Market Soapbox 10/14/05
Resistance: DJIA 10800; SP500 1250; Nasdaq 2225; NDX 1670
Support: DJIA 10200 ; SP500 1175; Nasdaq 2000; NDX 1500
In our top story tonight, Generalissimo Francisco Franco is STILL dead. In other news, even Uncle Al Greenspan says don't go against the dollar.
Greenspan asserted that the US is having no trouble funding the external deficit, and doubts the dollar will lose status as a reserve. As shown in last Thursday's data, the budget deficit as a percentage of GDP has now fallen to 2.4%, which is actually slightly below the average of the past few decades.
The influential ( over 40% of the S&P) financial sector is up 3.2% YTD. Over the last four weeks, +10.8% demonstrating that some people believe that the Fed's rate hike cycle is nearing an end. Homey don't think so, other central banks will raise, and the Fed will too.
We see 75 basis points of raises through March, bringing Fed Funds to 4.75. By that time, stagflation in the core will have taken over. We must factor in the possibility of a global energy price shock slowdown, followed by Gulf rebuilding efforts and underlying growth currents resurfacing, all of which will result in rates continuing to rise.
Today's SOOHEY PIG PIG award goes to me for letting the pig have a tranquil day in its poke.
8 weeks ago, DJIA -270 on higher volume, plunging below all major DMA's. 7 weeks ago, DJIA +148, lacking conviction. 6 weeks ago, DJIA -281 crashing down on higher volume. 5 weeks ago, large swings DJIA -6.
4 weeks ago larger swings, DJIA -77, 3 weeks ago, even larger swings, DJIA +186. 2 weeks ago, broadbased gains on higher volume DJIA +128. Last week, DJIA +154, making three consecutive weeks of gains totaling DJIA +468.
Today, DJIA +10 on lower volume with tepid internals. XAU, RUT, DJUA & DJTA suffering. NDX, NAZ & MID flat, SOX & XOI up nicely. CAC, DAX & FTSE up, Hang Seng & Nikkei 225 down. This week DJIA +10, over the last 8 weeks DJIA -8.
Oh no, I'm having another bout of DFS, as Maxine Nightingale said: "Ooo and it's alright and it's comin' 'long, We got to get right back to where we started from". Don't laugh as Disco Flashback Syndrome is a serious affliction for anyone who survived that era and it can strike at any time.
Dollar up BIG vs. Euro 1.168 & Yen 118.7, XAU & gold down, XOI & crude up @ 57.69, CRB commodities up & bonds down. Contra trend: Gold & $ up.
Sectors: Airlines, Gold Bugs, Biotech, Pharma, Transports, Commodity, Consumer, Real Estate, REIT's & Banking all beat down. Oil, Oil Services, Retail, Cyclical, Healthcare & Semis up nicely.
The curve looking scary flat; Bonds down with the 10 year yield rising @ 4.60% & the 30 year @ 4.79. The 2 & 5 year gap @ 6 basis points; the 5 & 10 year gap @ 6 basis points; the 10 & 30 gap @ 19 basis points.
Looking ahead at potential market influences, Nov 15th: PPI & Retail Sales; Nov 16th: CPI & Net Foreign Purchases; Nov 17th Philly Fed, Capacity Utilization, Industrial Production. Nov 18th: Options Expiration.
From Thursday: regarding the Import & Export prices component of the trade deficit; "the bad news is that while oil import costs were less than expected, it was the non-oil segment that grew, which implies the arrival of core inflation growth. Signs of core inflation growth imply higher rates".
From Friday: "we suspect Monday may ramp up slightly, but Tues PPI & Wend CPI could give the market an interest rate fear clubbing."
Tomorrows Oct. Retail Sales ex-auto est. is +0.3%. Oct. PPI est. at -0.2% total, +0.2% core rate. Oct. CPI est. +0.1% total, +0.1% core rate. This is very benign compared to prior PPI +1.9% total; +0.3% core and CPI +1.2% total; +0.1% core. We don't think the numbers will be as benign as the estimates.
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 ..This is The Nattering Naybob and your NOT!!!
Support: DJIA 10200 ; SP500 1175; Nasdaq 2000; NDX 1500
In our top story tonight, Generalissimo Francisco Franco is STILL dead. In other news, even Uncle Al Greenspan says don't go against the dollar.
Greenspan asserted that the US is having no trouble funding the external deficit, and doubts the dollar will lose status as a reserve. As shown in last Thursday's data, the budget deficit as a percentage of GDP has now fallen to 2.4%, which is actually slightly below the average of the past few decades.
The influential ( over 40% of the S&P) financial sector is up 3.2% YTD. Over the last four weeks, +10.8% demonstrating that some people believe that the Fed's rate hike cycle is nearing an end. Homey don't think so, other central banks will raise, and the Fed will too.
We see 75 basis points of raises through March, bringing Fed Funds to 4.75. By that time, stagflation in the core will have taken over. We must factor in the possibility of a global energy price shock slowdown, followed by Gulf rebuilding efforts and underlying growth currents resurfacing, all of which will result in rates continuing to rise.
Today's SOOHEY PIG PIG award goes to me for letting the pig have a tranquil day in its poke.
8 weeks ago, DJIA -270 on higher volume, plunging below all major DMA's. 7 weeks ago, DJIA +148, lacking conviction. 6 weeks ago, DJIA -281 crashing down on higher volume. 5 weeks ago, large swings DJIA -6.
4 weeks ago larger swings, DJIA -77, 3 weeks ago, even larger swings, DJIA +186. 2 weeks ago, broadbased gains on higher volume DJIA +128. Last week, DJIA +154, making three consecutive weeks of gains totaling DJIA +468.
Today, DJIA +10 on lower volume with tepid internals. XAU, RUT, DJUA & DJTA suffering. NDX, NAZ & MID flat, SOX & XOI up nicely. CAC, DAX & FTSE up, Hang Seng & Nikkei 225 down. This week DJIA +10, over the last 8 weeks DJIA -8.
Oh no, I'm having another bout of DFS, as Maxine Nightingale said: "Ooo and it's alright and it's comin' 'long, We got to get right back to where we started from". Don't laugh as Disco Flashback Syndrome is a serious affliction for anyone who survived that era and it can strike at any time.
Dollar up BIG vs. Euro 1.168 & Yen 118.7, XAU & gold down, XOI & crude up @ 57.69, CRB commodities up & bonds down. Contra trend: Gold & $ up.
Sectors: Airlines, Gold Bugs, Biotech, Pharma, Transports, Commodity, Consumer, Real Estate, REIT's & Banking all beat down. Oil, Oil Services, Retail, Cyclical, Healthcare & Semis up nicely.
The curve looking scary flat; Bonds down with the 10 year yield rising @ 4.60% & the 30 year @ 4.79. The 2 & 5 year gap @ 6 basis points; the 5 & 10 year gap @ 6 basis points; the 10 & 30 gap @ 19 basis points.
Looking ahead at potential market influences, Nov 15th: PPI & Retail Sales; Nov 16th: CPI & Net Foreign Purchases; Nov 17th Philly Fed, Capacity Utilization, Industrial Production. Nov 18th: Options Expiration.
From Thursday: regarding the Import & Export prices component of the trade deficit; "the bad news is that while oil import costs were less than expected, it was the non-oil segment that grew, which implies the arrival of core inflation growth. Signs of core inflation growth imply higher rates".
From Friday: "we suspect Monday may ramp up slightly, but Tues PPI & Wend CPI could give the market an interest rate fear clubbing."
Tomorrows Oct. Retail Sales ex-auto est. is +0.3%. Oct. PPI est. at -0.2% total, +0.2% core rate. Oct. CPI est. +0.1% total, +0.1% core rate. This is very benign compared to prior PPI +1.9% total; +0.3% core and CPI +1.2% total; +0.1% core. We don't think the numbers will be as benign as the estimates.
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 ..This is The Nattering Naybob and your NOT!!!
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