from the previous week’s 395,000, and the Conference Board’s Index of Leading Indicators, where economists are anticipating a 0.2% uptick during July, following a gain of 0.3% in June. Also, existing home sales will be reported, forecast to rise 2.7% to annual rate of 4.9 million units in July from 4.7 million the month prior, as well as the Philly Fed Manufacturing Index, which is expected to tick higher to 4.2 in August from 3.2 in July.

In other economic news, the MBA Mortgage Application Index rose 4.1% last week, after the index that can be quite volatile on a week-to-week basis, jumped by 21.7% in the previous week. The advance came as an 8.0% gain in the Refinance Index more than offset a 9.1% decline in the Purchase Index. The increase in refinancing activity accompanied a 5 basis point drop in the average 30-year mortgage rate to 4.32%.

Treasuries finished mostly higher following the inflation data, with the yield on the 2-year note flat at 0.19%, while the yield on the 10-year note was down 6 bps to 2.16%, and the 30-year bond declined 11 bps to 3.56%.

Eurozone crisis meeting has little effect overseas

Sentiment across the pond was mixed as yesterday’s eurozone crisis meeting between Germany and France had a muted impact. The meeting concluded with the two nations dampening expectations of the inception of Eurobonds in the near-term and downplaying the need to increase the size of the euro-area’s bailout fund, known as the European Financial Stability Facility (EFSF). The lack of any announcement of the creation of Eurobonds and an increase in the EFSF was likely expected, but financials saw some pressure to limit the resiliency today as Germany and France proposed a financial transactions tax that will take effect in September. In economic news, core eurozone consumer prices came in cooler than expected in July. Meanwhile, we got some data from the UK employment front, with the region’s jobless claims rising more than expected for July, while a separate report showed the UK unemployment rate moved higher. Finally, the Bank of England released the minutes from its early August policy meeting, which showed the first unanimous vote among policymakers to keep its benchmark interest rate unchanged at 0.5% since May 2010.

In the Asia/Pacific region, economic news came only from the land down under, with a report showing an increase in Australia’s Leading Index for the month of June, while 2Q wage costs in the nation rose 0.9% quarter-over-quarter, matching expectations.

The international economic calendar will remain light tomorrow with few reports of note, including
retail sales from the UK, Japan’s trade balance and Leading Index, and Canada’s Leading Index, wholesale trade and wholesale inventories.

Bullish Form for GLD

noreply@blogger.com (Avid Trader) — Wed, 17 Aug 2011 22:03:00 +0000

By Mike Paulenof

The pattern carved out in the SPDR Gold Shares (GLD) off of last Friday's low at 167.77 continues to exhibit bullish form and is perched atop its most recent rally that peaked earlier this morning (pre-open) at 174.71.

That said, unless or until the GLD declines beneath yesterday's pullback low at 171.72, the extreme near-term trend will remain UP -- and higher -- projecting next into the unfilled gap area left behind on August 11 at 175.00-175.50.

If hurdled and sustained, that should trigger upside continuation towards a retest of the Aug high at 176.75. And it would appear that the GLD is acting independently of the directional action in EUR/USD (although a higher EUR generally is more supportive).

Morning Market Update

noreply@blogger.com (Avid Trader) — Wed, 17 Aug 2011 13:34:00 +0000

Bulls Trying to Get Back on the Winning Track

After snapping a three-session winning streak yesterday, US equity markets are modestly higher in early trading, aided by a favorable earnings reports from Target Corp, despite a hotter-than-forecasted read on producer prices and a lackluster outlook from Dell Inc. Treasuries are modestly lower in morning action following the inflation data, and as mortgage applications rose. In other corporate earnings news, Deere & Co topped the Street’s 3Q expectations but issued some cautious commentary. Overseas, Asia finished mixed, while European markets have pared early losses in the wake of yesterday’s eurozone crisis meeting between Germany and France.

As of 8:49 a.m. ET, the September S&P 500 Index Globex future is 3 points above fair value, the Nasdaq 100 Index is at fair value, and the DJIA is 31 points above fair value. WTI crude oil is $1.31 higher at $87.96 per barrel, and the Bloomberg gold spot price is down $1.12 at $1,784.43 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—is down 0.4% at 73.66.

Target Corp. (TGT $49) reported 2Q earnings of $1.03 per share, above the $0.97 consensus estimate of analysts surveyed by Reuters, with revenues rising 4.6% year-over-year (y/y) to $16.2 billion, roughly inline with what the Street had forecasted. 2Q same-store sales—sales at stores open at least a year—rose 3.9% y/y. TGT issued full-year EPS guidance that topped expectations.

Dell Inc. (DELL $16) announced 2Q EPS ex-items of $0.54, exceeding the $0.49 that the Street was looking for, as revenues increased 1% y/y to $15.7 billion, compared to the $15.8 billion that analysts had expected. The company said growth in its enterprise businesses highlighted the quarter, with “solid demand” for its server, storage and services portfolio, while revenue for laptops and desktops rose 4%. However, DELL lowered its full-year revenue guidance, based on “strategic decisions to redirect resources from lower-to-higher value solutions and a more uncertain demand environment.”

Deere & Co. (DE $75) achieved fiscal 3Q profits of $1.69 per share, two cents above analysts’ forecasts, with net revenues increasing 24% y/y to $7.7 billion, exceeding the $7.5 billion that the Street had projected. The farm and construction equipment maker said it saw broad-based improvement on growth from all divisions, with a “healthy global farm sector” continuing to support performance. DE raised its full-year net income outlook, but said “concerns over the health of the global economy and recent turmoil in world financial markets have introduced an additional element of uncertainty into the near-term outlook.”

Producer prices come in hotter than expected, while mortgage applications rise

The Producer Price Index showed prices at the wholesale level rose 0.2% month-over-month (m/m) in July, after falling by an unrevised 0.4% in June, and compared to the 0.1% increase that economists surveyed by Bloomberg had forecasted. Also, the core rate, which excludes food and energy, increased 0.4% m/m, above forecasts of a 0.2% gain, after rising an unadjusted 0.3% in June. On a year-over-year basis, headline producer prices were 7.2% higher, versus the 7.0% increase that was projected, and the core rate was up 2.5%, above expectations of a 2.3% rise.

In other economic news, the MBA Mortgage Application Index rose 4.1% last week, after the index that can be quite volatile on a week-to-week basis, jumped by 21.7% in the previous week. The advance came as an 8.0% gain in the Refinance Index more than offset a 9.1% decline in the Purchase Index. The increase in refinancing activity accompanied a 5 basis point (bp) drop in the average 30-year mortgage rate to 4.32%.

Treasuries are modestly lower in morning action after the inflation data, with the yield on the 2-year note unchanged at 0.19%, while the yields on the 10-year note and the 30-year bond are gaining 1 bp to 2.23% and 3.67%, respectively.

Europe mixed following eurozone crisis meeting

The equity markets in Europe are mixed in afternoon action after paring some early losses that came from yesterday’s meeting between Germany and France amid the recent increase in eurozone contagion concerns. The meeting concluded with the two nations dampening expectations of the inception of Eurobonds in the near-term and downplaying the need to increase the size of the euro-area’s bailout fund, known as the European Financial Stability Facility (EFSF). The lack of any announcement of the creation of Eurobonds and an increase in the EFSF was likely expected, but financials in the UK are leading stocks in the nation lower today as Germany and France proposed a financial transactions tax in September. In equity news, the UK’s SABMiller Plc. (SBMRY $35) is moving higher after the brewer announced that it will take its $10 billion bid to acquire Australia’s Foster’s Group Ltd. (FBRWF $5) directly to shareholders after the offer was rejected by the board of Foster’s, which did not comment on the report.

In economic news, core eurozone consumer prices came in cooler than expected in July. Meanwhile, we got some data from the UK employment front, with the region’s jobless claims rising more than expected for July, while a separate report showed the UK unemployment rate moved higher. Finally, the Bank of England released the minutes from its early August policy meeting, which showed the first unanimous vote among policymakers to keep its benchmark interest rate unchanged at 0.5% since May 2010, per Bloomberg.

The UK FTSE 100 Index is down 0.3% and Germany’s DAX Index is declining 0.4%, while France’s CAC-40 Index is gaining 0.8%.

Asian stocks mixed on US and European data

Stocks in Asia finished mixed as traders digested yesterday’s upbeat US industrial production data and favorable earnings reports from Dow members Wal-Mart Stores Inc. (WMT $52) and Home Depot Inc. (HD $33), while grappling with Tuesday’s lackluster eurozone GDP reports. Japan’s Nikkei 225 Index declined 0.6% and China’s Shanghai Composite Index decreased 0.3%, while South Korea’s Kospi Index rose 0.7%. Meanwhile, Australian stocks moved to the upside, gaining 1.3%, following reports that showed the nation’s Leading Index rose in June, while 2Q wage costs increased 0.9% quarter-over-quarter, matching expectations, after advancing 0.8% in 1Q. Finally, the Hong Kong Hang Seng Index moved 0.4% higher, aided by a solid gain in shares of China Coal Energy Co. (CCOZF $1) after the company reported an increase in earnings.

The 13th Floor

noreply@blogger.com (Avid Trader) — Wed, 17 Aug 2011 13:24:00 +0000

by Larry Levin

Many people believe that the media is biased in favor of the left or the right, depending on which television station you’re watching, which is certainly true. One thing seems to be clear though, BOTH the left and the right sides of the media are dismissing the Libertarian running for president: Ron Paul.

The left hates his smaller government stance, while the right abhors his no war policy.

Time Magazine said this about the issue...

The sheer, smug dismissiveness with which the political press treats the libertarian Congressman in these clips is really something. And it's yet another example of political media winnowing the pack in advance by deciding who is a "serious" candidate and who isn't. In this case, seemingly, by deciding that Paul's beliefs are too far out there or, maybe more likely, simply don't easily fit the left-right narrative.

I'm not, by the way, making the argument that Paul would have a serious shot at the GOP nomination in any case. That hardly matters, though; a candidate with obvious significant support can still have a serious effect on the race, and its ideas, and that's news. Or it should be, if the horserace handicappers didn't insist on deciding their news angles in advance.

Jon Stewart displays the amazing dismissiveness here:

http://www.thedailyshow.com/watch/mon-august-15-2011/indecision-2012---corn-polled-edition---ron-paul---the-top-tier

In other news, the European "emergency meeting" ended with no new news. Nothing in Europe was fixed but since it was discussed, it is no longer an issue.

Too bad that sort of nonsense doesn't work in real life. Imagine you bet everything on black in Vegas and lose; then hold an emergency meeting with a counselor, talk about the debt, and then somehow your financial problems go away. Yes, make believe would be great.

Trade Date: 8/16/11

E-Mini S&P Trades*

(before fees and commissions):

1. 80% buy @ 1:32pm at 1188.25 = -.75 & -1.50

2. Algorithm positions (4)

3. "Reading the Tape" positions (4) ...combined Secret's, Algo, & "Reading the Tape" total...+4.00

Indices Close Lower in Volatile Session

noreply@blogger.com (Avid Trader) — Wed, 17 Aug 2011 01:15:00 +0000

By Harry Boxer, The Technical Trader

The stock market indices had a volatile day today with five or six different whips back and forth. The day started out with a sharp move down testing support. They rallied sharply to test the highs, but couldn’t get through, and then came down even sharper, taking out the morning lows and taking out two-day lows. A very severely oversold intraday condition ensued, where the tick got to nearly -1500. At that point they staged a 3-wave rally over the next couple hours and moved back up to the upper end of the range, but then pulled back to close negatively on the session.

Net on the day, the Dow was down 76.97 at 11,405.93, the S&P 500 down 11.73 to 1192.76, and the Nasdaq 100 down 19.85 to 2194.27.

Advance-declines were about 3 to 1 negative on the New York Stock Exchange, and a little worse than that on Nasdaq.

Up/down volume was 4 1/2 to 1 negative on New York with total volume of just over 1.1 billion. Nasdaq traded just under 2 billion, and had about a 3 to 1 negative ratio.

So, technicals were decidedly negative today.

On TheTechTrader.com board, as a result, the majority of the stocks down today. Several of them were down sharply. Leading the way on the downside today was SodaStream International Ltd. (SODA), which got hammered for 11.72 to 38.63 on negative comments from Cramer. Goldman Sachs (GS) was down 2.26 to 116.87, Apple Inc. (AAPL) 2.93 to 380.48, International Business Machines Corp. (IBM) 1.75 to 171.24. Travelzoo Inc. (TZOO) 3.01 to 41.60, and Youku.com Inc (YOKU) 2.11 to 23.92.

The Direxion Daily Small Cap Bull 3X Shares (TNA) lost 2.72 to 46.12.

However, on the plus side, ultra-short ETFs had a good day. The Direxion Daily Small Cap Bear 3X Shares (TZA) was up 2.55 to 47.09, the Direxion Daily Financial Bear 3X Shares (FAZ) gained 2.46 to 58.00, and the Direxion Daily Large Cap Bear 3X Shares (BGZ) was up 1.23 to 42.50.

Among the individual issues we follow, MAKO Surgical Corp. (MAKO) was up 78 cents to 32.60, or about 2 points off its low.

Stepping back and reviewing the hourly chart patterns, the indices were down in the morning, up midday, and then sold off sharply early afternoon. They came on in a 3-wave advance to press near the session highs with about 15-20 minutes to go, and then they rolled over and backed off to extend some of the early losses.

Nevertheless, it was a solid day for the indices. We’ll see how it goes tomorrow, but today could have been a topping pattern as head-and-shoulder patterns are developing in this range. It will be interesting to see what kind of follow-through they get.

Good Trading!

Harry

Free 15-Day Trial to Harry Boxer's Real-Time Technical Trading Diary

Evening Market Update

noreply@blogger.com (Avid Trader) — Tue, 16 Aug 2011 22:05:00 +0000

Europe Fears Snap Three-Day Winning Streak

Despite some better-than expected US economic and earnings news, US stocks fell short of notching a fourth-straight day of gains after a meeting between German and French leaders offered little in the way of any solid plans to combat the eurozone debt crisis. German Chancellor Merkel and French President Sarkozy proposed better economic coordination in the region and said they were working on “ambitious” joint proposals, but any significant change on their stance surrounding the eurozone’s bailout facility and the possibility of Eurobonds in the near future lacked substance.

Treasuries finished higher despite better-than-expected reports on US housing and industrial production, along with a higher-than-anticipated rise in import prices, as Fitch Ratings affirmed the US’ triple-A credit rating. Meanwhile, gold rose solidly and crude oil found pressure, while the US dollar gained against the euro following the conclusion of the eurozone meeting. On the equity front, Dow members Wal-Mart Stores and Home Depot topped analysts’ forecasts for 2Q, shares of Urban Outfitters suffered after the specialty retailer offered some cautious remarks, and Dell reported mixed results after the close.

The Dow Jones Industrial Average fell 77 points (0.7%) to 11,406, the S&P 500 Index lost 11 points (1.0%) to 1,193, and the Nasdaq Composite declined 32 points (1.2%) to 2,523. In moderate volume, 1.1 billion shares were traded on the NYSE and 2.1 billion shares changed hands on the Nasdaq. WTI crude oil lost $1.23 to $86.65 per barrel, wholesale gasoline shed $0.02 to $2.85 per gallon, while the Bloomberg gold spot price jumped $19.98 to $1,786.00 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—was 0.1% higher at 73.95.

After the closing bell, Dell Inc. (DELL $16) reported 2Q EPS of $0.54, above the $0.49 expected by analysts surveyed by Reuters, but revenues of $15.66 billion fell short of the $15.77 billion forecast.

Dow member Wal-Mart Stores Inc. (WMT $52) reported 2Q earnings ex-items of $1.12 per share, above the $1.08 that analysts surveyed by Reuters had projected, with revenues growing 5.5% year-over-year (y/y) to $108.6 billion, exceeding the $108.2 billion that the Street anticipated. 2Q US same-store sales—sales at stores open at least a year—were flat y/y, excluding fuel sales, with a 5.0% increase at Sam’s Club offsetting a 0.9% decline in Walmart US sales.

The world’s largest retailer said its grocery and health and wellness business—representing two-thirds of its sales—continued to deliver positive sales, while its “hardlines and apparel businesses are improving.” WMT raised its full-year EPS guidance, reflecting “our confidence in the business for the back half of the year,” but it said it remains “concerned” about the economic pressure on its customers and the uncertain impact it can have on their shopping behavior. Shares were nicely higher.

Meanwhile, fellow Dow component Home Depot Inc. (HD $33) announced 2Q profits of $0.86 per share, three cents above the Street’s expectations, with revenues increasing 4.2% y/y to $20.2 billion, topping the $20.0 billion that analysts had estimated. Same-store sales for the quarter increased 4.3% y/y, with US sales rising 3.5%. The world’s largest home improvement retailer said its 2Q results were driven by a rebound in its seasonal business, storm-related repairs, and strength in its core categories. HD raised its full-year EPS guidance. HD finished over 5% higher.

In other retail earnings news, shares of Urban Outfitters Inc. (URBN $28) were solidly lower after the specialty retailer noted in a conference call with analysts, “we believe the recent political and macroeconomic events have influenced our customer, especially at Anthropologie, where the trend has slowed compared to the other brands.” The company added that “we remain cautious for the second half,” anticipating gradual improvements in same-store sales and performance over the balance of the year and into spring 2012. The comments came as the company reported 2Q EPS and revenues that beat analysts’ estimates, while net same-store sales declined.

Housing and industrial production positively surprise, while import prices rise

Housing starts (chart) for July declined by a smaller rate than expected, falling 1.5% m/m to an annual rate of 604,000 from a downwardly revised 613,000 in June, above the expectations of economists, which called for starts to come in at 600,000. However, building permits fell more than forecasted, dropping 3.2% m/m in July to an annual rate of 597,000, after June’s downward revision to a 617,000 rate. The expectation was for permits to come in at 605,000 units.

With household finances under pressure from high unemployment, deleveraging, tougher credit standards and a belief that housing prices may continue to fall, consumers have been increasingly renting instead of buying. As such, the multi-family sector has outpaced single-family activity, with multi-family permits up 16.3% y/y and starts surging by nearly 67% y/y. Meanwhile, single-family activity is nearly unchanged from a year ago, and on a m/m basis starts fell 4.9% m/m and permits gained 0.5% m/m.

Elsewhere, industrial production in July rose by a better than expected 0.9% m/m, while the forecast was for a 0.5% increase. Additionally, prior months were revised slightly upward, with June coming in at a 0.4% m/m gain. July’s increase was led by a 5.9% jump in auto-related production, while output for other durable goods rose, with nearly a 1% gain in home electronics and miscellaneous goods. Nondurable consumer goods rose 0.5%, paced by a 1.5% gain in utility output. Furthermore, business equipment increased 0.6% and has gained 8.5% over the past 12 months. Areas of weakness included clothing and chemical products, and a decline in defense and space equipment. Capacity utilization posted a better gain than forecasted, rising to 77.5% from an upwardly adjusted 76.9% in June, while the expectation was for 77.0%. With the rise in July, utilization is now 2.2% above the rate from a year earlier, but remains 2.9% below its average rate from 1972 to 2010.

In other economic news, the Import Price Index unexpectedly increased, rising 0.3% month-over-month (m/m) for July, compared to the expectation of economists, which called for the index to decrease by 0.1%. The surprising increase follows the 0.6% decline seen in June, which was revised from an initially reported 0.5% drop. Year-over-year, import prices are higher by 14.0%, versus the 13.4% forecast of economists, and the upwardly revised 13.7% gain that was posted in June.

Treasuries finished higher following the data and amid the decline in stocks, with the yield on the 2-year note down 1 bp to 0.19%, while the yield on the 10-year note was 9 bps lower at 2.23%, and the 30-year bond declined 11 bps to 3.66%. Bonds extended gains after Fitch Ratings affirmed its triple-A credit rating on the US, while keeping its outlook at stable, noting that, “We still believe that the US is an exceptionally strong credit,“ and “The underlying economic fundamentals are very strong and that includes the global reserve currency status of the dollar.” Fitch added that “relative to some of its other major triple-A peers, at this point in time, we don’t think the US is materially weaker than some of those,” per Dow Jones Newswires.

European economic data exacerbates negative sentiment overseas

Eurozone 2Q GDP expanded at a smaller-than-forecasted rate, led by Germany—the eurozone’s largest economy—adding further pessimism to investors’ already-dour mood. 2Q GDP in the eurozone grew by 0.2% quarter-over-quarter (q/q), down from the 0.8% expansion seen in 1Q, and compared to the 0.3% increase that economists forecasted. Year-over-year, eurozone output gained 1.7%, decelerating from the 2.5% growth seen in 1Q, and below the 1.8% expectation. The region’s disappointing GDP figure came as the German economy showed a 0.1% q/q rate of growth, well below the 0.5% increase that was projected, and a sharp deceleration from the downwardly revised 1.3% gain posted in 1Q.

Meanwhile, the highly-anticipated post-meeting press conference following discussions between Germany and France over the eurozone debt contagion crisis lacked any decisive plans to combat the dilemma. During the press conference, German Chancellor Merkel and French President Sarkozy noted that the two eurozone nations are working on “ambitious” joint proposals to defend the euro, per Bloomberg, and the eurozone needs more economic coordination, while also proposing a financial transactions tax in September and a eurozone economic council. On the topic of Eurobonds, the two leaders said they could be imagined in the long-term, but downplayed the benefits of issuing the instrument to solve the crisis. Concerning the size of the region’s bailout facility, known as the European Financial Stability Facility (EFSF), Sarkozy noted that the fund is sufficient at its current size.

In other economic news across the pond, UK consumer prices came in slightly hotter than expected for July, while a separate report showed UK retail prices fell inline with forecasts m/m for July.

Economic news in Asia/Pacific offered little help to sentiment in the region that found some pressure following the disappointing GDP report out of the eurozone. India’s wholesale prices, although decelerating in July from June, came in slightly hotter than expected, fostering some uneasiness regarding further monetary policy tightening, while a report showed China’s Leading Index accelerated m/m in June. Elsewhere, the Reserve Bank of Australia (RBA) released the minutes from its early August policy meeting, noting that the “case against tightening at this meeting was that downside risks to demand had probably increased, as a result of the acute uncertainty in global financial markets.”

Inflation expected to remain subdued

Tomorrow brings the release of the Producer Price Index (PPI), forecasted to rise 0.1% m/m in July, after falling 0.4% in June. Excluding food and energy, the core PPI is expected to increase by 0.2%, while gaining 0.3% in June. Compared to the same period last year, the headline and core PPI rates are forecasted to tick higher by 7.0% and 2.3%, respectively. In addition to today’s Import Price Index, and the expectation of Thursday’s Consumer Price Index, the low level of core inflation in an economy that continues to post slow growth is putting little upward pressure on prices and has kept the Federal Reserve accommodative.

Tomorrow’s international economic calendar offers the current account balance and CPI from the eurozone, employment figures from the UK, PPI from New Zealand and wage data from Australia. As well, the minutes from the Bank of England’s last monetary policy meeting will be released.

S&P Pressuring Support

noreply@blogger.com (Avid Trader) — Tue, 16 Aug 2011 19:09:00 +0000

By Mike Paulenof

The Markel-Sarkozy press conference managed to leave today's high at 1201.50 in the emini S&P 500, which we notice is just below yesterday's high at 1201.75.

The decline this afternoon from 1201.50 to 1177.50 has created a larger "M" or double-top formation, which is putting intense pressure on key support around the 1180/78 area.

If the e-SPU breaks and sustain below today's intraday low at 1177.50, then the "M" top formation will be confirmed and should trigger downside follow-through towards 1155-1146.50 next.

Conversely, should the e-SPU manage to climb all the way back to 1200-1202 and break out to new highs, my earlier scenario for a run at 1220/25 will be back on the front burner.

Morning Market Update

noreply@blogger.com (Avid Trader) — Tue, 16 Aug 2011 14:03:00 +0000

Eurozone Data Dampens Sentiment in Morning Action

The US equity markets are under pressure in early trading, as the three-day winning streak is in jeopardy, courtesy of some disappointing eurozone GDP data, ahead of the conclusion of the debt contagion crisis meeting between Germany and France. Meanwhile, Treasuries are higher amid the declines in stocks, and following reports that showed US housing starts and building permits came in mixed, and despite a hotter-than-forecasted read on import prices. Later this morning, we will get a look at industrial production and capacity utilization. Elsewhere, US equity news is helping limit losses, with Dow members Wal-Mart Stores Inc and Home Depot Inc posting 2Q results that topped analysts’ forecasts. Overseas, Asian stocks finished mixed following the lackluster eurozone GDP figures, which are also weighing on the European equity markets.

As of 8:45 a.m. ET, the September S&P 500 Index Globex future is 19 points below fair value, the Nasdaq 100 Index is 33 points below fair value, and the DJIA is 151 points below fair value. WTI crude oil is $2.00 lower at $85.88 per barrel, and the Bloomberg gold spot price is up $13.00 at $1,779.03 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—is up 0.3% at 74.06.

Dow member Wal-Mart Stores Inc. (WMT $50) reported 2Q earnings ex-items of $1.12 per share, above the $1.08 that analysts surveyed by Reuters had projected, with revenues growing 5.5% year-over-year (y/y) to $108.6 billion, exceeding the $108.2 billion that the Street anticipated. 2Q US same-store sales—sales at stores open at least a year—were flat y/y, excluding fuel sales, with a 5.0% increase at Sam’s Club offsetting a 0.9% decline in Walmart US sales.

The world’s largest retailer said its grocery and health and wellness business—representing two-thirds of its sales—continued to deliver positive sales, while its “hardlines and apparel businesses are improving.” WMT raised its full-year EPS, reflecting “our confidence in the business for the back half of the year,” but it said it remains “concerned” about the economic pressure on its customers and the uncertain impact it can have on their shopping behavior.

Meanwhile, fellow Dow component Home Depot Inc. (HD $31) announced 2Q profits of $0.86 per share, three cents above the Street’s expectations, with revenues increasing 4.2% y/y to $20.2 billion, topping the $20.0 billion that analysts had estimated. Same-store sales for the quarter increased 4.3% y/y, with US sales rising 3.5%. The world’s largest home improvement retailer said its 2Q results were driven by a rebound in its seasonal business, storm-related repairs, and strength in its core categories. HD raised its full-year EPS guidance

Import prices rise, home construction activity mixed, industrial production on deck

The Import Price Index unexpectedly increased, rising 0.3% month-over-month (m/m) for July, compared to the expectation of economists surveyed by Bloomberg, which called for the index to decrease by 0.1%. The surprising increase follows the 0.6% decline seen in June, which was revised from an initially reported 0.5% drop. Year-over-year, import prices are higher by 14.0%, versus the 13.4% forecast of economists, and the upwardly revised 13.7% gain that was posted in June.

Housing starts for July declined by a smaller rate than expected, falling 1.5% m/m from a downwardly revised 613,000 annual rate of units in June, to a rate of 604,000 units, and compared to expectations of economists, which called for starts to come in at 600,000. However, building permits fell more than forecasted, dropping 3.2% m/m in July to an annual rate of 597,000, after June’s downward revision to a 617,000 rate. The expectation was for permits to come in at 605,000 units.

Treasuries remain higher following the data and the downward pressure on stocks, with the yield on the 2-year note unchanged at 0.19%, while the yields on the 10-year note and the 30-year bond are declining 4 bps to 2.27% and 3.73%, respectively.

Later this morning, the US economic calendar will yield the release of industrial production and capacity utilization, with production forecasted to rise 0.5% m/m in July, while utilization is expected to improve slightly from 76.7% in June to 77.0% in July.

Europe under pressure following disappointing eurozone growth reports

The European equity markets are solidly lower in afternoon action, with industrials and basic materials leading to the downside, on the heels of reports that showed eurozone 2Q GDP expanded at a smaller-than-forecasted rate, led by Germany—the eurozone’s largest economy. 2Q GDP in the eurozone grew by 0.2% quarter-over-quarter (q/q), down from the 0.8% expansion seen in 1Q, and compared to the 0.3% increase that economists forecasted. Year-over-year, eurozone output gained 1.7%, decelerating from the 2.5% growth seen in 1Q, and below the 1.8% expectation. The disappointing eurozone GDP figure came as the German economy showed a 0.1% q/q rate of growth, well below the 0.5% increase that was projected, and a sharp deceleration from the downwardly revised 1.3% gain posted in 1Q. Meanwhile, traders are treading with some caution ahead of the press conference later today from Germany and France, concluding their meeting on the eurozone debt contagion crisis. Focus will be paid to any new announcements concerning the size of the region’s bailout facility, known as the European Financial Stability Facility (EFSF), or any mention of the possibility of the inception of Eurobonds, to help combat the threat of contagion, which concerns about have recently ravaged the markets in key nations of Italy and France.

Sizable actions by banks and policymakers could result in a rebound in European stocks. However, we believe it would be short in nature and continue to have concerns about stocks and the economy in Europe over the intermediate term. One reason is that if banks face a cash crunch, as deposits leave and capital needs to be raised to replace losses on government debt, they can begin to raise rates charged for loans and/or pull back from lending, the lifeblood of economic growth. Additionally, austerity measures and already weak growth threatened by a global economic slowdown means a recession in Europe is not out of the question.

In other economic news, UK consumer prices came in slightly hotter than expected for July, while a separate report showed UK retail prices fell inline with forecasts m/m for July.

The UK FTSE 100 Index is declining 1.2%, France’s CAC-40 Index is dropping 1.9%, Germany’s DAX Index is falling 2.5%, and Italy’s FTSE MIB Index decreasing 2.9%.

Asia mixed on strength in technology and concerns about eurozone growth

Stocks in Asia finished mixed, with technology stocks showing some strength on a major M&A announcement in the US yesterday, while equity markets that remained open after Germany’s lackluster GDP report found pressure. South Korea’s Kospi Index led the way, rallying 4.8% after being closed yesterday for a holiday and following the strong advance in the US on Monday. Technology issues found support from Google Inc’s (GOOG $557) $12.5 billion agreement to acquire Motorola Mobility Holdings Inc. (MMI $38), with South Korean smartphone software maker Samsung Electronics Co. Ltd. (SSNLF $800) gaining over 6% to help pace the advance. Also, Japan’s Nikkei 225 Index finished higher, gaining 0.2% to extend yesterday’s gains that came from its smaller-than-forecasted contraction in 2Q GDP. Elsewhere, GOOG’s announcement helped shares of Foxconn International Holdings Ltd. (FXCNF $0.40) surge over 12% as the Hong Kong-based company is a key supplier to Motorola Mobility. However, the rally in Foxconn shares were unable to lift the Hang Seng Index into positive territory, as it declined 0.2%, giving up an early advance after the disappointing read on German GDP. Meanwhile, stocks in mainland China moved lower, with the Shanghai Composite Index declining 0.7%, despite a report showing China’s Leading Index accelerated m/m in June.

In other economic news, India’s wholesale prices, although decelerating in July from June, came in slightly hotter than expected, fostering some uneasiness regarding further monetary policy tightening, and the BSE Sensex 30 Index fell 0.7%. Finally, Australian stocks moved lower, with the S&P/ASX 200 Index dropping 0.8%, after the release of the Reserve Bank of Australia’s (RBA) minutes from its early August policy meeting. The RBA noted that the “case against tightening at this meeting was that downside risks to demand had probably increased, as a result of the acute uncertainty in global financial markets.” Also weighing on the Australian markets, shares of Westpac Banking Corp. (WEBNF $22) fell solidly after the nation’s second-largest lender, per Bloomberg, reported a drop in earnings as lending declined.