Morning Musings From Art Cashin
Via UBS Financial Services
Currency Influence Asserts, Absents, And Then Re-Asserts, While Crude Takes A Brief Breather – Friday morning, a flurry of rumors circulated that a Greek rescue package would be announced before the sun went down. Cynical traders suspected that European officials might have started the rumor themselves. The purpose might be to avoid or at least delay a potential weekend panic.
Where the rumors came from didn’t matter. What mattered was that enough people (Euro shorts) bought into it that their response lifted the Euro. That, in turn, lifted gold and stock futures. For a short while it also supported the third Troika member – oil, but only briefly and very early.
From mid-morning into early afternoon, the currency influence seemed to blur a bit. Crude drifted negatively as stocks and gold seemed to turn indifferent to the Euro. Then the currency connection seemed to reconnect.
Gold firmed a bit as did stocks. Oil remained plagued by oversupply rumors.
In the final hour, stocks moved higher. Were they simply drawn to Dow 11,000; or was someone trying to push them over the goal line? Whatever, or whoever, became a bit unimportant as they crossed 11,000 for the, above noted, nano-second. They closed just below that level – thus, frustrating the media pundits who longed for a “number” to celebrate. Oh, well!
Advancing The “Advances” Argument – Friday, we reviewed the positive backdrop for the markets when the advance/decline (market breadth) line is making new highs. In this morning’s Gartman Letter, our good friend, Dennis Gartman, visits that theme by citing the estimable Paul MaCrae Montgomery:
Last week most equity market advance/decline lines hit new recovery highs, and some equity market cohorts also saw 52 week highs reach their best levels in several years. Both of these data sets tend to top a few months before the market averages top, so on form this bull [market] has some time to run. Lowry’s “Buying Power” and “Selling Pressure” also tend to reverse a few months before stock prices themselves do. “Selling Pressure” hit its low four weeks ago and “Buying Power” hit its high two weeks ago, so according to these data this bull market is entering a later stage but it still should see higher prices some time in the weeks to come.
So, we can see that many veteran market observers carefully watch the breadth index to help time the cycles in the markets. We’ll continue the watch.
Cocktail Napkin Charting – While the press and pundits hype the 11,000 level, the real resistance levels are up around 11,100. That’s where lots of Fibonacci targets and moving averages converge. Friday, the napkins suggested S&P resistance at 1194/1197. Friday’s high was 1194.66. Today’s numbers look like: resistance 1199/1202 and support 1182/1185.
Greek Rescue Package – There may be more questions than answers. The IMF austerity proposals look far more severe than
Greeks may accept. Merkel takes pounding at home for buckling. We’ll do a review tomorrow.
Consensus – The bulls have the ball and pundits are cheering. Let’s see if Euro based rally holds as package is examined. Stay very nimble.
Answer to the "the" puzzle: 1) Billy the Kid; 2) Attila the Hun; 3) Henry the Eighth 4) Jack the Ripper
Today's Question - "Are we related?" - What comes next in this logical (?) series: 8, 2, 4, 8, 2, 16, 8, 128, 16, __
The Week Ahead – Based upon published data, the watercooler wizards are guessing that this week’s calendar may look something like this:
Post Confidence Ind. N.A.
Wednesday: (7:00) Mortgage Apps. N.A.
(8:30) CPI 0.1%
CPI (Core) 0.1%
Retail Sales 1.2%
Retails Sales (ex Autos) 0.5%
(9:30) Cleveland Fed Pianalto
(10:00) Business Inventories 0.4%
(10:30) Crude Inventories N.A.
(11:00) Richmond Fed’s Lacker
(12:15) Kevin Warsh Speaks
(1:00) Dallas Fed’s Fisher
(2:00) Fed Tan Book
(7:00) NY Fed’s Sack
Thursday: BRIC Summit
(8:30) New York (Empire) Survey 23.0
Initial Claims -5K
(9:00) TIC (Treasury Intl. Cap Flows)
(9:15) Ind. Prod. 0.74%
Cap. Util. 73.3%
(10:00) Philly Fed Mfg. 20.0
(10:30) Natural Gas Invent. N.A.
Richmond Fed’s Lacker
(12:15) St. Louis Fed’s Bullard
(1:00) NAHB Housing Index 16
(1:40) Atlanta Fed’s Lockhart
(4:30) All The M’s
(9:00) San Francisco’s Yellen
Friday: Housing Starts 610K
Building Permits -10K
(9:55) University of Michigan Index 75.0 As you can see, we have a saloonful of Fed speakers this week. As usual, traders will home in on Thursday’s Initial Claims data. Despite the jump last week, the moving average is virtually unchanged. Some think the jump may have been post-Easter retail layoffs.
Earnings season kicks off this week. Traders will look to see if the expected better earnings are still the result of cost cutting or have revenues finally started to kick in.
This Day In History
On this day in 1814, Napoleon Bonaparte stood in the hands of captors. Just three years earlier he had been the self-proclaimed Emperor of France, de Facto ruler of most of Europe and the proud father of a new-born son by his second wife. In addition, even his enemies had conceded him a unique sense of governance - his Napoleonic code stands to this day on two continents.
But he had an aggressive M & A department that told him to gamble all this for a hostile takeover of Russia. It wasn't junk bonds that did him in. Instead it was junk weather. When his victorious army found itself forthright but freezing, he was forced to retreat. And even though he fought off old enemies in incredible ways - once they touched French soil he abdicated to save his people.
So, here he was, a short Corsican kid with a great mind and a lousy stomach who had come up just short of ruling the world in a way Alexander and Caesar never quite made.
Unable to accept this fall from grandeur, he secretly asked his private doctors for poison, that he might die rather than be humiliated. Once he had taken the potion, he decided to move for the melodramatic. Why die in your room alone when you could make a grand gesture.
He summoned his guards and demanded a meeting with his counterparts, the leaders of his captors. Once in audience, he would speak of the great work he had done and then die dramatically at the feet of these Lilliputians.
At the audience the medicine began to take its effect. But it was counterbalanced by the medication for his ulcer. Before his magnificent speech began, he developed -- hiccups. So the nearly emperor of the world did not die defiantly at the feet of his captors. Instead he hiccupped and stammered until he had to be helped - incoherently and inaudibly back to his bed.
Doubly lost, he quietly went into exile at Elba, but a year later when the medication wore off, he escaped and within 100 days, he had nearly recouped all his former glory. But then came Waterloo - but that's another story, for another day.
The bulls hoped that a punch through 11,000 in the Dow would be the bears’ Waterloo. They managed to achieve their goal for a nano-second but failed to achieve either a rout nor a conclusive victory.