posted by Peter Greene
Tuesday, June 30, 2009
ISM Chig. and 1 day S&P returns
This chart represents 1d S&P returns on release day for the ISM-Chicago figure. Returns are relatively normal during longer periods of expansion/contraction. But during periods of uncertainty, such as now, returns are volatile on the day of release and tougher to predict. Its sensitivity to Midwest auto manufacturing cycles is likely the current issue to decipher.
Monday, June 29, 2009
Firm's Oil comments
Crude Oil Weekly Report
Oil was a flat line as the market got pulled in different directions on a confusing mix of market fundamentals. Once again the Chinese are calling for a global currency so they can loosen their dependence on the dollar and talk of more big purchases of oil yet at the same time we have Bank of China Governor Zhou Xiaochuan playing down dollar worries by saying that China’s foreign exchange reserve policy is stable. That kind of talk may give the dollar a boost but the other key question for the oil market is whether or not the Chinese are going to continue their recent strong buying in oil.
Well the answer to that question is probably yes. Over the weekend it was reported that China plans to increase strategic crude oil reserves by 60 percent to 270 million barrels during the next five years by the Nikkei English News citing an unidentified official from China’s National Energy Administration. According to the report China will spend 30 billion yuan ($4.39 billion) for stockpiling facilities with a capacity to hold 169 million barrels. China Petrochemical Corp., China National Petroleum Corp. and other companies will construct and use the storage sites. If China continues to strengthen its reserve then oil will be bought on pullbacks. This should help provide some long term support.
Technicals: Because this is our initial piece on Oil, we decided to show a broader view of the USO (United States Oil Fund, LP) – our proxy ETF for the general crude contract. For the most part, the chart above represents a huge rounding type bottom. Notice the heavy volume at the trough – this is showing the type of volatile activity where money moves from weak hands to strong hands. This is most likely representative of oil bulls finally giving up after buying at much higher prices and new investors popping in feeling that oil was undervalued. Over short term, USO may linger but should eventually retest the $40 region and eclipse that to target the $55/$60 region over the more intermediate term.
posted by Peter Greene
Oil was a flat line as the market got pulled in different directions on a confusing mix of market fundamentals. Once again the Chinese are calling for a global currency so they can loosen their dependence on the dollar and talk of more big purchases of oil yet at the same time we have Bank of China Governor Zhou Xiaochuan playing down dollar worries by saying that China’s foreign exchange reserve policy is stable. That kind of talk may give the dollar a boost but the other key question for the oil market is whether or not the Chinese are going to continue their recent strong buying in oil.
Well the answer to that question is probably yes. Over the weekend it was reported that China plans to increase strategic crude oil reserves by 60 percent to 270 million barrels during the next five years by the Nikkei English News citing an unidentified official from China’s National Energy Administration. According to the report China will spend 30 billion yuan ($4.39 billion) for stockpiling facilities with a capacity to hold 169 million barrels. China Petrochemical Corp., China National Petroleum Corp. and other companies will construct and use the storage sites. If China continues to strengthen its reserve then oil will be bought on pullbacks. This should help provide some long term support.
Technicals: Because this is our initial piece on Oil, we decided to show a broader view of the USO (United States Oil Fund, LP) – our proxy ETF for the general crude contract. For the most part, the chart above represents a huge rounding type bottom. Notice the heavy volume at the trough – this is showing the type of volatile activity where money moves from weak hands to strong hands. This is most likely representative of oil bulls finally giving up after buying at much higher prices and new investors popping in feeling that oil was undervalued. Over short term, USO may linger but should eventually retest the $40 region and eclipse that to target the $55/$60 region over the more intermediate term.
posted by Peter Greene
Madoff to Jail
Bernie had no friends, no character witnesses, nobody no family . With that the judge gave him the maximum 150 years....
Still can't believe this guy is still lying and not helping anything in the investigation...This guy is the lowest piece of scum ever.
posted by Peter Greene
Still can't believe this guy is still lying and not helping anything in the investigation...This guy is the lowest piece of scum ever.
posted by Peter Greene
Firm's S&P note
This week’s trading on the S&P 500 should tell us a lot about the market. The questions likely answered this week are the following: Is this just a pause that refreshes and prices work higher or are we entering into a corrective phase commensurate with the typical seasonal summer weakness ?
As seen in the attached note the market is equally conflicted with this idea as well as the S&P 500 has been fairly directionless since early May oscillating a few percentage points above and below the 920 level. To gain some direction (up or down) the index needs to either break above 923 or below 875 (key intermediate term support).
Sentiment remains the markets friend as most sentiment measures suggest that investors have not endorsed the current rally.
posted by Peter Greene
As seen in the attached note the market is equally conflicted with this idea as well as the S&P 500 has been fairly directionless since early May oscillating a few percentage points above and below the 920 level. To gain some direction (up or down) the index needs to either break above 923 or below 875 (key intermediate term support).
Sentiment remains the markets friend as most sentiment measures suggest that investors have not endorsed the current rally.
posted by Peter Greene
Firm's Gold Comments
June 29, 2009
Gold Market Weekly Report
Last week, spot gold closed at $939.60 per ounce up $5.55 or 0.59 percent. Gold equities, as measured by the XAU Gold & Silver Index (11) rose by 1.52 percent for the week. The U.S. Trade-Weighted Dollar Index (12) fell by 0.54 percent.
Salient Research Points:
• Gold’s investment appeal resurfaced as the dollar came under renewed pressure after China’s central bank reiterated a call to lessen the dollar's role as the world's currency. The European Central Bank’s liquidity injection of 442 billion euros pushed money market rates and Libor to record lows. This marked the first week in four that gold prices recorded a gain.
• Contrary to market expectations, many analysts believe the Federal Reserve is unlikely to begin rate normalization in 2009 because of a negative output gap and tight levels of credit. RGE analysts said that in order to tame rising Treasury yields, the Federal Open Market Committee may later expand quantitative easing.
The chart at right shows what looks to be an ascending triangle forming in the GLD (streetTRACKS Gold Trust Shares). It has successfully held the lower line at the 92.00 region and, with continued dollar weakness, will likely retest the top trendline near 96-97 area. A clear break there will obviously send the metal to new highs likely snapping the previous peaks at 98.99 and 100.44 with ease. Using a pattern price projection, the 112-115 region should be attainable.
posted by Peter Greene
Friday, June 26, 2009
6/26/09 ... Resilient, resilient, resilient ...
What can we say about this tape other than what our title says, Resilient, resilient, resilient ...
Why do we say this ? Well one only has to look at the internals yesterday where the NASDAQ scored an up to down volume ratio of 8.24:1 with over 4 stocks (4.22) advancing for every on that declined. Not to be out down the NYSE scored ratio's of 7.50 to 1 on up to down volume and also had over 4 stocks (4.18) advance for every on that declined. with ratio's like that it is hard to call the recent pullback anything other than that.
Tech remains the most attractive area of the market as its issues have the largest bases (ie. floors) from which to advance off of. Within tech we are seeing a shift towards the largest cap names that have been out of favor for quite some time (ie. CSCO, ORCL, DELL, QCOM, etc … etc…)
As long as internals remain like this it is hard to not honor the uptrend we are still in off the lows.
Several names with bullish set ups (ie. big bases) within the NASDAQ 100 even beyond the names mentioned above are HSIC, ISRG, QCOM URBN and SRCL.
posted by Peter Greene
Why do we say this ? Well one only has to look at the internals yesterday where the NASDAQ scored an up to down volume ratio of 8.24:1 with over 4 stocks (4.22) advancing for every on that declined. Not to be out down the NYSE scored ratio's of 7.50 to 1 on up to down volume and also had over 4 stocks (4.18) advance for every on that declined. with ratio's like that it is hard to call the recent pullback anything other than that.
Tech remains the most attractive area of the market as its issues have the largest bases (ie. floors) from which to advance off of. Within tech we are seeing a shift towards the largest cap names that have been out of favor for quite some time (ie. CSCO, ORCL, DELL, QCOM, etc … etc…)
As long as internals remain like this it is hard to not honor the uptrend we are still in off the lows.
Several names with bullish set ups (ie. big bases) within the NASDAQ 100 even beyond the names mentioned above are HSIC, ISRG, QCOM URBN and SRCL.
posted by Peter Greene
Tuesday, June 23, 2009
S&P Morning note from the firm
As seen in the attached research note the S&P 500 ran into a significant downtrend line near 950 and has subsequently turned down. This area also represented the January 2009 peak before the index legged down to its’ lows. Given the S&P 500 had to rally almost 44 % before it hit this down trend it is only logical the index would stall here.
We would expect sideways and downward price movement with periodic minor rallies throughout the remainder of the summer, however we think for a while 950 will be the high price on the index, thus more defensive postures (ie. such as buying into corrections and selling the recovery bounces) and strategic trading is likely to make more sense than buying and being patient.
Additionally and as we mentioned yesterday as we enter the mid to latter summer seasonality trends also tend to become less bullish as the summer rally gets replaced by the summer doldrums. So the preponderance of evidence suggests continued softening is likely to occur for a while.
Only taking out the aforementioned resistance/downtrend line near 950 would change the picture from cautious to bullish.
posted by Peter Greene
We would expect sideways and downward price movement with periodic minor rallies throughout the remainder of the summer, however we think for a while 950 will be the high price on the index, thus more defensive postures (ie. such as buying into corrections and selling the recovery bounces) and strategic trading is likely to make more sense than buying and being patient.
Additionally and as we mentioned yesterday as we enter the mid to latter summer seasonality trends also tend to become less bullish as the summer rally gets replaced by the summer doldrums. So the preponderance of evidence suggests continued softening is likely to occur for a while.
Only taking out the aforementioned resistance/downtrend line near 950 would change the picture from cautious to bullish.
posted by Peter Greene
Tuesday, June 16, 2009
S&P Levels & Note from the firm
As seen in the attached report on the S&P 500, the index is stalling again and now turning down from the 950 area. Given the large run up off the lows this should not be a surprise to anyone to see the market starting to stall, pause or retrace. However just as the market bottomed and rallied in the face of bad news now we are getting the exact opposite where the news flow is improving or good and the market is selling off. It is this action of selling off on good or less than bad news that troubles us more than anything.
Early warnings of the loss of momentum can be traced back to early May when the S&P 500 broke below two faster accelerating trend lines and then subsequently failed to climb back above them. To keep things in context Monday’s action looks like a small blip so far, however we have to be aware that the S&P 500 has now failed on numerous attempts to get back above 950 and is now testing a less accelerated trend line while its RSI momentum diverges from price. Any movement below that aforementioned trend line level would suggest that market may want to test the next level of support below the market near 875.
At this point the low hanging fruit and easy money has been made and traders/investors need to be more selective while the market corrects the excesses of the run off the lows. It doesn’t mean money can’t be made on the long side or we have to have a full retest, it just means being patient and buying the next corrective wave may make more sense than chasing. To get a renewed bullish outlook 950 is going to need to be taking out on a solid upside breadth day (ie. good advance/decline and up to down volume ratios)
posted by Peter Greene
Early warnings of the loss of momentum can be traced back to early May when the S&P 500 broke below two faster accelerating trend lines and then subsequently failed to climb back above them. To keep things in context Monday’s action looks like a small blip so far, however we have to be aware that the S&P 500 has now failed on numerous attempts to get back above 950 and is now testing a less accelerated trend line while its RSI momentum diverges from price. Any movement below that aforementioned trend line level would suggest that market may want to test the next level of support below the market near 875.
At this point the low hanging fruit and easy money has been made and traders/investors need to be more selective while the market corrects the excesses of the run off the lows. It doesn’t mean money can’t be made on the long side or we have to have a full retest, it just means being patient and buying the next corrective wave may make more sense than chasing. To get a renewed bullish outlook 950 is going to need to be taking out on a solid upside breadth day (ie. good advance/decline and up to down volume ratios)
posted by Peter Greene
Monday, June 8, 2009
OMG- We knew Goverment control of pay was coming.
JUNE 5, 2009
White House Set to Appoint a Pay Czar
By DEBORAH SOLOMON
WASHINGTON -- The Obama administration plans to appoint a "Special Master for Compensation" to ensure that companies receiving federal bailout funds are abiding by executive-pay guidelines, according to people familiar with the matter.
The administration is expected to name Kenneth Feinberg, who oversaw the federal government's compensation fund for victims of the Sept. 11, 2001, terrorist attacks, to act as a pay czar for the Treasury Department, these people said.
View Full ImageAssociated Press
Kenneth Feinberg, who oversaw payouts to 9/11 victims, will keep tabs on executive pay at companies in bailout.
Mr. Feinberg's appointment could be announced as early as next week, when the administration is expected to release executive-compensation guidelines for firms receiving aid from the $700 billion Troubled Asset Relief Program. Those companies, which include banks, insurers and auto makers, are subject to a host of compensation restrictions imposed by the Bush and Obama administrations and by Congress.
Wall Street has been anxiously awaiting more details on how the rules will be applied. "The law is confusing and a bit ambiguous, and so we're looking for certainty as to how to structure pay incentives," said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a trade association.
The move comes amid a series of sometimes-overlapping efforts to curb pay at financial firms following perceived industry excesses that led to the lending boom and bust.
The Obama administration earlier this year issued guidelines that include limiting salary for top executives at some firms receiving TARP funds and requiring that additional pay be in the form of restricted stock, vesting only after the company repays its debt, with interest, to the government. Congress then chimed in with even tougher rules curbing bonuses for top earners at firms receiving TARP money. As part of that effort, lawmakers barred those firms from paying top earners bonuses that equal more than a third of their total compensation.
The White House has been wrestling with how to marry those two efforts, which in combination are more punitive than administration officials had intended.
The government is also pursuing a separate revamping of financial-sector rules that could change industry compensation practices more broadly. For instance, the Federal Reserve is considering rules that would curb banks' ability to pay employees in a way that would threaten the "safety and soundness" of the bank.
Mr. Feinberg is expected to focus on pay restrictions related to firms receiving TARP bailout funds, helping companies to interpret the rules and ensure that they are being followed.
For instance, companies have been confused about whether to pay 2008 bonuses, since restrictions on incentive pay didn't go into effect until early 2009. Some firms have made the payments while others have held off. Many firms are also unsure whether the "top earners" targeted by Congress include rank-and-file employees or just executives.
Journal Community
discuss
“ Obama is establishing a new cabinet of officials who are accountable only to him. This is an unprecedented power grab. ”— Kathryn Reagan
Mr. Feinberg will report to Treasury Secretary Timothy Geithner, but he is expected to have wide discretion on how the rules should be interpreted. Firms likely won't be able to appeal decisions that Mr. Feinberg makes to Mr. Geithner, according to people familiar with the matter.
Mr. Feinberg, founder and managing partner of the law firm Feinberg Rozen LLP, spent several years overseeing payouts totaling more than $7 billion to victims of the 9/11 attacks. He personally reviewed every claim, approving or denying awards and allocating sums to be paid out of the Treasury.
Write to Deborah Solomon at deborah.solomon@wsj.com
posted by Peter Greene
White House Set to Appoint a Pay Czar
By DEBORAH SOLOMON
WASHINGTON -- The Obama administration plans to appoint a "Special Master for Compensation" to ensure that companies receiving federal bailout funds are abiding by executive-pay guidelines, according to people familiar with the matter.
The administration is expected to name Kenneth Feinberg, who oversaw the federal government's compensation fund for victims of the Sept. 11, 2001, terrorist attacks, to act as a pay czar for the Treasury Department, these people said.
View Full ImageAssociated Press
Kenneth Feinberg, who oversaw payouts to 9/11 victims, will keep tabs on executive pay at companies in bailout.
Mr. Feinberg's appointment could be announced as early as next week, when the administration is expected to release executive-compensation guidelines for firms receiving aid from the $700 billion Troubled Asset Relief Program. Those companies, which include banks, insurers and auto makers, are subject to a host of compensation restrictions imposed by the Bush and Obama administrations and by Congress.
Wall Street has been anxiously awaiting more details on how the rules will be applied. "The law is confusing and a bit ambiguous, and so we're looking for certainty as to how to structure pay incentives," said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a trade association.
The move comes amid a series of sometimes-overlapping efforts to curb pay at financial firms following perceived industry excesses that led to the lending boom and bust.
The Obama administration earlier this year issued guidelines that include limiting salary for top executives at some firms receiving TARP funds and requiring that additional pay be in the form of restricted stock, vesting only after the company repays its debt, with interest, to the government. Congress then chimed in with even tougher rules curbing bonuses for top earners at firms receiving TARP money. As part of that effort, lawmakers barred those firms from paying top earners bonuses that equal more than a third of their total compensation.
The White House has been wrestling with how to marry those two efforts, which in combination are more punitive than administration officials had intended.
The government is also pursuing a separate revamping of financial-sector rules that could change industry compensation practices more broadly. For instance, the Federal Reserve is considering rules that would curb banks' ability to pay employees in a way that would threaten the "safety and soundness" of the bank.
Mr. Feinberg is expected to focus on pay restrictions related to firms receiving TARP bailout funds, helping companies to interpret the rules and ensure that they are being followed.
For instance, companies have been confused about whether to pay 2008 bonuses, since restrictions on incentive pay didn't go into effect until early 2009. Some firms have made the payments while others have held off. Many firms are also unsure whether the "top earners" targeted by Congress include rank-and-file employees or just executives.
Journal Community
discuss
“ Obama is establishing a new cabinet of officials who are accountable only to him. This is an unprecedented power grab. ”— Kathryn Reagan
Mr. Feinberg will report to Treasury Secretary Timothy Geithner, but he is expected to have wide discretion on how the rules should be interpreted. Firms likely won't be able to appeal decisions that Mr. Feinberg makes to Mr. Geithner, according to people familiar with the matter.
Mr. Feinberg, founder and managing partner of the law firm Feinberg Rozen LLP, spent several years overseeing payouts totaling more than $7 billion to victims of the 9/11 attacks. He personally reviewed every claim, approving or denying awards and allocating sums to be paid out of the Treasury.
Write to Deborah Solomon at deborah.solomon@wsj.com
posted by Peter Greene
Firm's morning comment
During the very early stages of this advance off the then lows we would watch how the markets reacted to negative news flow. We did this to gauge if all the bad news was already discounted into prices. And similar to many other lows in the past where bad news was widespread this tape also had its' share of scary headline news. And like other lows in the past this market also ignored the bad news every time it came out and managed to work higher. Since markets are a discounting mechanism they try to look ahead. Hence a few months back the markets were likely anticipating the not so bad economic data that we are now seeing. Thus Friday's bullish non-farm payroll actually led to a sell-off after the initial euphoria faded. This selling on good news was most likely because it was already anticipated. Now one day of selling into a rally on bullish news does not make a raging sell signal, however it should at very least make one start watching more closely to see if bullish news in the coming days and weeks leads to more of the same activity (ie. selling the good news) that we saw on Friday.At some point we are likely to get a testing sequence and selling the good news could be an early indication signal to take some chips off the table after a near 50% run off the lows.
posted by Peter Greene
posted by Peter Greene
Tuesday, June 2, 2009
S&P Levels-Post from firm
As seen in the attached pdf the S&P 500 broke back above its 200-day moving average yesterday. While this is more psychological than anything else it does suggest upward price momentum has been persistent, which is a more significant development. The next upside target for the S&P 500 comes into play at the 1,000 level while key downside support remains in the 875 area. As long as the 850 level is not violated the fears of a deep corrective wave remain off the table.
This current run up off the lows is very reminiscent of the run up off the late 2002/03 lows when breadth remained bullish for quite some time and powered stocks higher in rapid fashion without any significant pullbacks, even in with the back drop of periodic high bullish sentiment readings. So far the similarity between the 2002/03 rally and this current rally is the persistence of consistently strong internal readings. However this time around we have not had sentiment reading get bullish even in the face of a price melt up. In fact anecdotally sentiment remains extremely cautious, which is bullish and suggest under investment to equities still exists.
As long as sentiment remains cautious and tape action continues to strong through bullish advance to decline and up to down volume readings then the market can still work higher
posted by Peter Greene
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