Daily Investment Interpretations

Tuesday, June 5, 2012

2012-6-5: (Tuesday Night): The markets closed mixed today: Dow industrials snag gain after upbeat data; Stocks end higher on upbeat report. The NASDAQ Composite closed up 18.10 points (0.66%) to end at 2,778.11. The Dow added 26.49 points (0.22%) to close at  12,127.95; the S&P 500 advanced 7.32 points (0.57%) to settle at 1,285.50. Oil ended the day at 84.07: Oil tops $84 as traders weigh Europe, economy; gold logged off at 1618: Gold futures settle higher, fail to reclaim $1,620. The VIX dropped 1.44 to 24.68.
    "Stocks rise, with the Dow Jones Industrial Average closing higher for the first time in five sessions, after better-than-expected services-sector data."
U.S. stocks finished higher Tuesday, but the gains were limited as investors weighed an upbeat U.S. economic report against Europe's ongoing debt problems. More"

    Marketwatch says: 
    U.S. factory orders decline  "Orders for goods produced in U.S. factories decline 0.6% in April, the Commerce Department reports."
    Darrell Delamaide notes that Obama hopes dim with economic missteps.
    David Weidner observes that Finally there’s straight talk on Wall Street.  
    Mark Hulbert says: Correction's close to being over. He bases this conclusion on the extreme current level of pessimism.
    But Jon markman asks: Is the bear around the corner?
    How to break the vicious cycle  
    Fed’s Bullard: Jobless rate doesn’t change outlook  One disappointing jobs report isn't enough to recalibrate Fed policy.
    Euro stays down after G-7 call  European leaders today participate in a teleconference call, but apparently, nothing substantive came out of the meeting, and the Euro didn't rise on foreign currency markets.
    Europe stocks buoyed by U.S. services data         
    European Central Bank likely to stay on fence  "European Central Bank chief Mario Draghi’s frustration is showing, but he remains unlikely just yet to ride to the rescue of the euro zone."
    Germany will rescue euro zone: ex-Deutsche Bank chief  
    China in reverse  "China will have a hard time living up to its growth targets this year, according to analysts who say a reality check could be coming for policy makers seen as able to move the economy at will."
    China plans for potential Greek euro exit: report  
    Long-term Treasury yields rise for second day  It's "risk-off" again.
    Michael Gayad says: Bonds acting as if there's been a 'Lehman' event.
    "I also maintain my original stance that stocks may yet have a massive move higher into year-end as the reflation trade reasserts itself again. And given that our ATAC (Accelerated Time And Capital) models used for managing client accounts positioned us into equities during the first quarter, went into bonds in early April, and is now preparing for another rotation back into stocks in the next two to three weeks given market behavior, I am beyond excited for the next melt-up.
    "What makes me so bullish? The answer is simple — the payout for betting on the negative Black Swan likely no longer exists because various intermarket trends have behaved as if 1) a significant Crash/massive correction in absolute terms has already happened, and 2) given the pricing in of an event which has not actually occurred. In the first segment I did Monday, I talked about the price ratio of the 20+ Year Treasury ETF /quotes/zigman/1480195/quotes/nls/tlt TLT -1.34% relative to the 7-10 Year Treasury ETF /quotes/zigman/1480156/quotes/nls/ief IEF -0.33% . That ratio has factually behaved as if Lehman has already passed ( http://www.bloomberg.com/video/94069685-making-the-bullish-case-for-stocks.html ). Let me reiterate: the bond market has behaved like a Lehman event/credit seize-up has actually occurred."
    "The payout for betting against the crowd and bull market in fear must by definition be significant because everyone else internally within the markets has bet on the negative narrative as if it is a 100% certainty that the whole thing is going down. Yet, the Black Swan of all Black Swans is that something positive happens, and that the end of the world gets avoided. Note that this is not a counter argument to the long-term bears/deflationists, who may be right over time. I am addressing an extreme that contextually does not make sense for the here and now. Fear is rarely "preemptive," and the crowd is rarely ever right at the extremes. Furthermore, because 2008 happened, that is the story everyone has anchored on to ... that is the map everyone is using to navigate this environment. But it's a completely different forest."
    We'll see. I'm buying index-based ETFs such as SPY or SSO when the markets go up, and shifting into cash or inverse ETFs when they go down. My buy and sell signals are coming from State of the Markets' Daily Decision Service. (Unfortunately, I can't relay them here because the Daily Decision Service is a paid subscription-based service.)
    Michael Ashbaugh charts technical breakdown.
    Mick Weinstein: Where's the volatility?   
    Cody Willard warns about Nailing a market bottom. "Cody will never forget the hard lessons learned from one particular market bottom."   
    State of the Markets articles include:   
    Looking Ahead to Wednesday's Market  
    Technical Talk: Hope vs. Reality Battle Rages On 
    Just Who Is That Expert Guest?  "We have written several times in this space on the potential hazards to your portfolio in listening to the latest market “guidance” or specific stock “recommendations” by the panelists or guests you may hear on a financial news network. There is no need to go through all the reasons why this is a bad practice and simple common sense, which we all admittedly lack at times, should tell you it is a bad idea. But it is hard to resist the siren song when that “professional” you respect is making a compelling case for why the market is certain to go up or down, or why that stock is the next AAPL or the next RIMM. But whether that expert ... Read More »
    Spain Reverses Position, Says Country is Shut Out of Credit Markets  
    Market Mover: EFSF Preparing Credit Line For Spain
    G-7 Call Produces Little, No Statement to be Issued  
    ISM Non-Manufacturing Report Above Consensus    
    The Game is About Hope Versus Reality 

    Market futures are modestly (~⅓ %) higher tonight.