Friday, August 12, 2011

Morning Update/ Market Thread 8/12 – Death Cross Edition…

Good Morning,

Ban the shorts! LOL, has never worked, will never work. It is simply more proof of just how un-free the “markets” really are. Still, it’s a temporary excuse to suck the suckers back in so that the HFT boys can churn profits from the dimwits who still believe in the “Fed’s” fantasy… and Santa, the Easter Bunny, and Tooth Fairy.

So stocks are higher for now, the dollar is lower, bonds are higher, oil is higher ($87), gold & silver are slightly lower, and food commodities are in the same range of the past two weeks – high enough to make one choke.

The completely inane Retail Sales report came in at a .5% “growth” rate month over month in July. This is completely absurd and is a closer proxy of money printing than anything else. This report suffers from survivor bias and is artificially elevated by massive errors in the way we under report inflation. Even at that, it was a miss as .6% was expected by the clowns. Speaking of circus callers, here’s Econoshill:
Retail sales strengthened in July, led by a spurt in auto sales but with support from most other components. Overall retail sales in July jumped 0.5 percent, following a 0.3 percent rise the month before (originally up 0.1 percent). The July boost was just below the consensus forecast for a 0.6 percent gain. Excluding autos, sales were healthy, posting a 0.5 percent increase, following a 0.2 percent rise in June (originally flat). Analysts had estimated a 0.3 percent increase. Gasoline sales actually rose during the latest month, supporting ex autos. Sales excluding autos and gasoline in July advanced 0.3 percent, following a 0.5 percent rise in June.

Overall, the consumer is still spending, although the pace is hardly gangbusters. Despite difficulties in the financial markets, the consumer has not withdrawn to the sidelines.

On the news, both equity futures and Treasury rates firmed.

“Consumer” Sentiment is released just before 10 Eastern for August. If their sampling contains anything from last week it should be interesting to say the least. Business Inventories also comes out at 10.

The S&P 500 produced a “Death Cross” yesterday which is when the 50 day moving average crosses below the 200dma. This is a very negative technical indicator and will provide strong overhead resistance especially with the 50dma down slopping so steeply:

The DOW has yet to cross but is only a few days away. The RUT also produced a Death Cross yesterday, the NASDAQ is going to cross today, and the Transports aren’t far behind.

Below is a 30 day, 30 minute, chart of the DOW. Here you can see a potential rising wedge forming that gives the market a little more room to rise before its next down stroke. There is a small gap in the chart about the 11,300ish area that may fill first:

What I read in the mainstream regarding these “markets” and our economy is just laughable, a joke. Did you know that “Made in China” is GOOD for Americans! That’s the CNN headline. “Insiders Go on a Buying Spree!” “Warren Buffett – “The Lower Stocks Go, the More I Buy!”” “Hiding Cash in Tampon Boxes – and Other Sneaky Spots.” “Wimpy Double-Dip Forecasts Could be Wrong,” but “Postal Service to layoff 120,000 jobs (220,000 by 2015)." These are just a few of the jokes that pass for business "news."

Like I said, laughable. And people wonder why their homes are underwater and their retirements are simply worth less if anything at all? The clowns are running the circus – I hope we all know better now, and aren’t giving it all away…