Stocks seems to believe the EU will get its act together. Gold however, is acting like a flight-to-quality investment.
Tag Archives: Equities
Supportive News Out of EU; China Corn Production Concerns Support
A bit of an exhale on the European debt crisis with news of a plan that would attempt isolate the problems. Bernanke warns of weak US economy, but promises to support the economy if necessary. This tamped down flight-to-quality buys of bonds and precious metals. Some private jobs numbers out this week ahead of the US numbers Friday. The corn markets seems to have found some support from production concerns out of China and US acreage reductions.
Bit of a Negative Bias in Equities as We Close the Week
Little bit of a setback in equities with the positive buzz out of the Euro-Zone wearing off. Consumer Sentiment numbers will be important today. Gold and Silver are on the ropes as of late but have been rejecting the early morning moves so far. Grains are recovering a bit with an overly negative bias over the past week. Reports of derivative trading causing the recent slide in grains has surfaced.
The ‘Risk Off’ Mentality Continues
Global equity markets continue to slide overnight. Concerns over the European banking industry persist. Fund held positions of long crude / short natural gas are rumored to be getting unwound. This may cause a short-covering bounce in natural gas. Corn and other agricultural markets continue to be pulled down by outside macro-economic influences as opposed to their bullish internal fundamentals.
Recession Fears and Strong Dollar; Bad Combination for Commodities
Drops in grain prices were caused by the pervasive negative outside market action. While the more favorable forecast weighs on prices many feel the damage has already been done and this downward pressure may be hard to sustain. Gold may have hit a significant peak. This week’s COT report will likely show a new record long position and we have added $40/oz since that report date.
Weaker US Dollar and Improved Global Equity Markets Support Commodities
Generally positive tone off the holiday weekend. This is attributable to a weaker US Dollar and favorable international equity market action. Forward look at improving Japanese manufacturing is supportive as well. US weather is still questionable. The short-term benefit to planting of a hot-and-dry forecast may turn into a problem for the crop if it settles in for a longer term.
Stocks: Global Markets Under Pressure
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Global equity markets are on the defensive once again during the initial morning hours as yesterday’s commodity liquidation trade continued. Asian shares were lower across the board, fueled in part by concerns over China’s next step with monetary policy and whether the country’s growth story may falter. Weakness in commodity markets, like copper reaching its lowest level since December and silver’s 14.1% slide from Tuesday’s highs have pressured mining related shares in European trade again this morning. Adding to the weak tone was disappointing European Industrial Production data that showed a decline in March compared to expectations for a modest gain. There also remained concerns over Greek debt restructuring as well as fresh warnings from the IMF that urged the ECB to hold off on hiking interest rates and calling for more reform to limit the debt crisis from spreading. Some analysts said that weakness across most asset classes left no place to hide and prompted many to cut risky positions, which has further contributed to the liquidation trade.
S&P 500: The June S&P continued to decline from Wednesday’s negative reversal and ongoing liquidation trade during the early morning hours. This puts the index closer to the May 5th low of 1325.50 and makes that level a likely downside testing area this morning. In addition to broad weakness in commodity related names, financial sector shares were also under pressure. While there was news regarding AIG’s debt offering of around $9 billion, it was nearly half previous estimates and makes it more difficult for the Treasury to exit their position (bailout funds) with a profit. The bears have the edge to start this morning with the key downside pivot level of 1325.50. Clear penetration below this level would bring the 1300.00 area back into focus.
DOW: The June E-mini Dow fell to a new 5 session low this morning and has closed in on last week’s low of 12,467 in the process. In addition to weakness in energy and industrial related names, the Dow came under more downside pressure following disappointing guidance from Cisco Wednesday afternoon. Cisco reported an 18% drop in third quarter profits and lowered its sales and growth prospects below street expectations going forward, and that seemed to add to the prevailing bearish tone. Wednesday’s bearish wide range reversal and downside follow through this morning provide the bear camp with the early advantage. The June E-mini Dow has support below at last week’s low of 12,467, which corresponds with a 50% retracement level from the late April rally at 12,454.
NASDAQ: The June NASDAQ has fallen within 10 points of its May lows of 2363.50 during the early morning hours. While news that Intel planned to hike their quarterly dividend by 16% may have normally been viewed as a positive, worries over economic growth and sustainability of recent gains in the NASDAQ inspired profit-taking. Perhaps economic data this morning on April Retail Sales provides NASDAQ shares with something positive, but for now sentiment favors the bears. Downside resistance in the June NASDAQ lies at 2363.50.
TODAY’S MARKET IDEAS: US equity markets face a weak outside tone driven by an ongoing liquidation trade in risk assets. The major US indexes are approaching a key support level provided by last week’s low and further penetration below that level could set the stage for an even deeper slide. At the same time, it probably takes a disappointing sweep in this morning’s US economic data on April Retail Sales, Producer Prices and weekly Jobless Claims to fuel a decline worthy of more downside momentum. There were reports that China hiked their bank reserve requirement ratio, which could be another negative blow to the commodity trade that manifests itself in weaker related shares this morning. Key pivot levels below in the June S&P 500 come in at 1325.50 and 12,467 in the June E-mini Dow.
Weaker US Dollar; Gold Higher; Most Grains Showing Weakness
Mixed environment this morning. The ongoing “US Budget Battle” appears to be dampening equity markets. China may be changes their banking reserve requirements again. Grains under pressure from news out of China and current weather forecasts look to not slow corn plantings. PPI and jobless claims reports today.
Video: Early Update – 2011.03.28
Global equity markets have a slightly positive tone to start the week. This is a little surprising in light of Germany’s ruling party being dealt a political setback, and the uncertainty in Japan. Important USDA report due out this week which will influence the grain markets. Rebels in Libya are attempting to negotiate the sale of some oil.
Stocks: Equity Markets Sharply Higher During the Overnight Hours
by Dave Hightower on January 17, 2012
Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
Global equity markets traded sharply higher during the overnight hours, fueled by stronger than expected Chinese Q4 GDP data. While China GDP came in at the slowest rate in 10 quarters, it was better than expected and was taken as more evidence that their economy was avoiding a “hard-landing”. The positive growth data helped take the focus away from a series of European credit downgrades from Standard and Poor’s last Friday. The bulls gained more upside momentum this morning following a well-subscribed Spanish bill auction and strong German ZEW sentiment readings. The major European indices broke out to their best levels in more than 5 months. The strong overnight and early morning reports fueled gains in the major US indices of nearly 1.0% and that pushed some prices into new highs for their respective moves. US economic data this morning presents January Empire State Manufacturing, which is expected to show a minor improvement and its 3rd month in positive territory.
S&P 500: The March S&P 500 rallied more than 2.25% from the Friday morning low and has broken out into new high ground for the move. Robust Chinese growth data and favorable news out of Europe this morning have more than offset S&P credit downgrades from over the holiday weekend. The positive growth data has offered a lift in mining shares within the index. Looking ahead, the index will get the latest earnings reports from Wells Fargo and Citigroup before the Wall Street open, both of which are expected to show significant improvement from the year ago quarter. The Commitments of Traders Futures and Options report as of January 10th for S&P 500 Stock Index showed non-commercial traders were net short 8,816 contracts, an increase of 21,699, which represents a change from a net long to net short position. Non-commercial and non-reportable traders combined held a net long position of 10,628 contracts, a decrease of 6,469 in their net long position. The spec selling is seen as a negative short term force. Further upside in the index early this week could force new shorts to cover positions. The advance from the mid-December low has reached overbought territory, and that could make it more difficult for the index to continue its upward track. Upside targeting this morning comes in at 1305.00. Swing low support stands at 1272.70.
DOW: The March E-mini Dow forged an upside breakout on the charts and has climbed to its highest level since July 21st. This marks a 250 point rebound from Friday’s low and puts the bull camp back in control. Shares of Alcoa were up around 2.0% in pre-market trade, supported by gains in commodity-related shares. Meanwhile, price momentum indicators have become overbought and that could leave the market vulnerable for a near term correction. The Commitments of Traders Futures and Options report as of January 10th for Dow Jones Index $5 showed non-commercial traders were net long 20,085 contracts, a decrease of 816. Non-commercial and non-reportable traders combined held a net long position of 26,442 contracts, an increase of 749 in their net long position. The short term charts for the March E-mini Dow continue to favor the bulls, with swing low support standing at 12,253. The next resistance level stands at the July high of 12,554.
NASDAQ: The March NASDAQ punched through its October high (2396.50) in early morning action, which leaves 2418.25 as the next upside resistance level. Better than expected GDP data out of China is seen supporting technology shares in the NASDAQ, like Apple which was up more than 1.0% in early German trade. The Commitments of Traders Futures and Options report as of January 10th for NASDAQ Mini showed non-commercial traders were net long 44,339 contracts, an increase of 17,287. Non-commercial and non-reportable traders combined held a net long position of 66,128 contracts, an increase of 19,913 contracts in their net long position. It is possible that net spec long positioning has increased after prices rallied 1.5% since that report window closed. The early edge goes to the bulls, with uptrend channel resistance seen at 2408.00.
TODAY’S MARKET IDEAS: The bull camp has the edge to start this morning, helped by robust Chinese GDP data and upbeat news out of Europe. However, the index has made the upside charge with severely overbought momentum indicators, and that leaves them susceptible to a downside correction. The latest sentiment readings have reached their most optimistic levels since early May, and that is another force reflecting a level of complacency in the market. We see a little more upside in the March S&P 500 toward 1305.00, 12,554 in the March E-mini Dow. Earnings this morning from Wells Fargo and Citigroup that falls short of estimates could serve this overbought market a negative blow.