12 Aug
Pre-open eMini S&P 500 Morning Report for August 12, 2010
Posted in Pre-open Analysis by Bob English at 9:13:58 12 CommentsThe Precise Take – Equity futures down again, as rally hopes rapidly vanish
Big Picture Analysis: The equities indexes plowed through many support levels yesterday and overnight, which is probably the death knell for the rally. In retrospect, the signs of institutional participation and high breadth were probably a result of record high correlation in the stock universe. Going forward, we will tend to discount such information until the correlation lowers to normal levels. Tomorrow, CPI and Retail Sales will be released before the open, with Consumer Sentiment 25 minutes after, which could make for a volatile end of week. The 1018-25 support area sits far below and is the next major target for the strong shorts. It will probably take a close above 1105.00 to get them to cover.
Leaders Analysis: Just as the EuroYen plummeted yesterday, the US Dollar Index rallied, and is up again overnight, with the 84.00 level a likely target into next week. After more downside yesterday in the 10 Year Yield, it is nearly to strong support. The rally in the 10 Year Note futures (inverse to yield) is likely overdone, and now that the QE Lite rumor is a reality…
ahmedm
on August 12 2010 at 10:36:44
We had an early push down and a rejection so far. Some materials stocks look strong
ahmedm
on August 12 2010 at 10:38:25
Fertilizers look very strong after the WASDE report lowered grain stocks. Thanks for your food theme Bob
Bob English
on August 12 2010 at 10:54:05
Yes, my number was 1069.25, but I could see 70.50 as well as the pros like to protect the fives and tens. They got their ten points and change and covered, but the market pushed to new highs, so that’s a sign of strength.
Wheat could be basing for its next leg up.
ahmedm
on August 12 2010 at 11:26:08
World wheat stockpiles before next
year’s Northern Hemisphere harvests will be 6.6 percent smaller
than forecast in July after drought decimated crops in Russia,
Kazakhstan and Ukraine, the U.S. Department of Agriculture said.
Global output will total 645.7 million metric tons in the
year that began June 1, down 5.1 percent from the previous year,
the USDA said today in a report. Inventories on May 31 will fall
to 174.8 million tons. The average estimate of 17 analysts
surveyed by Bloomberg News was for 178.8 million.
spainconsultant
on August 12 2010 at 13:46:27
Im not trading, but visiting the chart I see a wedge in 15 mn could be breaking soon……….
ahmedm
on August 12 2010 at 14:05:02
good call. It broke downward. Do we get a terrible Friday tomorrow like so many times before and a bounce on Monday?
Bob English
on August 12 2010 at 14:30:36
Thanks spainconsultant…had to step away for a bit.
Ahmedm: depends on the news. The bond reaction to CPI will be important. If it’s hot and the futures go down hard, could lift equities. Vice versa if it comes in cold. Consumer Sentiment has been a market mover recently, but after the last one, which was horrible, expectations might not be too high.
spainconsultant
on August 13 2010 at 05:33:21
Global relief as German growth strong last quarter and yen calm down between considerations of when BOJ we´ll intervene………….. But Germany alone can´t and won´t as is European factory and world high level fabric, euro rebound maybe short lived, BOJ interventions doesn´t look as panacea looking some months back, and worst looking some years back. Anyway while USA sleeps moves are always skeptical August Friday……… maybe not much of anything, horrible/spectacular figures in USA apart
Looking to this year charts (this contact) we´d been most of this last 3 months trading in flash crash tail area (low 1050, close 1118). I count 4 times touching down, with the 3rd broken to the June-July lows (1002) and 3 touchs up, with the firs briefly breaking (June high, premarket I recall) July 27 , just kiss and back, and then August 2-8 above but not breaking………… The post flash crash day May 7th, we have the low at 1086.75 I used this as middle point line, from that day every time we had cross that line down we´d been to the lows (1050) the opposite not being fullfiled……. I´m not professional trader, not analyst, not have more than a tiny idea about charts so don´t trade according to this…….. maybe just concidential nonsense
It takes so much time to me write in English, that now when finishing the punch up seems to be vanishing at leat in the ES ………guess that GDP Euro figures due some 30 minutes came not as Germans, they are so german……… (and fall so hard last year 4,7 % GDP down I think)
spainconsultant
on August 13 2010 at 06:00:49
Well, in fact Euro area growth Q2 was 1 % intertrimestral (quarter on quarter) and 1,7 % interanual http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-13082010-BP/EN/2-13082010-BP-EN.PDF
So kind of good news…………..so the market down in this counter-intuitive summer
spainconsultant
on August 13 2010 at 06:30:45
By the way, peripheral debt worries on the rise in Europe……….. for the ones that don´t hear about before, have and eye on Catalonia (Cataluña) , Spanishs banks ECB money borrowing at record high, Hungary exists………….Dubai condos are sell for something like a millon $ and a crappy apartment in La Coruña, is priced more than a nice house in Kendall. a crappy apartment in Madrid doble the price of a Brickeld nice almost new one, and Brickel is empty, which is very convinient to park near Dolores ( I highly recommend the huevos rotos con garbanzos). Spain unemployment after make-up is 20 % and you go to a low-life place in Majorca and pay 55 euros (that´s 70 $) in a dinner for 2 without wine or desserts, Spain needs that so bad word…….deflation and some Euro adjust too…… Greece is happy, because deficit is 40 % down, and that´s good, but economic growth now is well……..negative as we economist tend to name that kind of no-growth
Worst of all, banks and bankers are part of the problem…………not the solution, but they are the ones that get the money from the people trough the politicians, the ones that they finance and got dinner with……. deja vu
Bob English
on August 13 2010 at 08:01:54
Ah, Dolores, I know her well, Horatio.
My understanding of Cataluña is it’s the industrial center of Spain. Any proxies for it in the market that exclude the rest of the country?
Also, I’ve read to keep an eye on Belgium and Hungary, as they could be a bellwether of renewed Euro concerns.
Well, looks like the carry trade is winding up again and we’ll see in 30 minutes if the breakout is sustainable.
spainconsultant
on August 13 2010 at 08:56:47
Is ok with me if you call her Lolita
Yes, Cataluña, is one of the 17 Autonomous Comunities (kind of states in USA) in Spain, Barcelona is the capital, is the second biggest in population (Andalucia ) but the most important in wealth, kind of 20 % GDP 16 % population………… Is having lot of problems to finance and delaying pays…….they couldn´t go market in the last months seems some month ago get a bank syndicated credit to pass trough at Euribor + 300 basic points, more expensive than good spanish companies are getting. 10 year Cataluña Generalitat bonus touch yesterday 5,5 % I read…… There are state and local (cities) elections in Spain, November in Catalonia, March 2011 rest of the country…….. Apparently several of this Spanish states are having problems to put debt in the market……… Don´t know proxies for Cataluña, as their big companies operate all spain, and internationally in fact, Cataluña bonds may worth a look, but don´t really know….
Hungary just say no to european conditions (3% deficit) and IMF to go some placer hotter than Dubai in August……..but was on Sunday so nobody put a lot of attention, debt spread with Germany/ USA are on the rise, so yes debt concern may come back and euro could go down…….. But what about $ ,¿ ready for a come back and substitute yen or Swiss franc for cautious people? Euro/$ carry could make a comeback righ?
Probably nothing of this is really ugly for world markets while focus is focusing far of concerns for USA debt and deficit………