Market Soapbox 05/27/05 UPDATED
Resistance: DJIA 10600; SP500 1200; Nasdaq 2100; NDX 1550
Support: DJIA 10400 ; SP500 1180 ; Nasdaq 2000; NDX 1500
Positive: energy, utilities, oil services, cyclicals, biotech, commodities
Weak: everything else.
Economic Reports of Note:
TUE: Chicago PMI, Consumer Confidence
WEN: Auto Sales, Truck Sales, Construction Spending, ISM index
THUR: Jobless Claims, Productivity, Factory Orders
FRI: Non Farm Payrolls, Unemployment, ISM services
European & Asian markets were up. Dollar down vs. Yen/Euro, oil, gold & commodities up, bonds flat. Contra action: None
Personal Income +0.7% (est. 0.6%, prev. 0.5%); Personal Spending +0.6% (est. 0.8%, prev. 0.9%); Core PCE deflator +0.1%; Michigan Sentiment Revised 86.9 (est. 86, prev. 87.7. This shows that personal income and sentiment is stable, consumers are modifying their spending habits.
Today's Soohey Pig Pig!! Award goes to the brokerages and media for sucking the unsuspecting public into the semis (+2% on the week after todays 1.5% selloff). We have been banging on this drum for awhile, 1Q and 2Q reporting for semis will not be pretty.
The brokers have been touting a 2nd half recovery on potential fundamental improvement. Folk's thats a potential 2nd half recovery, NOT 2nd Quarter. Buying before 2Q reporting is betting on the come and putting the cart before the horse. Another WWF slap down awaits in mid to late July during 2Q reporting.
This recommendation comes AFTER reports showed a 37% drop in April sales; AFTER the honest Semi companies gave lowered guidance for 2Q; and is an ADMISSION that 2Q reporting will not be pretty.
If 2Q was upbeat they would not be hedging and saying 2nd half. Given the above circumstances and empirical evidence, anyone buying into this defies all logic and comprehension. Soohey, Pig Pig!!!!
A sideways day on lite volume, profit taking was nominal. 7 of 10 sectors were up on lite volume. Crude oil futures +1.7% today, and +6.2% for the week.
Oil & Gas Refiners (+2.0%), Oil & Gas Exploration (+1.7%), Integrated Oil & Gas (+1.3%) and Oil & Gas Equipment (+1.3%) continue to be four of the top ten performing S&P groups.
Gold Bugs screaming again +3.85% today, watch gold stocks, XAU & Gold Bugs rising big as the price of gold barely moves. Something is afoot on a $ and sector play.
On May 29th or June 1st , the dollar and market could get a huge boost. The French and Dutch are ratifying the EU Constitution by referendum on those respective dates. Tues, barring a French NO on Sunday, I look for sideways action on low volume. The day after Memorial Day historically has a 55% chance of being down.
Go away in May, come back in September to play. Liquidity and participation in the market are low, this is evidenced by violent up and down swings on tepid volume. This makes for range bound trading and easy institutional sector manipulation. In this environment, one must look for opportunities and exploit them.
Now a gift for those of you paying attention, and this will be the LAST time I will ever allude to it. Bare in mind, when the cats away the mice play. So Riddle me this Batman (Frank Gorshin, RIP).
In a market stretched thin on liquidity, when is the best time for the mice to play? Naturally, when the cat is forced to liquidate and temporarily go away.
A smart mouse is cognizant of when the cat has to liquidate positions to raise capital for government purchase obligations and/or evacuate untenable hedge positions in a timely fashion.
Remember, if the cat is away, there is no safety net to catch falling objects when gravity takes its course, and when the forementioned events coincide is optimal.
Empirical clues can be found by looking at the Bloomberg economic events calendar, then correlating the applicable dates with a historical chart of your favorite index.
Two hints to help solve the riddle, one; the longer the duration, the less market liquidity which magnifies the effect that gravity has. Two; know when your options expire and what is timely anticipation of said event.
Shorting the RUT is recommended on these days, as small caps suffer the worst. Profunds and Rydex have 200% ultra short funds for this purpose.
From the Soapbox earlier this week: "the line in the sand has either; already been reached or could be at NDX 1590, SP500 1215, DJIA 10725." From the 31st through June 7th, the market will attempt to make a new high.
Attempt is the operative word. I believe by mid June, the party will be over until mid August or September, when a flood of cash exiting the bond market slaughter will prime stocks for their annual Santa Claus rally till year end.
We take it day by day and keep our eyes peeled to the sky, because it could be a name brand that pancakes us. Just my opinion, I could be wrong. P.S. Next week the Soapbox will not be so daily.
Support: DJIA 10400 ; SP500 1180 ; Nasdaq 2000; NDX 1500
Positive: energy, utilities, oil services, cyclicals, biotech, commodities
Weak: everything else.
Economic Reports of Note:
TUE: Chicago PMI, Consumer Confidence
WEN: Auto Sales, Truck Sales, Construction Spending, ISM index
THUR: Jobless Claims, Productivity, Factory Orders
FRI: Non Farm Payrolls, Unemployment, ISM services
European & Asian markets were up. Dollar down vs. Yen/Euro, oil, gold & commodities up, bonds flat. Contra action: None
Personal Income +0.7% (est. 0.6%, prev. 0.5%); Personal Spending +0.6% (est. 0.8%, prev. 0.9%); Core PCE deflator +0.1%; Michigan Sentiment Revised 86.9 (est. 86, prev. 87.7. This shows that personal income and sentiment is stable, consumers are modifying their spending habits.
Today's Soohey Pig Pig!! Award goes to the brokerages and media for sucking the unsuspecting public into the semis (+2% on the week after todays 1.5% selloff). We have been banging on this drum for awhile, 1Q and 2Q reporting for semis will not be pretty.
The brokers have been touting a 2nd half recovery on potential fundamental improvement. Folk's thats a potential 2nd half recovery, NOT 2nd Quarter. Buying before 2Q reporting is betting on the come and putting the cart before the horse. Another WWF slap down awaits in mid to late July during 2Q reporting.
This recommendation comes AFTER reports showed a 37% drop in April sales; AFTER the honest Semi companies gave lowered guidance for 2Q; and is an ADMISSION that 2Q reporting will not be pretty.
If 2Q was upbeat they would not be hedging and saying 2nd half. Given the above circumstances and empirical evidence, anyone buying into this defies all logic and comprehension. Soohey, Pig Pig!!!!
A sideways day on lite volume, profit taking was nominal. 7 of 10 sectors were up on lite volume. Crude oil futures +1.7% today, and +6.2% for the week.
Oil & Gas Refiners (+2.0%), Oil & Gas Exploration (+1.7%), Integrated Oil & Gas (+1.3%) and Oil & Gas Equipment (+1.3%) continue to be four of the top ten performing S&P groups.
Gold Bugs screaming again +3.85% today, watch gold stocks, XAU & Gold Bugs rising big as the price of gold barely moves. Something is afoot on a $ and sector play.
On May 29th or June 1st , the dollar and market could get a huge boost. The French and Dutch are ratifying the EU Constitution by referendum on those respective dates. Tues, barring a French NO on Sunday, I look for sideways action on low volume. The day after Memorial Day historically has a 55% chance of being down.
Go away in May, come back in September to play. Liquidity and participation in the market are low, this is evidenced by violent up and down swings on tepid volume. This makes for range bound trading and easy institutional sector manipulation. In this environment, one must look for opportunities and exploit them.
Now a gift for those of you paying attention, and this will be the LAST time I will ever allude to it. Bare in mind, when the cats away the mice play. So Riddle me this Batman (Frank Gorshin, RIP).
In a market stretched thin on liquidity, when is the best time for the mice to play? Naturally, when the cat is forced to liquidate and temporarily go away.
A smart mouse is cognizant of when the cat has to liquidate positions to raise capital for government purchase obligations and/or evacuate untenable hedge positions in a timely fashion.
Remember, if the cat is away, there is no safety net to catch falling objects when gravity takes its course, and when the forementioned events coincide is optimal.
Empirical clues can be found by looking at the Bloomberg economic events calendar, then correlating the applicable dates with a historical chart of your favorite index.
Two hints to help solve the riddle, one; the longer the duration, the less market liquidity which magnifies the effect that gravity has. Two; know when your options expire and what is timely anticipation of said event.
Shorting the RUT is recommended on these days, as small caps suffer the worst. Profunds and Rydex have 200% ultra short funds for this purpose.
From the Soapbox earlier this week: "the line in the sand has either; already been reached or could be at NDX 1590, SP500 1215, DJIA 10725." From the 31st through June 7th, the market will attempt to make a new high.
Attempt is the operative word. I believe by mid June, the party will be over until mid August or September, when a flood of cash exiting the bond market slaughter will prime stocks for their annual Santa Claus rally till year end.
We take it day by day and keep our eyes peeled to the sky, because it could be a name brand that pancakes us. Just my opinion, I could be wrong. P.S. Next week the Soapbox will not be so daily.
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