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Do Markets Sense Trouble?

David Fry's picture




 
  
4-12-2013 3-45-07 PM force

Retail Sales lay an egg (-.4% vs 0% exp & prior 1.1%) and ex-Autos/Gas (-1% vs .3% exp & prior .4%). The more unreliable U of Michigan Consumer Sentiment Indicator (72.3 vs 79 exp & prior 78.6). Business Inventories fell (.1% vs .4% exp & prior 1%) Lastly, PPI tumbled (-.6% vs -.2% exp & prior .7%) while the pathetic “core” PPI rose slightly (.2% vs .2% exp & prior .2%). PPI data was the biggest decline in 10 months, as gas prices plunge. This headline number here will allow more justification for QE and $1.25-1.75 Fed buys scheduled for Friday.
 
JP Morgan (JPM) earnings were released beating some expectations but overall they’re a confusing mix of “except this and that”. A deeper analysis courtesy of Zero Hedge, “JPM beats expectations solidly, coming at $1.59 on expectations of $1.39 print, this was largely driven by a bigger than expected loan loss reserve release in its real estate portfolios ($650MM pretax), and card services ($500MM pretax), which was the largest combined release number since the $2 billion reduction in Q1 2012.” Wells Fargo (WFC) beats on earnings 92 cents vs 89 cents expected but like JPM misses slightly on revenues $21.3 billion vs $21.6 billion expected.
 
Japan stated it doesn’t intend stimulus (QE) to have any impact on the value of the yen. If you believe that then I’ve a nuclear plant to sell you in Fukushima.
 
In Europe stocks were weaker on losses for Rio Tinto and auto makers including VW. Is it possible Cyprus will need 30% more in the bailout funds? It would seem so according to the PM. Collateral? That’s all gone.
 
China stocks were down for the week with the Shanghai CSI 300 down nearly 1% on the week. The India Sensex index lost roughly 1.5% last night occasioned primarily by losses to software heavyweight Infosys which slid an amazing 21% on earnings miss. In Australia bonds are set to rally as the terrible unemployment there rose prompting more QE there according the PIMCO.

Friday saw panic selling in gold as the metal broke $1,500 in a free-fall move. Is this a sign of “risk on” or something more sinister? Perhaps Cyprus is a major seller or there’s a large margin call somewhere. Some even assert some countries with debt problems are selling gold to raise capital to finance their country’s needs.
 
Markets seem to be coming unglued as inter-market correlations are breaking down. Those countries and regions engaged in QE are significantly outperforming those not in that game. Those markets with the greatest volatility (EMs, commodities and BRICs) are seeing selling while more conservative sectors (healthcare, consumer staples, dividends and big caps) are garnering the most inflows. Low volume is still ubiquitous in U.S. sectors overall. Bulls suggest inflows are great but most of this comes from large pension plans, hedge funds and particularly overseas investors seeking more safety in U.S. companies. Bond prices (TLT) were higher once again on a safety bet. The dollar (UUP) was flat. Commodities (DBC) continue their substantial declines indicating little global economic demand and growth.
 
We’re still 60% long mostly equities with a mix of fixed income and dividend issues. The rest is in cash.
 
Volume was once again light and breadth per the WSJ was negative.

 

4-12-2013 5-21-28 PM Markets Diary

 

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 SPY 5 MINUTE 

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The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.

 


The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.

 

The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.

 


 

There is something wrong with markets. Perhaps it’s just me but I feel it in my gut. What serves us well is to stay systematic and disciplined. In this environment it isn’t easy.
 
Next week is mostly about earnings with economic data focused on the Beige Book (Wednesday) and Philly Fed (Thursday).
 
Let’s see what happens.
 

 

 

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Sat, 04/13/2013 - 11:27 | 3444483 ebworthen
ebworthen's picture

"...as long as the FED keeps printing."

YUP.

Sat, 04/13/2013 - 11:16 | 3444463 Never One Roach
Never One Roach's picture

Gold down b/c:

1. Cyprus selling;

2. tax season...bills due;

3. dollar stronger as world panics about their bansk stealing their deposits and yen weakening;

4. margin calls;

5. we are in a Deflationary Death Spiral (to quote another ZH'er) and the Fed is falling behind as defaults severely outweigh printing right now; and,

6. the third lag of our depression is setting in as food stamps, joblessness, etc soar.

 

Few are buying anything that is not zero down; for example, houses, cars, etc....all bought with zero down, years to pay...or not pay back at all and simply defalut....which seems to be all the rage right now.

 

jmho

 

Sat, 04/13/2013 - 11:37 | 3444494 Mark123
Mark123's picture

You missed one of the key reasons - gold down to scare people away from hoarding wealth as bankers devalue currency to hide their problems.  I think this is all to do with Japan (apparently controlled by banking cartel) going into hyper printing mode.  Just think what is going through the minds of Japanese savers now - would you keep your savings in a 0% interest yen denominated bond/cash account?  If not, would you put your savings into:

1. Japanese stock market

2. US/Europe

3. China

4. Gold

 

It is #4 that is a huge problem for the cartel (at least in the short run).  In the longer term the banking cartel owns most of the gold bullion so they will do VERY well when they have completely thrashed all fiat.

Sat, 04/13/2013 - 11:30 | 3444488 Never One Roach
Never One Roach's picture

Scariest chart of them all:

 

http://research.stlouisfed.org/fred2/series/WTP30A28

 

 

Sat, 04/13/2013 - 11:06 | 3444450 alien-IQ
alien-IQ's picture

"There is something wrong with markets."

Really? Ya think?

Sat, 04/13/2013 - 10:55 | 3444433 DawgAss
DawgAss's picture

Enough DAMN charts already!!!!!!!

Sat, 04/13/2013 - 11:39 | 3444500 max2205
max2205's picture

Shut up and learn.  I like them

Sat, 04/13/2013 - 10:19 | 3444387 Aussiekiwi
Aussiekiwi's picture

'In Australia bonds are set to rally as the terrible unemployment there rose prompting more QE there according the PIMCO.'

 

I live in Australia and this guy is dreaming, unemployment just moved up for march to 5.6% and remember we dont drop people of the unemployment lists and kick them into the gutter like the land of the free, so that figure is a lot more accurate than the US figure. I believe the true US figure is close to 12%, If Australian unemployment is 'terrible' what comments would he use to describe the US unemployment rate, terminal  perhaps?

I'm thinking of dropping my full time I.T job and going walk about for awhile, perhaps drift back into something other than I.T in 6 months or so, I would not be thinking of doing that if I had any doubts about my ability to obtain work.

 


Sat, 04/13/2013 - 10:29 | 3444399 cifo
cifo's picture

Flutter. Just before the collapse.

http://www.youtube.com/watch?v=aZQlmxrmjXQ

 

Sat, 04/13/2013 - 10:19 | 3444386 Aussiekiwi
Aussiekiwi's picture

'In Australia bonds are set to rally as the terrible unemployment there rose prompting more QE there according the PIMCO.'

 

I live in Australia and this guy is dreaming, unemployment just moved up for march to 5.6% and remember we dont drop people of the unemployment lists and kick them into the gutter like the land of the free, so that figure is a lot more accurate than the US figure. I believe the true US figure is close to 12%, If Australian unemployment is 'terrible' what comments would he use to describe the US unemployment rate, terminal  perhaps?

I'm thinking of dropping my full time I.T job and going walk about for awhile, perhaps drift back into something other than I.T in 6 months or so, I would not be thinking of doing that if I had any doubts about my ability to obtain work.

 


Sat, 04/13/2013 - 11:26 | 3444481 Mark123
Mark123's picture

Wow....maybe Australians really are idiots? 

 

I THINK what the author was trying to suggest was that Australia would use the "terrible unemployment numbers" to justify MOAR money printing....just like USA, Europe, UK, Canada, Japan etc etc etc....

Sat, 04/13/2013 - 10:23 | 3444394 El Oregonian
El Oregonian's picture

John Galt?

Sat, 04/13/2013 - 12:17 | 3444579 Boris Alatovkrap
Boris Alatovkrap's picture

Who is John Galt?

Sat, 04/13/2013 - 09:56 | 3444365 Stuck on Zero
Stuck on Zero's picture

The conclusion from these charts is: Counterfeiters rule!

 

Sat, 04/13/2013 - 09:51 | 3444357 MythicalFish
MythicalFish's picture

It's just you. Everyone else here thinks the rally 's got legs. LOL

 

So the big question is: when.

 

My guess: wait for this. Worked last time.

 

http://www.store.economist.com/Images/ECO/CMS/Mar17-Crikey_Large.jpg

 

Sat, 04/13/2013 - 11:30 | 3444485 Mark123
Mark123's picture

Modern economic theory - take bankrupt country and print endless amounts of money....give money to corrupt, rich, self-serving money-lenders that caused bankruptcy.

 

Repeat endlessly until utopia is reached.  NEVER define utopia.

Sat, 04/13/2013 - 12:14 | 3444572 Boris Alatovkrap
Boris Alatovkrap's picture

Time is to wake up neighbor. Turn off Amerikan Idol and Maroon 5, forget about Lindsay Lohan and Lady Gaga (but is save small place for Britney Spear now hair is grow back full body beauty) and consider where is all wealth and liberty gone. Forget about Newtown shooting and gun control and make up new law. Stop is listen to government talking head and blow hard economist. Think for self! Is things better or worse, is things get better or worse in existing direct!? Get a pair!

Sat, 04/13/2013 - 09:53 | 3444355 Aegelis
Aegelis's picture

Mmmm charts!  Nom nom nom nom.  "Please, sir, I want some more."

Sat, 04/13/2013 - 10:05 | 3444373 petolo
petolo's picture

Can I buy 12 rolls of those charts for my outhouse ?

Sat, 04/13/2013 - 10:18 | 3444385 El Oregonian
El Oregonian's picture

No.No. NO! That could cause you to contract "Lying Ass" syndrome...

Sat, 04/13/2013 - 12:07 | 3444550 Boris Alatovkrap
Boris Alatovkrap's picture

Too much porno-graph-ic! Technicals is maybe interesting, but not so interesting. Technical forecast not work because graphic is manifest of correlation, not causality. Great Recession is cause by meat head politician and money lust banker, not by graph.

Sat, 04/13/2013 - 09:46 | 3444348 q99x2
q99x2's picture

You do the Humpty Hump.

Sat, 04/13/2013 - 09:55 | 3444364 Aegelis
Aegelis's picture

All the banksters sing:

"Stop whatcha doin'

'cause I'm about to ruin

the image and the style that ya used to.

I look funny, but yo I'm makin' money,

see so yo world I hope you're ready for me."

Sat, 04/13/2013 - 12:08 | 3444545 Boris Alatovkrap
Boris Alatovkrap's picture

Lesson for greedy ass bankster - you can is sheer sheep many time, but can only skin once. But even when sheer, if sheer too close, can kill sheep with staph infection by 1000 nicks.

Sat, 04/13/2013 - 12:19 | 3444581 Aegelis
Aegelis's picture

Good to remember as I am getting fleeced.

Sat, 04/13/2013 - 12:30 | 3444606 Boris Alatovkrap
Boris Alatovkrap's picture

First you are fleeced, and on way to FEMA camp, next is deloused. Welcome to Brave New World courtesy Global Banking Cabal. Time is go off-grid.

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