Market Soapbox 11/22/05
Resistance: DJIA 11000; SP500 1275; Nasdaq 2250; NDX 1700
Support: DJIA 10200 ; SP500 1175; Nasdaq 2000; NDX 1500
In our top story tonight, Generalissimo Francisco Franco is STILL dead. In other news, yesterdays cost cutting news boosted GM stock, today investors digested the news and reflected on this sinking ship as GM stock fell 2%.
Todays release of the FOMC minutes provided the market with a boost. Key comments that spurred the market: "Some members cautioned that risks of going too far with the tightening process could also eventually emerge.... several aspects of the statement language would have to be changed before long, particularly those related to the characterization of and outlook for policy."
The markets interpretation was that the Fed was considering changing its statement language (by removing the term "measured") and that pausing early next year, may be in the cards. As usual, most of the spin doctors and markets missed the important points.
"The outlook continued to be for core inflation to pick up modestly over coming quarters owing to the lagged effects of higher energy prices... Manufacturing capacity utilization dropped substantially in September... however, underlying economic slack was likely quite limited."
In other words, the fed expects core inflation to pick up near term and the underlying slack (i.e. the output gap or difference in what we can produce vs. what we are producing) is quite limited or narrow.
Limited slack means that if there is a further increase in demand, price inflation will ensue. This could trigger more rate increases at higher levels (i.e. 50 basis point, rather than the measured 25 bps) and would necessitate the removal of the term "measured".
Todays, SOOHEY, PIG, PIG and SHAME ON YOU award will be covered in a separate posting.
9 weeks ago, DJIA -270 breaking key support. 8 weeks ago, DJIA +148, lacking conviction. 7 weeks ago, DJIA -281 crashing down. 6 weeks ago, large swings DJIA -6. 5 weeks ago larger swings, DJIA -77. Five weeks of downturn totaling -486.
4 weeks ago, recovery begins with larger swings, DJIA +186. 3 weeks ago, broadbased gains DJIA +128. 2 weeks ago, DJIA +154. Last week, a slowing, DJIA +79. Four weeks of gains totaling DJIA +547.
Mon, DJIA +54 on decent internals with tepid volume. Today, crude oil surged 1.5%, after the FOMC minutes release the market rebounded DJIA +51 on improved internals and higher volume. This week DJIA +105 , over the last 10 weeks DJIA +166.
Semis and tech got a nice bid. SOX, XAU & XOI leading the way up, RUT & MID giving support, DJUA weak. CAC down, DAX up, FTSE up, Hang Seng flat & Nikkei 225 up.
Dollar down vs. Euro & Yen, XAU & gold up, XOI & crude up BIG @ 58.84, CRB commodities & bonds up. Contra trend: none.
Sectors: Tech, Energy, Natural Gas, Oil, Oil Services, Tranports & Semis up. Airlines & Pharma down.
Some widening on the curve, bonds up with the 10 year yield falling @ 4.42% & the 30 year @ 4.65. The 2 & 5 year gap @ 3 basis points; the 5 & 10 year gap @ 9 basis points; the 10 & 30 gap @ 23 basis points.
Looking ahead at potential market influences, Nov 23: Michigan Sentiment; Crude Inventories; Nov 25 Initial Claims.
The market uptrend began on 10/13 and is still intact. Judging from the last two days action, the market does not seem to have disconnected from rising oil, it needs to if this rally is going to be sustained.
My sense is today's FOMC media misinterpretation will be digested by investors and today's gains might get capped tomorrow.
Keep it tween da ditches, 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 and Hey! Hey! Lets be careful out there...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, yesterdays cost cutting news boosted GM stock, today investors digested the news and reflected on this sinking ship as GM stock fell 2%.
Todays release of the FOMC minutes provided the market with a boost. Key comments that spurred the market: "Some members cautioned that risks of going too far with the tightening process could also eventually emerge.... several aspects of the statement language would have to be changed before long, particularly those related to the characterization of and outlook for policy."
The markets interpretation was that the Fed was considering changing its statement language (by removing the term "measured") and that pausing early next year, may be in the cards. As usual, most of the spin doctors and markets missed the important points.
"The outlook continued to be for core inflation to pick up modestly over coming quarters owing to the lagged effects of higher energy prices... Manufacturing capacity utilization dropped substantially in September... however, underlying economic slack was likely quite limited."
In other words, the fed expects core inflation to pick up near term and the underlying slack (i.e. the output gap or difference in what we can produce vs. what we are producing) is quite limited or narrow.
Limited slack means that if there is a further increase in demand, price inflation will ensue. This could trigger more rate increases at higher levels (i.e. 50 basis point, rather than the measured 25 bps) and would necessitate the removal of the term "measured".
Todays, SOOHEY, PIG, PIG and SHAME ON YOU award will be covered in a separate posting.
9 weeks ago, DJIA -270 breaking key support. 8 weeks ago, DJIA +148, lacking conviction. 7 weeks ago, DJIA -281 crashing down. 6 weeks ago, large swings DJIA -6. 5 weeks ago larger swings, DJIA -77. Five weeks of downturn totaling -486.
4 weeks ago, recovery begins with larger swings, DJIA +186. 3 weeks ago, broadbased gains DJIA +128. 2 weeks ago, DJIA +154. Last week, a slowing, DJIA +79. Four weeks of gains totaling DJIA +547.
Mon, DJIA +54 on decent internals with tepid volume. Today, crude oil surged 1.5%, after the FOMC minutes release the market rebounded DJIA +51 on improved internals and higher volume. This week DJIA +105 , over the last 10 weeks DJIA +166.
Semis and tech got a nice bid. SOX, XAU & XOI leading the way up, RUT & MID giving support, DJUA weak. CAC down, DAX up, FTSE up, Hang Seng flat & Nikkei 225 up.
Dollar down vs. Euro & Yen, XAU & gold up, XOI & crude up BIG @ 58.84, CRB commodities & bonds up. Contra trend: none.
Sectors: Tech, Energy, Natural Gas, Oil, Oil Services, Tranports & Semis up. Airlines & Pharma down.
Some widening on the curve, bonds up with the 10 year yield falling @ 4.42% & the 30 year @ 4.65. The 2 & 5 year gap @ 3 basis points; the 5 & 10 year gap @ 9 basis points; the 10 & 30 gap @ 23 basis points.
Looking ahead at potential market influences, Nov 23: Michigan Sentiment; Crude Inventories; Nov 25 Initial Claims.
The market uptrend began on 10/13 and is still intact. Judging from the last two days action, the market does not seem to have disconnected from rising oil, it needs to if this rally is going to be sustained.
My sense is today's FOMC media misinterpretation will be digested by investors and today's gains might get capped tomorrow.
Keep it tween da ditches, 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 and Hey! Hey! Lets be careful out there...This is The Nattering Naybob and your NOT!!!
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