Editor's Note: Todd posts his vibes in real time each day on
Buzz & Banter
It's a new day, a new week, and for many, a new month. With the
holiday stretch behind us and earnings dead ahead-starting with
) tonight-we'll have no shortage of news to digest as we swelter
into the sweet spot of the summer.
Last Wednesday, we shared
a laundry list of potential catalysts
that could move the market. A few of them are listed below, with
: While there was
violence in Cairo, the baton passed between governments in a
relatively smooth manner, at least thus far. Power to the people.
: Over on the Aegean Island, Greek debt inspectors are ready to
release the next batch of bailout loans despite
of an "uncertain" economic outlook. Still,
while a desensitized global audience looks the other way.
Deutsche Bank AG
Credit Suisse Group AG
) ratings were cut by Moody's; given the putrid price action
that news, it was more or less a non-event after the fact.
popped through par ($100) on Middle East tension concerns. While
crude at $50 is more economically problematic than crude at $150,
in my view,
Texas Tea remains elevated, trading north of $103.
was quietly down 26% this year, or 32% in USD terms, or back at
2009 levels. It's still there, virtually in the same spot;
- There were high level defections in
in front of €10 billion of bonds due in September, reminiscent in
some ways of
what we said in September 2008
. The president is now
considering a snap election
in an attempt to identify a solution to the political crisis; the
situation remains fluid.
continue to abate as the Chinese overnight lending rate dropped
from 3.38% to 3.26%, per the chart below.
- For the first time in history, the
(NYSEARCA:SPY) opened and closed in the bottom half of its
intra-day range for four straight days (Thursday to Tuesday).
Typically, when a stock, market, or market of stocks opens strong
and fades lower into the close, it's a sign of distribution.
Indeed, when we awoke last Wednesday, global markets were getting
crushed and the stateside tape, sitting
directly under our technical Danger Zone
(updated below) had every excuse to trade lower-but didn't.
We offered at the time that we
be learning a lot just by watching-the reaction to news is always
more important than the news itself-but some offered the thin
holiday ranks skewed the traditional dynamic, if in fact the
dynamic is still traditional. Still, rallies on lighter volume are
typically viewed with suspicion; particularly if sell-offs occur on
All things considered, the next leg of the US equity market will
rely on the fundamental metric, which arrives in the form of
earnings. Historically, the bigger the rally
earnings, the higher the bar becomes for companies to clear those
hurdles, which is what we refer to when we discuss "field
(INDEXSP:.INX) has rallied 5.5% since the June swoon low at S&P
1560 on June 24, for what it's worth and so it's said-right smack
dab back into the middle of the June range. Due to the upward slope
of the November trend line, my trading parameters are in constant
flux and updated in real-time on the Buzz & Banter (
click here for a free two-week trial
- S&P 1600-1650 is the near-term zone; Mr. Valentine has
set the price.
- Last Friday, the ECB communicated that they would remain
"extraordinarily easy" for an extended period (and discussed
dropping the deposit rate below zero
) and the Chinese government said they would suspend the release
of industry-specific data for the monthly manufacturing PMI
(flashback to the suspension of US M3!). I'm sure they had no
idea it was a holiday session in the US.
- The jobs data? Better, if you believe the top line.
The U6 unemployment
-likely a truer gauge-rose to 14.3%, or one in roughly every
seven people in the US are out of work.
Discipline must always trump conviction.
- Gold $1180 is the level that must hold to the downside.
- Bloomberg is reporting that John Paulson's PFR Gold Fund fell
23% in June and is down 65% year-to-date. The bigger question, I
suppose, is whether he has been selling.
- We have inflation in things we need, deflation in things we
want, thus the question is posed: Do we need gold?
- The Internet is the most deflationary invention of all time,
which is great if you're a consumer but not so much if you're a
- A sideways market above support is called basing; a sideways
market under resistance is called churning.
- We took our daughter Ruby on the water for the first time
over the holiday; she's a natural!
- Good luck this week, and I'll see YOU over on the Buzz!