Monday - 6-25-2012
Dr. John L. Faessel
ON THE MARKET
Commentary and Insights
Quotes of the Day
"It will take a massive market riot to galvanize the sort of policy response necessary to save the euro."
~ The Bank Credit Analyst ~
"An economy cannot spend or tax itself into prosperity."
~ Milton Friedman ~
Global Slowdown Underway
Lumber and Copper Hit Cycle Lows
EuroLand Doomed! Lunacy reigns supreme... This says it all;
Europe's highest court ruled that workers who happened to get sick on vacation were legally entitled to take another vacation. See NY Times link: http://www.nytimes.com/2012/06/22/world/europe/europe-court-says-sick-workers-can-retake-vacations.html?_r=2
So the numnuts in EuroLand, blind to reality, who continue to throw more and more ECB created from thin air Euros at their debt bomb, now from their highest court, add another massive anvil to the structurally untenable situation. Simply incredible...
Accordingly the Bond Vigilantes are pushing Up key southern Euro bond yields [PIGS] again.
Last week's market moving news; Moody's slashes the credit rating of America's No. 1 and No. 3 banks to near junk on exposure to bad government risk.
Last week stocks rallied on higher volume, but were still mostly down by Fridays close.
Always worth at read. From the NY Times ─ How we got into this mess -
Fannie Mae Eases Credit to Aid Mortgage Lending
September 30, 1999
By STEVEN A. HOLMES
EuroLand Bond Yields off their recent highs
Greek 10-year yields 25.79%
Italy 10-year (gross) bond yield - 5.90% - off from highs of 7.29% on 11-24.
Spanish 10-year (generic) bond yield at new cycle highs of - 6.45%
Prepare for more selling as the market looks weak both long term and short term. Bullish sentiment remains gloomy and is just off the lows of the cycle. (See below) The McClellan Oscillator (my favorite measure of overboughtness or oversoldness) is in high range of neutral at plus 137. Stochastics overview is Bearish, but the Bollinger bands are also showing that the market is oversold.
The S&P 500 (SPX) closed Friday at 1335.02
Short term price support is at 1333 / 1328 / 1324
Longer out term price support is at 1320 / 1306
The 200-day moving average support is at (SPX) 1295
Stronger 'Price' support (the lows last Monday) in the (SPX) is at 1266 and will be the battleground zone as the market tests its lows.
50-day moving average resistance is at 1344
Resistance at the lows of the pattern of former support broken on June 21st is at 1346.
Price resistance at the 'top' of the recent rally is at 1363.
Friday's key indicators and metrics:
Cycle highs or lows are in red
· McClellan Oscillator is in high range of neutral at plus 137
· Copper - 3.3060
· Crude oil (NYMEX) $79.76
· Brent Crude $90.98
· Silver (COMEX) 26.661
· Euro - 1.2572
· US Dollar Index - 82.442
· The Treasury 10-year yield 1.67%
· The 30-year Treasury is at 2.76%
· VIX - 18.11
· CBOE Put / Call Volume Ratio - 0.99
· 3-month $ LIBOR at 0.468
· Natural Gas (Globex) 2.625
· Gold (COMEX) $1566.9
· Aussie Dollar - 0.9996
· Japanese Yen 12444
· Swiss Franc - 1.0483
· Canadian Dollar - 0.9739
* This week's Bullish Investor Sentiment.
Certainly, sentiment is remains terrible but just off the recent new cycle lows.
(High BULLISH readings in the Investor Sentiment Readings usually are signs of Market tops; low ones, market bottoms.)
· The American Association of Individual Investors [AAII] Investor Sentiment Survey of BULLISHNESS rose a few ticks to 32.9%from 34% the prior week. Three weeks ago it was 27.5%. The lows of the cycle were ticked 6-weeks ago at 23.6%.
· The Market Vane (Market Letter Survey) up ticked to 55% from 53% the prior week.
· Consensus Index BULLISH sentiment moved higher a tick to 57% from 56% the prior week.
· The AAII Investor Survey of BEARISHNESS rose a tenth of a point to 35.9 from 35.8% the prior week. 5-weeks ago it was 46%. On August 4th 2011 it posted cycle highs of 49.9% in Bearishness.
· The Citigroup "Panic / Euphoria" Model fell to its cycle lows and remains in the Panic mode of minus 0.31.
The BARRON's Confidence Index posted a 67.6. The previous week it was 68. Four-months ago the index posted cycle lows of 66.9. One-year ago it was 77.1.
The Confidence Index is the premier measure of how the bond markets trillions (total global is around $91 trillion and USA is 39% of that) are allocated: (The bond market is twice the size of the stock market.)
The Index is the High-grade bond index divided by intermediate-grade index. A decline in latter vs. former - generally indicates rising confidence, pointing to higher stocks.
For my Best Ideas for 2012 please send an e-mail request to: Dr.Faessel@onthemar.com