The Top Will Have to Wait

[Excerpted from Bill Cara's Daily Report]

We may have to wait for that intermediate-term cycle top; Wednesday’s action in US equity markets was bullish from the open, and then overnight there was a return of buyers in the Asia-Pacific markets. Thursday morning has already seen fast markets, quickly lifting commodities, the Euro, European equities and US equity futures.

At the closing bell on Wednesday in New York, the S&P 500 (1,005.81 +11.46 +1.15%), the DJIA (9,361.61 +120.16 +1.30%) and the NASDAQ Composite (1,998.72 +28.99 +1.47%) closed much higher on the day – without much help at all from the much anticipated FOMC announcement at 2:15pm ET. The script had already been written.

The Toronto Exchange Composite (10,659.87 +30.40 +0.29%) and the Toronto Venture Board (1,186.02 +9.18 +0.78%) were more subdued because the Cdn Dollar (91.86 +1.12 +1.23%) was soaring but precious metals were being kept under wrap (at least at that point).

All sectors and industries in the US equity market were higher with the exception of Utilities (XLP -0.04%), which was down a tad. The winners were Technology and Financials (XLK +2.0% XLF +2.0%), led higher by Pulp and Paper and by Computer Networks ($DJUSPP +4.0% $NWX +4.0%).

A softer $USD (78.89 -0.25 -0.31%) may have ushered a return of the Great Reflation play. The FOMC announcement did little to discourage that notion. Crude Oil ($WTIC 70.15 +0.70 +1.01%) regained the $70 level, while $GOLD (946.90 +0.70 +0.07%) managed to gain less than +$1.00.

For Cara 100 company stocks, the winners were Black & Decker, Tata Motors and Teck Corp (BDK +5.2% TTM +4.8% TCK +4.5%). The losers were led by Brunswick Corp and Garmin (BC -5.7% GRMN -3.6%). BC finally saw profit-taking after a humungous run-up in share price leading to a major offering of debt.

As the US Dollar softened during the session, the Yen (104.05 -0.18 -0.17%) dropped even faster, recognizing the return to risk-taking. As well as the soaring Canadian Dollar, there was a higher Euro (141.92 +0.41 +0.29%). The British Pound (164.81 -0.03 -0.02%) was flat for a second day in a row.

The US long bond ($USB 116.86 -0.62 -0.53%) gave back some of the previous day’s gains. Treasury yields lifted for the 30-year (4.523 +0.70 +1.57%) and 10-year (3.701 +0.08 +0.22%) but not for the 5-year (2.659 -0.30 -1.12%) instruments. I project that comes Thursday. The Treasury bill yield (0.170 -0.10 -5.56%) dipped.

Earlier Thursday, the Austral-Asian markets closed sharply higher. Japan’s Nikkei 225 (10,517.2 +0.79%), Hong Kong (20,861.3 +2.08%), Shanghai (3,140.6 +0.89%), India (15,518.5 +3.32%) and Australia (4,436.7 +2.09%) all jumped.

Before 7:00am ET this morning, the French CAC (3,542.7 6:53AM ET +1.01%), German DAX (5,421.9 6:39AM ET +1.34%) and FTSE 100 (4,767.1 6:39AM ET +1.07%) were also flying.

The spot (cash) market Thursday morning saw the price of gold, palladium, platinum and silver lifting in fast markets: (959.06 +9.36 +0.99% 06:55am ET); (277.0 +8.0 +2.97% 06:55am ET); (1266 +13 +1.04% 06:41am ET); and (15.00 +0.47 +3.23% 06:55am ET), respectively.

Euro:Dollar futures (1.4268 +0.0054 +0.38% 06:42am ET) were much stronger.

Crude Oil futures (71.64 +1.48 +2.10% 06:42am ET) were gaining quickly as well.

US equity market futures were rising sharply (9401 +82 +0.88% 06:42 am ET), indicating a strong open Thursday. Traders, however, watch the closing hour more closely. In any case, the Great Reflation play is back on stage.

Comments

[justin_3d]

Well there was bad economical data today, so this might actually stop this rally, and make this 38.2% Fibonacci level a top for now!

2009 Aug 13 11:18 AM

[Hmm?!]

Looking at Friday's market, you may........may.... be right. the market was basically down until that last half hour, which I always greet with suspicion.

The last half hour currently means to me.........mutual fund sellers have gotten some suckers to buy. There really is no logic here since the sellers only make money when they sell.....so in a down market do they let themselves starve to death out of principle?? Not likely!!

PS. If anyone can post a good sight for basic Fibonacci knowledge.........uuh....

On Aug 13 11:18 AM justin_3d wrote:

> Well there was bad economical data today, so this might actually
> stop this rally, and make this 38.2% Fibonacci level a top for now!

2009 Aug 14 05:52 PM