S&P 500 Recap and A Look Inside the Markets

Hopes that Greece will get a second bailout boosted market sentiment around the world on Friday, a day after stocks and the euro plunged on fears over the pace of the global economic recovery.

Stocks, particularly in Europe, have recovered a large chunk of the losses posted on Thursday after EU leaders backed another bailout for Greece should the Parliament there approve euro28 billion in austerity measures in a vote next week.Japan's Nikkei 225 was 0.9 percent higher to close at 9,678.71, while South Korea's Kospi rose 1.7 percent to 2,090.81.

Hong Kong's Hang Seng added 1.9 percent at 22,171.95, with banking shares getting a boost after Chinese Premier Wen Jiabao wrote a newspaper commentary indicating China is getting its inflation problem under control.

Mainland Chinese shares also gained on Wen's comments. The Shanghai Composite Index rose 2.2 percent, the biggest gain in four months, to 2,746.21, while the Shenzhen Composite Index gained 2.3 percent to 1,136.39.

S&P futures are up three points this morning with the following reports pending

08:30 GDP – Third Estimate

08:30 GDP Deflator – Third Estimate

08:30 Durable Orders

08:30 Durable Orders –ex Transportation

German Retail Sales

08:00 German IFO – BusinessClimate, Current Assessment, Expectations

Thursday's session opened sharply lower, bounced several points around 10:00 am, then continued lower to put the low of the day on the chart just before 11:00 am. Breaking to new intraday lows after the first hour had the look and feel of a dismal trend day in the works. But the SPX began to claw back, in fits and starts. About 1:30 pm a dozen points had been recovered and then it looked like the index was going to rollover. Eight points were lost before news arrived of a new, latest and greatest Greece austerity plan. For whatever reason, traders loved what they saw in the news and the index rocketed skyward ten points in four minutes and then tacked on five more before the close. This was a powerful reversal day but the seeds were planted early in the session as technology and SOX were strong throughout the morning.

For the SPX Index there were 184 components advancing and 291 components declining. On the NYSE 3,153 issues were traded with 1,279 advancing issues and 1,761 retreating issues, a ratio of 1.38 to one declining. There were 28 new highs and 49 new lows. The five day moving average of New Highs is 44 while the five day moving average of New Lows is 40 and the ten day moving average of Net Advancing is 42.

 Thursday’s volume far exceeded Wednesday's volume. Late in the session the volume exploded upward along with the index. The MO and MSI look much more bullish tonight than might be expected after a session that the SPX lost almost four points.

This is nothing more than a short covering rally in the hope of the bailout for Europe and you know if Greece gets bailed out then help will be given to the other nations that make up the PIIGS. This is a form of QE, and will certainly add to inflation. The problem is that as the EUR portion of the EUR/USD weakness the dollar will strengthen keeping a lid on any rallies.

Metals Update

With the huge move down today in Gold and Silver many are predicting no summer rally in Gold and Silver. I am not throwing in the towel just yet. Silver is down another percent this morning but if it can get some buying in today then yesterday could just be a head fake. This occasionally happens before the blast of in volatility squeeze unfortunately there is no way to know. So if you are going to play long then you stop out a couple three percent below the low end of the range. At the open the SLV will be at the low end of the range, but we have economic data that will certain move the markets around 830 so lets see where we open.

Gold on the other hand has broken below its trend line and heads toward the lower end of the zone.

Dollar is up against major resistance. hope this range holds or the PM's are going to have a really ugly July and August. Statistically a rising wedge in a major downtrend usually ends in a big down move but this can last a couple of months, for an example of this, take a look at the SPX chart for summer of 08, see how that ended.

Dollar Eurozone Bonds

With no QE, and all the problems in europe the dollar is benefiting and everything else is selling off. 

ECB President Trichet today said that the risk signals from the situation in Greece are "flashing red" as far as stability in the Euro zone are concerned. Fears of some sort of contagion spreading to the big European banks are running very high over there. 

curious that in this environment bonds wouldn't breakout

Wow look like the eurozone will be gone pretty soon. Check this out:

Last year, Germans were asked to pony up money to fund the bulk of a Greece bailout package. Germany lent money to Greece with the provision that Greece would get its act together.

Now, a year later, Greece hasn't changed a thing... and, is now in need of more money (what a surprise) to ward off bankruptcy. The EU is once again asking Germany to out up most of the money with the demand the Greeks really do something this time.

So the German government keeps paying, and the German people see their hard-earned tax dollars going to benefit strangers in another country – strangers who appear to have a relaxed lifestyle, now at the expense of the German workers.

The EU is trying to force Germany to bail out Greece to keep the union intact.

I would not be surprised to see Germany back out of the European Union.

Meanwhile, over in Greece – they say they don't want the money. They would rather default, rather declare bankruptcy and wipe the slate clean, than take on more burdensome debt and be forced to change their standard of living.

The EU is trying to force Greece to take the bailout money to keep the union intact.

Don't be surprised to see Greece back out of the European Union as well.

Then, of course, there's Portugal, Italy, and Spain. All have problems similar to Greece's. All have taken bailout money. And all are on the verge of needing another bailout.

They had a good run, time to say bye bye to the eurozone

Peter Schiff interview on KWN

When asked about year over year increases in inflation in the UK with butter being up 57%, bread 50%, potatoes 103%, tomatoes 63%, cauliflower 82.6% Schiff remarked, “Inflation is the money that the Fed is printing that is causing all of these prices to rise. The Fed has been printing money like crazy. The Federal Reserve has been printing enough money to buy all of the net new issuance of US government debt...Central banks around the world are also printing money to prevent their currencies from rising against the debased dollar.

So the world is in a money printing fest and the result is that prices are rising, mostly for commodity prices. The Fed is going to be announcing today what it’s going to do with interest rates once the official policy of QE2 or dollar debasement comes to an end. Will they replace it with a QE3? I think the Fed will try to deny that, but I believe that they will do it because without the continuous printing of money, interest rates will rise sharply and this phony bubble economy that’s built on a foundation of cheap credit will come tumbling down.

Original Post   

Change To Inflation Measurement On Table As Part Of Budget Talks -Aides

Change To Inflation Measurement On Table As Part Of Budget Talks -Aides

By Corey Boles and Janet Hook

WASHINGTON -(Dow Jones)- Lawmakers are considering changing how the Consumer Price Index is calculated, a move that could save perhaps $220 billion and represent significant progress in the ongoing federal debt ceiling and deficit reduction talks.

According to congressional aides familiar with the discussions, the proposal would shift how the Consumer Price Index is calculated to reflect how people tend to change spending patterns when prices increase. For example, consumers tend to drive less when gas prices increase dramatically.

Such a move is widely seen by economists as resulting in a slower rise in inflation. That would impact an array of federal programs that are linked to CPI including the Social Security program and income tax brackets set by the federal government.

The proposal could lower federal spending by around $220 billion over the next decade, based on calculations by last year's White House deficit commission, which recommended the change as part of its final report.

According to two congressional aides familiar with the budget negotiations, the shift is being "seriously discussed" as part of the ongoing talks to strike a budget deal, that would be used to ease the passage of a required increase in the country's debt limit.

Those talks involve Democratic and Republican lawmakers from both chambers and are led by Vice President Joe Biden. The group held its latest meeting Tuesday as they strive to reach the broad outlines of a compromise on federal spending by the end of the month.

original 

Dollar Metals Bonds

Dollar got a boost from Bernanke, still stuck in a range

Silver gave back all of its earlier gains after announcement, still in a tight range looking to explode one way or another, the longer this last the more explosive the move will be.  

Gold obviously doing much better than silver top end of pennant soon to make all time highs this leads me to believe the move in Silver will be up and not down. 

Long bonds are in a topping formation 

S&P 500 Recap and A Look Inside the Markets

The FOMC release this yesterday basically reaffirmed what most of the market has been thinking for some time now, namely, that the economic "recovery" is proceeding at a moderate pace though "somewhat more slowly" than had previously been expected. 

They plan will be keeping interest rates near zero for the next few months, or in their words, "an extended period of time". They repeated that the QE2 program would come to an end this month but at this point they had no intention of actually reducing their balance sheet or selling any of the $600 billion in Treasuries which they have purchased over the last 6 months or so. What they will do however is to reinvest the proceeds from maturing Treasury bonds. That will give some stimulus but compared to the massive sum of $600 billion, amounts to a drop of water into the bucket. This news sent the markets lower.

Wednesday'session opened without a significant gap but quickly moved four points lower and put on the chart what held as the low of the day until very late in the session. The SPX then quickly began to move higher and put the high of the day on the chart just before 11:00 am. The next several hours were choppy with a slight negative bias until Fed Chairman Bernanke began his press conference. The market obvious disliked what he had to say and the last ninety minutes saw the index shed almost twelve points, closing at the lows of the session.

For the SPX Index there were 96 components advancing and 378 components declining. On the NYSE 3,156 issues were traded with 1,269 advancing issues and 1,788 retreating issues, a ratio of 1.41 to one declining. There were 67 new highs and 23 new lows. The five day moving average of New Highs is 42 while the five day moving average of New Lows is 46 and the ten day moving average of Net Advancing is 174.

Wednesday’s volume was about equal to Tuesday but still failed to exceed the ten day average. Volume was greatest on the intraday up moves but also surged as the session closed with a thud. Our Breadth Indicators look quite mixed suggesting some choppiness ahead. The McClellan Oscillator ten day average remains oversold.

83.6% of the SPX are above their five day moving average, 74.8% are above their 10 day average, 41.2% are above their 20 day moving average, 27.4% are above their 50 day moving average, and 58.8% are above their 200 day moving average.

S&P 500 Recap and A Look Inside the Markets

Good morning, after what appears to have been a short covering oversold rally the futures are down a bit this morning. We also have the FOMC rater decision pending. Yesterday markets around the world were happy to hear of the news that the Chinese appear to be willing to lend a hand in the European situation. In addition, expectations were rising that PM Papandreou's new government would receive a vote of confidence today in Greece. .

Tuesday's session opened with a gap higher and didn't even think about going lower until just before noon. From noon until 2:00 pm the SPX gave back a mere four points before heading higher and putting the high of the day on the chart at 2:39 pm. The final hour was a bit choppy but the index refused to give back much of the day's gains as the SPX closed in the top 15% of the intraday range and right on the 1295 support and resistance line.

The index was pushed above 1280, buyers were in a panic that the train was leaving without them. Institutions that must report to fund holders at the end of the quarter were buying heavily today in fear that they were about to miss the next leg higher. While a breather is likely after a session such as this, can you bet that the institutions won't be buying the dip and will be protecting themselves, at least until quarter end?

For the SPX Index there were 429 components advancing and 45 components declining. On the NYSE 3,158 issues were traded with 2,614 advancing issues and 464 retreating issues, a ratio of 5.63 to one advancing. There were 68 new highs and 25 new lows. The five day moving average of New Highs is 33 while the five day moving average of New Lows is 57 and the ten day moving average of Net Advancing is 80.

Tuesday’s volume was heavier but still failed to exceed the ten day average. There were two distinct peaks in volume, both associated with large up moves on the SPX. This is a bullish pattern. Our Breadth Indicators look much more bullish this evening. The McClellan Oscillator is approaching overbought while the ten day average remains oversold; this has a tendency to be bullish until the ten day average moves into neutral. Continue to watch the Summation Index for a break above zero; today it finally reversed and is headed higher.

unable to upload charts for some reason, will be back later