After trading lower overnight, and Europe and Asia trading lower, the market open modestly lower and is at 10:00am trading up 25 on the Dow and up 2.90 on the SPX. The rest of the major indexes are modestly higher. The big news over night was the new highs in Gold and Silver, with Gold trading 1436.20 and Silver trading 34.90. Oil also was higher over night, trading at 100.72 and Brent at 115.62. Concern grows that Oil production can be delayed for some period of time and reports that Oil could hit 130 near term. Copper, the much watched leader of the last 1 year market rally continues to consolidate its recent decline, and is trading lower at 4.4695.
The Euro continues its run to 140, trading higher at 1.3873 and the Dollar continues to knock about on support at 76.60. Bonds are soft after being higher overnight, apparently in response to the ADP payroll report of 217,000 new jobs. They also reported sharp increases in expected layoffs for both private and government employers. The 10 Year Note is off slightly at 3.4243% and the Bond is flat to slightly lower, trading at 4.5071%
Zerohedge has a "must read" story here on Bill Gross of PIMCO. His question is "Who will buy the Treasuries when the Fed won't?". I knew that the Fed appeared to be the major buyer of Treasuries at the almost daily POMO auctions, but I had not idea that they were the buyer of 70% of the annualized issuance since the start of QE 11 in November. Gross further estimates that current rates are about 1.5% too low if in fact the GDP accomplishes the expected 5% annual growth. He says that current prices and yields are sitting on an artificial foundation of Fed credit, which may or not be successful in handing off to the private sector, and creating a stable foundation for prices and rates. Sound like "risk off" to me!
The Momentum Change indicators generated the 3rd Sell confirmation since 1/20 and I have offered new short side trades. Please place protective stops at the suggested level. As I wrote yesterday, I expect this Bearish momentum to be significant (there has been not Buy signal since 12/1/2010), but first of all, protecting capital is most important and Mr Market has been very confused for the past month and a half, even though the indexes have traded higher.
For those interested in charts, take a look at yesterdays Bearish Engulfing Candle which took out the previous 3 days of gains.
It is possible that we get some kind of bounce today before the decline resumes.
Best To Your Trading!
Bill
No comments:
Post a Comment