Market Soapbox 08/05/05
Resistance: DJIA 10750; SP500 1250; Nasdaq 2200; NDX 1625
Support: DJIA 10500 ; SP500 1210 ; Nasdaq 2100; NDX 1535
European markets & Asian markets down. Dollar up vs. Yen/Euro , oil up, commodities, gold & bonds down.
Today's Soohey Pig Award goes to me for letting the pig have a quiet day in its poke.
Baidu.com BIDU $129 +$102 billed as the Chinese Google, shares of BIDU have soared 380% on its debut, becoming one of the hottest Wall Street IPOs over the last five years... get your Bermuda Shorts ready for this dog.
From yesterday: "Reintro of the long bond, rising low end rates, flattening yield curve, limited carry trade, rising energy costs, FNMA & FHLMC handcuffed and forced to reduce their portfolios, RMB revaluation, these all equal two things; RISING INTEREST RATES and a BOND MARKET BASHING."
"In addition, the scent of a market peak in equities, bonds and real estate and a long overdue consolidation is very ripe these days. They just need a little shove over the cliff, thats all."
A follow up consolidation day with AUTHORITY on higher volume. A large red tide came in yesterday and today. The MID and RUT were clubbed over the head again.
We have been saying all along that there is an undercurrent of economic activity which due to reporting latencies will be recognized in the 2nd half of this year. End result, the bond market will suffer and rates will go up beyond anyones expectations.
To spend, spend, spend, they must borrow, borrow and borrow... July nonfarm payrolls checked in at a stronger than expected 207K, and consumer credit in June surged 8% to $14.5 bln, well above forecasts of $6.0 bln.
In addition, an unexpected 0.4% increase in average hourly earnings (consensus +0.2%). In my opinion, the last two days have given the real estate equities, bond and utilities market a small dose of what is to come.
Homebuilding continued its pullback, -5.3% and REITs 4.1% have been pounded into the ground, and the dollar is rebounding, as they should, in a rising rate environment.
The 10 year note was off 17 ticks to hit a 3 1/2-month yield high (4.37%). Gas Utilities -2.3%, Electric Utilities -2.0% and Multi-Utilities -1.9%. Technology has been weak across the board, led by profit-taking in chip stocks.
Consolidation in biotech and HMOs have prevented Health Care from extending its respectable year-date performance +5.2%.
Next week: Mon and Tues are open for a bounce, but do not be fooled, FOMC meeting on Tues with 25 basis point increase and forward looking statements from Uncle Al.
Options unwind and 5 year note auction on Wen, 10 year note auction on Thurs. Less liquidity in the market equals the potential for additional consolidation.
The impetus for this market turn is multi faceted, $61 oil being the leading factor. Even though the DJIA is only off 100 points, the market internals reveal how horrible the last two days have been.
We hope someone listened the last 3 weeks, while everything was heading for a peak and we started calling for potential short positions.
We think that next week will be another down week, then a dead cat bounce the following week. Followed by the traditional September through mid October drubbing of the market.
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.
Support: DJIA 10500 ; SP500 1210 ; Nasdaq 2100; NDX 1535
European markets & Asian markets down. Dollar up vs. Yen/Euro , oil up, commodities, gold & bonds down.
Today's Soohey Pig Award goes to me for letting the pig have a quiet day in its poke.
Baidu.com BIDU $129 +$102 billed as the Chinese Google, shares of BIDU have soared 380% on its debut, becoming one of the hottest Wall Street IPOs over the last five years... get your Bermuda Shorts ready for this dog.
From yesterday: "Reintro of the long bond, rising low end rates, flattening yield curve, limited carry trade, rising energy costs, FNMA & FHLMC handcuffed and forced to reduce their portfolios, RMB revaluation, these all equal two things; RISING INTEREST RATES and a BOND MARKET BASHING."
"In addition, the scent of a market peak in equities, bonds and real estate and a long overdue consolidation is very ripe these days. They just need a little shove over the cliff, thats all."
A follow up consolidation day with AUTHORITY on higher volume. A large red tide came in yesterday and today. The MID and RUT were clubbed over the head again.
We have been saying all along that there is an undercurrent of economic activity which due to reporting latencies will be recognized in the 2nd half of this year. End result, the bond market will suffer and rates will go up beyond anyones expectations.
To spend, spend, spend, they must borrow, borrow and borrow... July nonfarm payrolls checked in at a stronger than expected 207K, and consumer credit in June surged 8% to $14.5 bln, well above forecasts of $6.0 bln.
In addition, an unexpected 0.4% increase in average hourly earnings (consensus +0.2%). In my opinion, the last two days have given the real estate equities, bond and utilities market a small dose of what is to come.
Homebuilding continued its pullback, -5.3% and REITs 4.1% have been pounded into the ground, and the dollar is rebounding, as they should, in a rising rate environment.
The 10 year note was off 17 ticks to hit a 3 1/2-month yield high (4.37%). Gas Utilities -2.3%, Electric Utilities -2.0% and Multi-Utilities -1.9%. Technology has been weak across the board, led by profit-taking in chip stocks.
Consolidation in biotech and HMOs have prevented Health Care from extending its respectable year-date performance +5.2%.
Next week: Mon and Tues are open for a bounce, but do not be fooled, FOMC meeting on Tues with 25 basis point increase and forward looking statements from Uncle Al.
Options unwind and 5 year note auction on Wen, 10 year note auction on Thurs. Less liquidity in the market equals the potential for additional consolidation.
The impetus for this market turn is multi faceted, $61 oil being the leading factor. Even though the DJIA is only off 100 points, the market internals reveal how horrible the last two days have been.
We hope someone listened the last 3 weeks, while everything was heading for a peak and we started calling for potential short positions.
We think that next week will be another down week, then a dead cat bounce the following week. Followed by the traditional September through mid October drubbing of the market.
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.
Comments
Glad to hear it, and I too have found "marginal happiness" in the markets. You may see alot of short covering this next week. To determine how much covering there will be, you may want to check the open positions on the indices options DIA, etc. to see where max pain is and contrast those positions to where we are now.