SPX DXY BONDS METALS OIL

Fed is getting exactly what they want, a lower base from where to restart the QE, and its not just our government Europe is in the same situation. Yesterday we had more horrible economic news and bad news out of Eurozone as well. The situation in Greece continued to be an issue with Germany saying they want to delay a second bailout of Greece until September. In addition, another weak report in the UK, this one on retail sales, kept concerns about the global economy at the forefront. Global markets were lower across the board and the futures in the U.S. were modestly weak before the open. In the US, Initial Claims for Unemployment Insurance for the week ending 6/11 fell by 16,000 to 414K. This was below the consensus estimate for 422K and last week's total of 430K. Continuing Claims for the week ending 6/4 came in at 3.675M vs. 3.68M and last week's 3.696M. Housing Starts rose 3.5% in May to an annualized rate of 560K. This was above the consensus for 544K. Building Permits for May rose 8.7% to 612K. This was also above the consensus of 556K and last month's reading of 563K. At 10:00 am the Philadelphia Fed numbers came in as the largest decline in history and the market was rattled momentarily.

Thursday's session opened without a significant gap. The trend was moving higher until the Philly Fed report at 10:00 am sent the market into a brief tailspin. But within moments the SPX had recovered eight points and was moving along very nicely until shortly after 1:00 pm when the bottom fell out and the index ran off almost fifteen points to test the 200 DMA. But the SPX bounced sharply off the moving average and regained about ten points in the final hour to close at about 60% of the intraday range. It seemed to be a very bullish reversal.

Thursday’s volume was above the ten day average but below Wednesday's volume. There were four intraday surges of volume and three of them were associated with index up moves. The Breadth Indicators look much less bearish after Thursdays session. The McClellan Oscillator remains very oversold and the ten day average is also oversold. MSI could go even lower, so still some confusion even though I liked the price action yesterday. 

Dollar is right up against resistance and commodities are barely hanging on. 

Volatility Squeeze, Waiting for the pop (up, not down pls)

Nice Penant in a strong uptrend, on the hourly charts it looks like a rolling top, so depending on your time frame (proceed accordingly) 

Double Top?

Stocks and Bonds

No deal for Greece's second bailout was the noise de jour, I mean who cares about Greece its the size of North Carolina. Then there was a report that Moody's has placed three French banks on review (Oooo, Moody's is well known for timely calls, NOT!) for potential downgrades due to exposure to Greece's debt put pressure on equities. 

And then more bad economic news, the Empire Manufacturing Index was horrendous and that pushed the futures even lower. The Consumer Price Index for May rose by +0.2%, which was above the consensus for +0.1%. When you strip out food and energy (I wish I could strip that out of my budget), the so-called Core CPI came in with a gain of +0.3%, which was also above the expectations for +0.2%. The Empire Manufacturing Index for June was reported at -7.79, which was well below the consensus expectations for a reading of 11.72. In addition, the Employment Index was reported at 10.20 vs. 24.73 in May, while the New Orders component plummeted to -3.61 vs. 17.19. Looks like SPX headed to 1200! Folks are running to bonds, dollar is rallying, oil crashing. You see QE is working just fine. 

Volume not even close to capitulation. The big spikes of volume came during the second ninety minutes of the day during the heaviest selling. 21.4% of the SPX are above their five day moving average, 15.2% are above their 10 day average, 8.4% are above their 20 day moving average, 13.4% are above their 50 day moving average, and 53.2% are above their 200 day moving average.

ADX about to breakdown

OVERSOLD

‘Tidal Wave’ of Gold Demand Coming From China, India-BLOOMBERG

Gold may extend its decade-long rally as demand surges from emerging markets including China and India, according to the producer-funded World Gold Council.

“There’s a tidal wave of gold demand coming,” Jason Toussaint, the WGC’s managing director of U.S. and Investment, said today at the Bloomberg Link Money Managers Conference in Boston. “A key is the long-term fundamental change in emerging markets. The biggest markets of growth are China and India.”

Gold is up 7 percent in New York this year, touching a record $1,577.40 an ounce on May 2. The metal has gained fivefold since the end of 2000. India is the biggest consumer of the metal and China is the second-biggest, according to data from the council.

“There’s been a tremendous surge in the monetary base globally,” Edward Meir, a senior commodity analyst at MF Global Holdings Ltd., said at the conference. “The dollar is losing its luster. The natural currency to be bought is the yuan, but because you can’t buy the yuan, people are buying gold.”

original source

Saving the Dollar at all cost for the time being

Gold Dollar Bonds CCI

Gold continues in a strong steady uptrend above the 50dma (i'm not trading this)

Miners don't look so good, they sell off with the stock market but get cheaper in valuation as gold continues to rise. 

Dollar makes a lower high is above the 50dma which by the way is still showing a downward slope.

After the May sell off which brought it to test the 150dma seems to be stuck under the 50 in  a sideways consolidation. 

Notice the multiple tops. Maybe this market is now signaling stimulus!

SILVER UPDATE

Add Physical at 34

Watching the SQUEEZE PLAY. We had the head fake lower, hope this expands higher by Friday into the first day of deliver that TF talks about.

range bound until further notice from the fed

With QE ending the dollar has been rising and now over the 50dma, the stock market is looking terrible as is the economic data over the past many weeks. Things are pretty horrible out there and there isn't really a trade I can see to be very enthusiastic about long or short until we know exactly what Uncle Ben plans to do.

By now everyone knows of the abject failure of QE1 and 2 and last week's dismal employment reports confirm the impact of the stimulus (lack of) efforts by OweBama and the Fed that despite the record doses of both monetary and fiscal medicine, they did not produce the desired results.

Now the Fed is trying to save face, and seems like they are trying to save the dollar and the result is that the SPX has fallen substantially and 401k's are going down the tubes and the faux recovery fizzing away (or off the cliff) due to decreased consumer spending. Right now the Fed and OweBama have to make a decision. 

Fed has to decide whether it wants to throw Owebama under the bus, that happens if there no stimulus is provided, but you have to think there will be, the "Bernank" is scared to death of deflation he has said so many times not in those exact words but believe me he has implied it. So I doubt no stimulus is coming. Truly, I have no idea what they are going (no one does) to do but you'd have to think (guess) it will be pro inflation and not pro deflation. 

So the secular trend which is Inflation growth and the growth or assets related to inflation will increase in price. How much inflation, again who knows how much stimulus etc at this point is guess work.

 

So what to trade now? Again one really knows! And I really think people are worried and they are not making any big decisions and that is why you are seeing a range in trade for oil, and metals.

So there really isn't anything worth while to report one even a daily basis. Preserve capital, buy physical at the low end of range if you can and wait out the summer.

Just a heads up for regular visitors to this site. I'm not going to be putting up charts every day unless there is a move out of this range or we have a shift in policy. If you are trading, then you obviously know what you are doing and you don't need my help. Please note as the range contracts as it has it will create a volatility squeeze which will lead to an expansion phase in price so watch for that. Best of luck