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  • Dow, Nasdaq and S&P 500 had a dead cat bounce rally: TVIX, TZA, VXX 0 comments
    Jan 3, 2012 10:20 PM | about stocks: TZA, TVIX, ERY, FAZ
    This days Futures market decides the direction of the market. Today, Dow futures were up by 202 point in the Premarket while S&P futures were up by 24 points. There was no important news in the premarket to drive this rally except German unemployment rate was better then expected but the market were already up before any data release. When the market opened, after the December ISM manufacturing data came at 53.9 which beat the expectation of 53.2. ISM manufacturing for December 2009 and 2010 were 56 and 59 respectively.
     
    So if someone says ISM manufacturing data were good, then I would says its a lie. No doubt it's better then previous month but not a great data by any means to justify today's rally. 
     
    Today's rally I would rate it as a dead cat bounce rally. Dow jumped to 259 point after ISM data, before pulling back and closing to 179 point gain. So basically, Dow was up 202 point in premarket and  it added 57 point and then it declined 82 point at the close to end up with 179 point gain. This suggest there were more seller at the end of the day. How many individual investor trade in future market ? But the market direction is set by future market. In future we might see a another flash crash as the market is moving up and down like crazy.

    Also, Governments of the world’s leading economies have more than $7.6 trillion of debt maturing this year, with most facing a rise in borrowing costs.

    Led by Japan’s $3 trillion and the U.S.’s $2.8 trillion, the amount coming due for the Group of Seven nations and Brazil, Russia, India and China is up from $7.4 trillion at this time last year, according to data compiled by Bloomberg. Ten-year bond yields will be higher by year-end for at least seven of the countries, forecasts show. You can read further @http://www.bloomberg.com/news/2012-01-03/world-s-biggest-economies-face-7-6-trillion-bond-tab-as-rally-seen-fading.html

    The volume is still very thin, so the market is still run by manipulator. The market is not safe for investment yet, so avoid it and "Keep cash in hand" there are plenty of opportunity to make money.

    Tomorrow Economic data to watch out are (EST):
    02:45 EUR French Consumer Spending (MoM)  expected is 0.3% (lower is bearish/above is bullish)  
    03:50 EUR  French Services PMI   expected is 50.2  (lower is bearish/above is bullish)  
    03:55 EUR  German Services PMI     expected is    52.7  (lower is bearish/above is bullish)  
    04:00 EUR   Services PMI     expected is 48.3   (lower is bearish/above is bullish)  
    04:30 GBP   Net Lending to Individuals   expected is 0.9B  (lower is bearish/above is bullish)    
    04:30 GBP   Mortgage Approvals         expected is 53K  (lower is bearish/above is bullish)          
    04:30 GBP   M4 Money Supply (MoM)   expected is 0.2% (lower is bearish/above is bullish)     
    04:30  GBP  Construction PMI   expected is 52.0  (lower is bearish/above is bullish)  
    05:00  EUR   Italian CPI (MoM)  expected is 0.3%   (lower is bearish/above is bullish for GLD)      
    05:00  EUR   CPI (YoY)    expected is 2.8%  (lower is bearish/above is bullish for GLD)      
    07:00  USD  MBA Mortgage Applications   expected is -2.6% (lower is bearish/above is bullish)   
    10:00  USD  Factory Orders (MoM)        expected is 1.9%    (lower is bearish/above is bullish)    
    17:00  USD  Total Vehicle Sales         expected is 13.5M   (lower is bearish/above is bullish)  

    I think the market will open low tomorrow followed by continuous sell off in coming days. The technical level to watch for downside on Dow is 12385 resistance and S&P500 1275 resistance, if it could break and hold below this level. For upside Dow resistance is 12439, followed by 12491 and on S&P500 its 1285.
    Stocks: TZA, TVIX, ERY, FAZ
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