Posts Tagged ‘vix’

Markets In Black After Technical Support

Thursday, December 15th, 2011
The Dow Jones Industrial Average gained 70.1 points, to 11,893, the S&P jumped 6.7 points, to 1,219. US Data lifts markets as Europe rumor grows silent. A report from the New York Federal Reserve on manufacturing in the New York region also easily topped expectations. The gauge hit 9.53 in December from an anemic 0.61 in November, and better than the reading of 3 economists had anticipated. The Philadelphia Federal Reserve’s manufacturing gauge climbed to 10.3 in December from 3.6 in November, easily topping estimates of a reading of 5. Traders who used to profit from price swings are struggling as record stock market volatility shows no signs of abating. All VIX futures expiring next year trade above 30, indicating that investors are betting that stock-market volatility will remain above average for the next eight months.
 
Hedge funds are on track to post their second-worst year on record, with managers such as John Paulson seeing bets undermined by Europe’s two-year sovereign-debt crisis and concerns over the U.S. economic recovery. Paulson, who is having the worst year of his career as bets on a U.S. economic recovery go awry, reduced risk at his firm after losing as much as 47 percent in the first nine months in one of his biggest funds.U.S. mutual funds are headed for their second-weakest year of deposits in two decades, and the top Wall Street banks posted their worst quarter in trading and investment banking since the depths of the 2008 financial crisis.

Smaller investors are also pulling back. U.S. mutual funds that invest in stocks and bonds attracted an estimated $42 billion through November, according to the Investment Company Institute, a Washington-based trade group. Funds have seen net withdrawals in every month since June, with redemptions reaching a peak in August. At the current rate, 2011 is on pace to be the second- weakest year in two decades, ICI data show. In 2008, the worst year, investors withdrew $225 billion.

Traders used to profit from volatility in the aftermath of events such as the 2008 bankruptcy of investment bank Lehman Brothers Holdings Inc. or the 1998 collapse of U.S. hedge fund Long-Term Capital Management LP. 

Three-month historic volatility for the gauge known as the VIX increased to a record 191.59 on Oct. 31, above the 92.56 median over the past decade and surpassing the prior peak of 190.44 from December 2008. The benchmark for U.S. options prices and expected stock-market swings surged the most in four years on Aug. 8 after S&P’s stripped the U.S. of its top credit rating for the first time. The Dow plunged 634.76 points the first trading day after the U.S. downgrade for the biggest drop in two years. Over the next three days it rebounded 429.92 points, plunged 519.83 points and rallied 423.37 points. Dow swings between intraday highs and lows averaged 126.49 points this year through July. Since Aug. 1 they averaged 261.22 points. The Dow is 245.97 points above where it ended last year.

The VIX closed at 26.04 yesterday, or 27 percent above the 20.56 average over its 21-year history. All VIX futures expiring next year trade above 30, indicating that investors are betting that stock-market volatility will remain above average for the next eight months. April futures trade at 31.70, which indicates that options traders expect the S&P 500 Index to make daily moves of about 2 percent.

Tags: , , , , , , ,
Posted in Contributors, Debt, Economics, Facebook feed, Large Cap Stocks | No Comments »

1st Nationwide Emergency Alert System Today

Wednesday, November 9th, 2011

DON’T PANIC -FEMA, in coordination with the Federal Communications Commission (FCC) and the National Oceanic and Atmospheric Administration (NOAA), will conduct the first nationwide Emergency Alert System (EAS) Test on November 9, at 2:00 p.m. Eastern. Although the EAS is frequently used by State and local governments to send weather alerts and other emergencies, there has never been a national activation of the system. The purpose of the November 9, 2011 Test is to assess the readiness and effectiveness of the current system and identify incremental improvements to better serve our communities in the preservation of life and property. The alert will be broadcast on every television station, radio outlet, satellite service and cable system for about 30 seconds throughout the whole nation.

After two failed apocalyptic attempts and the final day of the Mayan calendar, Dec. 21, 2012. You also get this panic-inducing fact: You know what Nov. 9 is right? It’s 11/9/11. That’s dyslexic — or European — 9/11. (Dyslexics see things backwards and, well, in Europe they do it backwards on purpose) The Emergency Broadcast System has actually never been used by the federal government for an actual emergency — not EVEN during the Soviet missile crisis, the assassination of President John F. Kennedy or even the terrorist attacks of Sept. 11. In a way that’s slightly comforting,  that we’ve never had to use it and yet it makes you wonder: What the heck else is coming down the pike that could be worse than any of that, that prompted them to just want to check the system?

“In the past, if you heard it on one station you could change the channel and listen to something else,” said Chief of Public Safety and Homeland Security James Barnett. ”Now if you change the station, it will be on another channel as well.” EAS is designed to quickly alert Americans about a national emergency, like a nuclear attack, major power grid or catastrophic storm.” ”This is to look at one backbone system to go, can we move a warning message from the White House all the way to the relay station to the general public,” said FEMA Administrator Craig Fugate. The test will be similar to one you have seen before, except the whole nation will indeed participate.

FEMA’s website

Nationwide EAS Test

FEMA, the FCC, and NOAA’s vision for improving the EAS is incremental, which means testing the readiness and effectiveness of the EAS as it currently exists today is the first step. A more effective and functional EAS requires continual testing to identify necessary improvements so that all levels of the system can better serve our communities and deliver critical information that will save lives and property. EAS Participants provide a critical public service to the nation as the resilient backbone of alert and warning when all other means of communication are unavailable. EAS Participants include all broadcasters, satellite and digital radio and television, cable television and wireline video providers who ensure the system is at a constant state of readiness. The nationwide EAS Test is not a pass or fail measure, nor will it specifically test Common Alerting Protocol (CAP) compliant equipment (although CAP compliant equipment should pass the Emergency Action Notification [EAN] live-code in the same manner as legacy EAS equipment). FEMA and its federal partners understand that improving the EAS is a process that takes time. IPAWS has compiled experiential lessons learned and best practices from the Alaska EAS Tests in 2010 & 2011 as well as through the EAS rebuilding effort and tsunami live-code test in the U.S. Virgin Islands (located in the EAS Tests and Demonstrations section).  Laboratory research is also being conducted at IPAWS.

What will people hear and see during the Test?

During the test, listeners will hear a message indicating that “This is a test.” Although the EAS Test may resemble the periodic, monthly EAS tests that most Americans are already familiar with, there will be some differences in what viewers will see and hear. The audio message will be the same for all EAS Participants; however, due to limitations in the EAS, the video test message scroll may not be the same or indicate that “This is a test.” This is due to the use of the live EAN code – the same code that would be used in an actual emergency. The text at the top of the television screen may indicate that an “Emergency Action Notification has been issued.” This notification is used to disseminate a national alert and in this case, the test. In addition, the background image that appears on video screens during an alert may indicate that “This is a test,” but in some instances there might not be an image at all.

There are several limitations to the current EAS for individuals with access and functional needs. FEMA and the FCC are committed to providing organizations and the EAS community with information well in advance of the Test. FEMA and the FCC will further engage the EAS community to better understand the wide range of information and access needs in preparation for the national EAS. IPAWS has been performing outreach to access and functional needs organizations in several different forums, including working groups and roundtables led by the FEMA Office of Disability Integration and Coordination, with representation from multiple FEMA program offices, other Department of Homeland Security components, and other Federal Departments and Agencies.

How long will the Test last?

The test will last for approximately 30 seconds.

Tags: , , , , , , , , , , , , , ,
Posted in Contributors, Facebook feed, Stock Market News | No Comments »

Greek Referendum Throws Bailout In Question

Tuesday, November 1st, 2011

Global equity markets were rocked today by a bit of poorly timed political grandstanding out of Greece, with embattled Prime Minister George Papandreou announcing a referendum on his country’s bailout package. This development threatened to derail the months-long efforts of European Union (EU) leaders to avoid a disorderly Greek default, prompting French President Nicolas Sarkozy and German Chancellor Angela Merkel to schedule an emergency meeting on the matter. The Dow Jones Industrial Average (DJIA – 11,657.96) gave up 297.1 points, or 2.5%, by the time the dust settled. The S&P (SPX – 1,218.28) fared even worse, surrendering 35 points, or 2.8%. However, the SPX managed to close just north of its 20-day moving average. Stocks pared the worst of their losses on afternoon reports suggesting Papandreou’s proposed referendum may be dead in the water, but U.S. benchmarks still ended the day broadly lower. Meanwhile, the CBOE Market Volatility Index (VIX – 34.77) vaulted 16.1%, reclaiming a foothold above the 30 level along the way. Financial markets suffered another bout of turmoil on Tuesday due to the new political uncertainty and the risk that long suffering Greeks would reject the bailout.

The Greek government believes it will win a confidence vote on Friday and will hold a referendum on an EU aid deal as planned, a spokesman said after several ruling party members asked for snap elections instead. ”We believe the government will once again win a vote of confidence in order to proceed with its plans,” Angelos Tolkas told reporters while Prime Minister George Papandreou was chairing a cabinet meeting. The Greek government faced possible collapse on Tuesday as ruling party lawmakers demanded Papandreou resign for throwing the nation’s euro membership into jeopardy with a shock call for a referendum. “We will not back down on anything we have to do to save the country,” Tolkas said.

Caught unawares by Papandreou’s high-risk gamble, the leaders of France and Germany summoned him to crisis talks in Cannes on Wednesday to push for a quick implementation of Greece’s new bailout deal ahead of a summit of the G20 major world economies. Papandreou chaired a cabinet meeting, expanded to include more ministers after the referendum bombshell, where he was expected to fend off demands to call a snap election. A leading PASOK lawmaker quit the party, narrowing Papandreou’s already slim parliamentary majority, and two others said Greece needed a government of national unity followed by snap elections, which the opposition also demanded. Papandreou needs 151 votes to implement the referendum. If any of the dissenters votes against it, it cannot be held. But the first hurdle for the government is a vote of confidence expected to be held by the end of the week.

Euro zone leaders thrashed out Greece’s second financial rescue since last year, in return for yet more austerity, in the hope that it would ease uncertainty surrounding the future of the 17-nation single currency. European politicians expressed incredulity at Papandreou’s announcement on Monday evening that took everyone by surprise, including his own finance minister. Announcing something like this only days after the summit without consulting other euro zone members is irresponsible.

The renewed uncertainty is likely to embarrass G20 host France as it tries to coax China into throwing the euro zone a financial lifeline. It could also further undermine dwindling political support in northern Europe for aiding Greece. Dutch Prime Minister Mark Rutte told parliament in a letter that his cabinet was concerned about the risk of delay and uncertainty. Business executives in Greece expressed despair at how the country was being run and markets speculated on whether Italy will be the next euro zone country to slide into a debt crisis.

Tags: , , , , , , , , , , , , , , , , , ,
Posted in Contributors, Debt, Economics, Facebook feed | No Comments »

Markets In Volatile Mode As Euro Crisis Focused

Wednesday, October 26th, 2011

U.S. stocks fell, following the biggest drop in three weeks for the S&P, as a European official said the capacity of the region’s bailout fund may not be determined until November. The S&P  fell 0.3 percent, down .39 to 1,224.92, after climbing as much as 1.2 percent or 1241. In a matter of 20 minutes, the S&P swung a full 19 points in volatile fashion. That holds the key as to capital markets’ ability to be able to absorb any of these continuous overpromising and underdelivering coming out of Europe. Expectations are just so low that any hint that they are making progress will push stocks higher. A Greek bond writedown of 50 percent on half of the Greek debt is pretty much assured.

Stocks erased gains as a European Union official said EU leaders may ask national finance ministers to determine the capacity of the expanded European Financial Stability Facility by the end of November. The leaders meet in Brussels later today and will back two EFSF leveraging options set out last week, the official said on condition of anonymity because the meeting hasn’t taken place yet. Global stocks rallied earlier after Germany’s lower house of parliament approved a plan to increase the capacity of the European bailout fund. European leaders hold the 14th crisis summit in 21 months today to discuss the Greek bailout, shoring up banks and strengthening the 440 billion-euro ($613 billion) rescue fund without pouring more taxpayers’ money into it, are the subject of fierce debate in Europe’s largest economy and biggest contributor to the fund. . The motion states that the European Central Bank (ECB) will no longer need to buy bonds on the secondary markets, and that the rescue fund cannot be financed through the ECB. The vote provides Chancellor Angela Merkel with the mandate she needs to negotiate at a key euro summmit later in Brussels.

A Greek bond writedown of 50 percent on half of the Greek debt is pretty much assured. However, Slovakia’s Prime Minister Iveta Radicova said Wednesday afternoon that private investors should accept a haircut of more than 50 percent on their holdings of Greek debt. “Slovakia is saying that the haircut has to be more than 50 percent,” she told reporters before leaving for an EU summit in Brussels. Negotiators remain divided on the issue of what will happen to the remaining 50 percent of the current outstanding 205 billion euros ($284.9 billion) of debt load. Indications are that the remainder will be divided into a cash sweetener, Greek Sovereign paper and paper from the European Financial Stability Facility (EFSF), the name of the currency zone’s bailout fund. The exact mix remains to be determined and remains a key point of debate. Indications are that the deal on a writedown—or “haircut” in current parlance—bears no resemblance to the original 21 percent PSI haircut, but will remain voluntary, though this word’s meaning is becoming increasingly fuzzy, sources said.

financial markets have been hoping for weeks that Wednesday’s summit, scheduled to start at 1500 GMT with a gathering of all 27 EU leaders, followed at 1730 GMT by the meeting of the euro zone heads of state, will produce detailed figures on how to combat the debt crisis, there is now little likelihood of concrete numbers, sources say. The numbers are not yet finalized — you have to have all parameters in place and see what is needed and what the leverage factor would be. It needs a lot of technical work to come up with a number,” one EU official said, adding that discussions would continue on Wednesday to forge a pre-summit consensus. The leaders will agree on the options tomorrow, but whether it will be an agreement with all details remains to be seen.

Prospects for a comprehensive deal to resolve the euro zone debt crisis at the summit on Wednesday look dim, with deep disagreement remaining on critical aspects of the potential agreement, including how to give the region’s bailout fund greater firepower. EU officials and European diplomats are lowering expectations of a breakthrough when the 17 euro zone leaders meet, despite Franco-German assurances only weeks ago that a “comprehensive solution” to more than two years of debt and economic turmoil would be found by the end of the month.

Today is a big day for Europe and, quite possibly, a defining day for U.S. share price performance. A concrete and credible solution out of Europe is likely to encourage another wave of short covering which could propel the market higher. Further delay will only add to the overall costs of a fix, while outright disappointment is likely to be met by share price weakness.

Talks over a haircut on Greece’s debt continue to be the main stumbling block in forging a resolution package at the EU Summit. While this evening’s summit will take place as planned, details of the Greek bond exchange appear unlikely to be finalized until a later meeting of EU finance ministers. The next meetings are not officially scheduled to take place until the 7th and 8th of Nov., but it would be possible to schedule an earlier meeting if necessary.

Tags: , , , , , , , , , , ,
Posted in Contributors, Debt, Economics, Facebook feed | No Comments »

World Markets Turn Increasingly Lower Via Rumor Of A Massive Short

Thursday, August 18th, 2011

The Bulls/Markets the last 5 days have been progressively recouping some of the massive losses from the August 8th low of 1101 in the S&P. Yesterday markets, were experiencing a tug of war between the bear and bulls with the bulls winning at the close by a small margin. Markets were inclined to go higher this morning from yesterday’s action, BUT, something that was news driven has caused a massive world wide selling. Currently the DJIA is off 350 while the S&P is off 41 points. The news coming out of Europe which has taken the world by surprise was as I quote “RUMOR Driven -  investors suspected that a bout of short selling or hedging by a large investor in the German DAX sent that index plunging nearly 4%.” Figures of the large short position is rumored to be €500billion Euro’s. This is of course is entirely rumored as investors that missed the 7% run up were  getting murdered on their short positions as a way out. As a matter of fact, if you Google “Who is shorting the German DAX” under Discussions, Blogs, & News; you’ll find tremendous amounts of history on this rumor dating back 1998 and 2008. Momentum of the selling should last for another few days until next week. The VIX – which measures volatility remains high above 37. Here’s a hint the Dollar is not making a dent in the Currency markets. Currencies for the first time are not moving. Does this not strike it odd?

In addition, stocks were also under pressure following reports that the U.S. federal and state regulators were intensifying their scrutiny of the U.S. arms of Europe’s biggest banks, according to the Wall Street Journal. Gold surged near its record highs above $1,800 an ounce, helped by the unease over the lack of a solution to the European debt crisis and sluggish growth in the developed world. Meanwhile, oil prices tumbled sharply.

On the economic front, the number of people applying for unemployment benefits jumped 9,000 to a seasonally adjusted 408,000, the highest in four weeks, according to the Labor Department. Meanwhile, the Consumer Price Index gained 0.5 percent in July, according to the Labor Department, amid higher gas prices last month. The core index, which excludes volatile food and energy, rose 0.2 percent.

Tags: , , , , , , , , , , , , , , , , ,
Posted in Contributors, Economics, Facebook feed, Stock Market News | No Comments »

US Market Swings +423

Thursday, August 11th, 2011
Prices
Date Open High Low Close Volume Points Up/Down
Aug 11, 2011 10,729.85 11,286.39 10,729.85 11,143.31 3,685,050,000 423.71
Aug 10, 2011 11,227.92 11,227.92 10,662.04 10,719.94 5,018,070,000 -519.83
Aug 9, 2011 10,810.91 11,251.08 10,588.55 11,239.77 2,366,660,000 429.92
Aug 8, 2011 11,433.93 11,433.93 10,779.05 10,809.85 2,615,150,000 -634.76
Aug 5, 2011 11,384.29 11,634.04 11,126.32 11,444.61 5,454,590,000 60.93
Aug 4, 2011 11,893.79 11,893.79 11,365.74 11,383.68 4,266,530,000 -512.76
Aug 3, 2011 11,863.89 12,152.96 11,857.91 11,896.44 6,446,940,000 29.82
Aug 2, 2011 12,130.22 12,152.96 11,857.91 11,866.62 1,674,180,000 -265.87
Aug 1, 2011 12,144.30 12,320.94 11,978.55 12,132.49 4,967,390,000 -10.75
Jul 29, 2011 12,239.28 12,262.74 12,044.21 12,143.24 5,061,190,000 -96.87
Jul 28, 2011 12,301.95 12,412.48 12,200.99 12,240.11 4,951,800,000 -62.44

The Dow Jones Industrial Average (DJIA – 11,143.31) recovered most of Wednesday’s losses, adding 423.4 points, or nearly 4%, to reclaim the 11,000 level. For the second time this week, all the DJIA finished higher. The S&P (SPX – 1,172.64) reversed yesterday’s deficit, almost exactlY, advancing 51.9 points, or 4.6%. Markets have become bipolar as of late with triple digit swings. The VIX dropped 9.28% or 3.99 to close $39. The last three session in the VIX has been making higher lows. Volatility remains extremely high as if it has reached its high or has been stalling. There were 2 stories that drove the markets higher if you don’t count the modest job gains. Both were related to Europe. The European Union’s financial market regulator ESMA said on Thursday that Belgium, France, Italy and Spain announced new bans on short selling or short positions would take effect from August 12. French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet next week as concerns over the spread of the euro-area debt crisis rattled French markets.

Europe News

France and three other European countries are banning short selling, with the moves coming after weeks of wild swings in global equity markets, reflecting investor worries about slowing growth, debt burdens and credit downgrades. Belgium, Italy and Spain round out the other countries that will impose or extend existing short-selling bans beginning Friday morning. As you recall, the ban on short sales on order by the U.S. Securities and Exchange Commission in September 2008 that prohibited short sales of 799 financial stocks through October of that year. That didn’t help much as markets continued to fall further, 4000 to be exact in the DJIA. Short sales are bets that a stock price will decline over time. In a regular short sale, the seller borrows a stock and sells it, understanding that the loan must be repaid by buying the stock. The authorities in the respective countries have decided to impose the bans “either to restrict the benefits that can be achieved from spreading false rumors or to achieve a regulatory level playing field, given the close inter-linkage between some E.U. markets. The French ban will prevent creating a short position or increasing any net-short position in French securities in the financial sector, according to French regulator AMF in a statement. The order covers 11 entities, including BNP Paribas, Crédit Agricole and Société Générale. Shares of French banks were rocked this week, in part on fears that France could lose its AAA credit rating, though surges on Thursday helped limit losses toward week’s end. The shares faced weekly losses ranging from 12% to 16%.

French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet next week as concerns over the spread of the euro-area debt crisis rattled French markets. The leaders of Europe’s two biggest economies will discuss economic governance of the 17-nation euro region in Paris on Aug. 16, according to separate statements issued today by Sarkozy and Merkel’s offices. Sarkozy and Merkel have called for their parliaments to approve measures by the end of September to strengthen the euro- area bailout fund as agreed on by European leaders on July 21. They have also backed a European Central Bank role in determining when bond buying is needed to stop contagion. Both leaders said at the July summit that “they would formulate joint recommendations aimed at strengthening political and economic governance in the euro area before the end of the summer,” the statement issued by the Chancellery in Berlin said. The proposals will feed into steps drawn up by European President Herman Van Rompuy on “improved working methods and a better crisis management in the euro area.” The leaders meet amid market turmoil that prompted France to speed up completion of its 2012 budget. The French government’s commitment to its deficit goals is “untouchable,” Sarkozy said in a statement after interrupting his vacation to chair an emergency meeting in Paris yesterday.

Market Swings & Day Traders

The Dow industrials have traded in a range of 400 points every day in the last five days as seen in the above chart, while the CBOE Volatility index has more than doubled from a recent closing low on July 22. Fear has increased alongside signs of slowing growth and an unprecedented downgrade of the U.S. credit rating by Standard & Poor’s. But swings have gone both ways: the S&P recently posted not only its worst day since 2008, but also its best. Day-traders are making a killing, taking advantage of wild market swings that have scared off even strong-stomached investors. Many of the day-traders including myself are not holding positions overnight due to uncertainty the next day and several hundred point swings. Too much risk to hold over night in this volatile markets. Daytraders take a short-term outlook on the market, holding positions for less than a day. They often sell securities short to profit from both upward and downward movements, bringing the chance of big wins, or equally large losses. Primary stocks have been the double and triple the daily performance of Indexes or sectors bull/up or bear/down direction. The velocity of the changes in market direction means traders who are not nimble can get caught on the wrong side of a trade, exposing themselves to massive losses. The last four trading days have seen a 2000 point swing with the bears having a 300 point advantage.

Tags: , , , , , , , , , , , , , , , , , , , , , , ,
Posted in Contributors, Facebook feed, Large Cap Stocks | No Comments »

Thrashing On Wall Street; US Markets Erase Yesterday’s Gain

Thursday, August 11th, 2011

The Dow Jones industrial average (DJIA) lost 520 points, or 4.6%, to 10,720. The index ended the day near session lows. The S&P 500 (SPX) fell 52 points, or 4.4%, to 1,121. 1120 in the S&P remains a key factor of support. Stocks were led lower by the financial sector. On Wednesday afternoon CEO of embattled Bank of America (NYSE:BAC) Brian Moynihan tried to reassure investors that conditions at the bank and in the country are much better than they were four years ago when the financial crisis hit. BofA has fallen nearly 50% so far this year. On Wednesday, shares of French bank Societe Generale tumbled 15% on the Paris stock exchange amid speculation that France, Europe’s second-largest economy after Germany, may be first to face a rating cut. European banking shares also fell sharply. Deutsche Bank’s (NYSE:DB) stock dropped 12% while Spanish bank Banco Santander (NYSE:STD) dropped 9.5%. Even though the major rating agencies have reiterated France’s AAA rating, there’s growing concern that France could get downgraded, which caused the markets to drop further. Ahead of the opening bell Wednesday, the New York Stock Exchange invoked Rule 48, which gives the exchange the right to pause trading in the event of extreme volatility. The NYSE typically invokes the rule several times each year. Wall Street’s most widely cited measure of volatility and fear in the market, the VIX, surged almost 22% to 43. A reading higher than 30 is considered a sign that investors are getting worried, but the VIX is still way below the peak level of almost 90 hit in October 2008 — after Lehman Brothers collapsed.

Gold

Gold futures kept the winning streak alive today, tagging another record high. Tuesday’s decision by the Federal Reserve to keep interest rates extremely low, coupled with uncertainty about the fate of France’s credit rating, only strengthened the commodity’s “safe haven” allure. Against this backdrop, gold for December delivery added $41.30, or 2.4%, to close at $1,784.30 an ounce. Earlier in the session, the contract topped out at an all-time best of $1,801 an ounce. Gold, which doesn’t pay dividends or interest and costs money to store, has become more attractive amid low interest rates. A rise in real interest rates is one of the drawbacks of gold investing, as it encourages investors to sell the metal rather than missing out on higher-yielding assets. Worries about weak global growth and currency debasement have also driven gold higher, especially in recent days amid turmoil following the Standard & Poor’s downgrade of U.S. debt and a string of disappointing economic data. The “opportunity costs of holding gold remain extremely low. Furthermore, there is also a risk of inflation rising further should the Fed actually loosen the monetary policy even more.

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , ,
Posted in Contributors, Debt, Facebook feed, Large Cap Stocks, Stock Market News | No Comments »

Market Massacre: DJIA Down 635, Gold $1700, VIX Up 50%

Monday, August 8th, 2011

The Dow Jones Industrial Average (DJIA – 10,809.85) swallowed its steepest loss since December 2008 today, giving up 634.8 points, or 5.6%, by the time the bell sounded. In fact, the DJIA ended south of the 11,000 level for the first time this calendar year. The S&P plummeted 79.92 points, or 6.66%, to close at 1,119.46, its lowest close since Sept. 10, 2010. The Dow Jones Industrial Average, which last week lost 698 points, nearly matched that drop in a single session, with Monday marking its worst day since late 2008. With Standard & Poor’s downgrade of U.S. credit exacting a heavy toll on already troubled investor sentiment.”Downgrade” was the word of the day on Wall Street today, as investors reacted to Standard & Poor’s late-Friday revision to the U.S. credit rating. The major market indexes headed south right out of the gate, and selling pressure intensified as the session progressed despite President Obama’s attempts to control the damage. Markets dropped another 2% after Obama’s speech.”No matter what some agency may say, we’ve always been and always will be a triple-A country,” Obama said, not long after the White House questioned S&P’s math. As traders made a mad dash for the relative safety of gold. The CBOE Volatility Index, widely considered the best gauge of fear in the market, spiked above 40 to touch its highest level since March. 2009 up 50%. 13th worst single day decline since WWII.

Volume was very heavy with the consolidated tape of the NYSE at 9.29 billion shares, while 2.54 billion shares changed hands on the floor. That exceeded last Friday’s heavy volume, which was the heaviest since the Flash Crash on May 6, 2010. According to Dow Jones, this was the 4th largest volume day in history on the NYSE.

Crude oil futures followed stocks into the red today, as the downgrade-induced decline on Wall Street amplified fears of fading demand. By the close, September-dated crude fell $5.57, or 6.4%, to end at $81.31 per barrel, black gold’s lowest settlement price since Nov. 23, 2010. Gold futures, on the other hand, skyrocketed to a new all-time best today, after S&P’s downgrade sparked a widespread flight to safety. As traders shunned riskier assets in favor of tangible safe havens, December-dated gold futures soared $61.40, or 3.7%, to end at $1,713.20 an ounce. Earlier in the session, the most active contract topped out at $1,719.09 an ounce.

Where should one invest during a Market Correction. Read here for a list short based ETF’s

What Does The S&P Downgrade Affect

1. The cost of government borrowing just went up, that includes states and munis too. This adds to your tax burden.

2. Higher government borrowing costs filter through the economy. It makes it slightly more expensive for corporations to borrow money. This is a drag on GDP.

3. Higher corporate borrowing costs filter down to consumers-the cost of some consumer loans might be slightly higher.

4. Puts a lot of political pressure on elected officials to actually cut the budget. We need to get back to a more traditional GDP/debt ratio. Once that’s done, why wouldn’t S&P take us back up to AAA?

S&P Technicals

Is today’s 6.66% drop in the S&P strike a similar resemblance of March 9, 2009 low of 666? Some traders made a note of this key number. Does this mean, we’re bound for a rally? Is this a buy signal that will lead to a market capitulation. There was broad selling across the board.Its very hard to believe we’ll get a strong bounce similar to 2009. Lets put the VIX in the spotlight. October 2008 the VIX hit a striking high of 89.53. It doesn’t look like it’s stopping any time soon. It’s as if the markets are experiencing a slow steady “flash crash”. Read my initial call from May 23rd 2011. I hate to say this, but we may be heading to a double-dip recession if we close firmly below 1100. We’re 19 points away. Will the Fed safe the day tomorrow? Are we in a Correction or a Crash?

S&P Marks to keep in mind

6 Month 300 day Moving Average/61.8% retracement- 1220-1225 -BROKEN 8/4/2011

2nd support – 1195 -BROKEN 8/8/2011

50% Retracement – 1120-1150- Holding 1120- will this hold last line of defense.

10 year 200 day Moving Average/Ultimate Support/50% retracement – 1050 -1100 Double Dip Recession

Below 1070 – Double-Dip Recession – Growing increasingly Possible

May – August 2010 Neckline Low – 1050

Will the Fed announce QE3 Tomorrow

The Federal Open Market Committee meeting on Tuesday, which just two weeks ago was expected to be an almost throwaway gathering, has suddenly morphed into a major event. The Fed will have weighed both the market’s slide as well as recent economic data, such as the deterioration in manufacturing sector sentiment and the weak gross domestic product reports for both the first and second quarter. The question for them is whether this is a soft patch or a sustained slump in activity. We don’t know and they don’t know. Markets are discounting for the uncertainty. The market’s major question is if the Federal Reserve, which will deliver its interest-rate decision at 2:15 p.m. Eastern on Tuesday, will give any hints on the initiation of a third round of quantitative easing, a so-called QE3. The August meeting won’t be followed a press conference with Federal Reserve Chairman Ben Bernanke, so any information the Fed wants to convey will have to be transmitted through its written statement. Bernanke will be making his annual major policy address in Jackson Hole, Wyo., at the end of the month.

But Fed followers say there’s not much ammunition left in the central bank’s cannon. And more broadly, monetary policy isn’t really the problem.

On Tap This Week:

TUESDAY: NFIB small biz optimism index, productivity and costs, 3-yr note auction, FOMC mtg announcement; Earnings from Disney
WEDNESDAY: Weekly mortgage apps, wholesale trade, oil inventories, 10-yr note auction, treasury budget; Earnings from Macy’s, Cisco
THURSDAY: International trade, jobless claims, 30-yr bond auction, money supply; Earnings from Kohl’s, Nordstrom, Nvidia
FRIDAY: Retail sales, consumer sentiment, business inventories; Earnings from JCPenney

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , ,
Posted in Contributors, Debt, Economics, Facebook feed | 1 Comment »

2011 Summer Market Meltdown; DJIA Down 500

Thursday, August 4th, 2011

Stocks plunged sharply Thursday, with the Dow down more than 500 points, in its worst one-day drop since December 2008. All three major averages tumbled into negative territory for the year as investors were rattled over an intensifying global economic slowdown. The S&P 500 sank 60.27 points, or 4.78 percent, to end at 1,200.07. In addition, all three averages fell into “correction territory,” defined by a drop of 10 percent from its peak from its intraday high in Apr. 29. The Dow Jones Industrial Average (DJIA) may have halted its losing streak on Wednesday, but the bears were back with a vengeance today. Ahead of tomorrow’s highly anticipated nonfarm payrolls report, Wall Street was none too impressed with the weekly jobless data from the Labor Department. The discouraging stats sparked an ominous note ahead of the July jobs report, and buyers hit the exits en masse as the session progressed. By the time the bell mercifully sounded, the DJIA found itself more than 500 points south of breakeven, marking its worst single-session drop since Dec. 1, 2008. On the flip side, the CBOE Market Volatility Index (VIX – 31.66) or the Street’s “fear barometer” skyrocketed more than 35% to tag a new 52-week high, marking its heftiest daily percentage gain since early 2007.

When markets are heading south buy Short ETFs and bonds

S&P Marks to keep in mind

6 Month 300 day Moving Average/61.8% retracement- 1220-1225 -BROKEN

2nd support – 1195 -Will it Hit tomorrow and bounce (5 points away)

50% Retracement – 1120-1150 IDEAL AREA TO BUY

May – August 2010 Neckline Low – 1050

10 year 200 day Moving Average/Ultimate Support/50% retracement – 1103

Below 1103 – Double-Dip Recession -Highly unlikely

What is a Market Correction

Secondary trends are short-term changes in price direction within a primary trend. The duration is a few weeks or a few months. One type of secondary market trend is called a market correction. A correction is a short term price decline of 5% to 20% or so. A correction is a downward movement that is not large enough to be a bear market (ex post). Another type of secondary trend is called a bear market rally (sometimes called “sucker’s rally” or “dead cat bounce”) which consist of a market price increase of only 10% or 20% and then the prevailing, bear market trend resumes. Bear market rallies occurred in the Dow Jones index after the 1929 stock market crash leading down to the market bottom in 1932, and throughout the late 1960s and early 1970s. The Japanese Nikkei 225 has been typified by a number of bear market rallies since the late 1980s while experiencing an overall long-term downward trend.

Tags: , , , , , , , , , , , , , , ,
Posted in Contributors, Debt, Economics, Facebook feed, Technical Stocks | No Comments »

S&P Now Negative For The Year

Tuesday, August 2nd, 2011

Regardless of an eleventh-hour debt deal in Washington, D.C., the Dow Jones Industrial Average (DJIA) ended lower for the eighth straight session today, extending its longest losing streak since October 2008. While Uncle Sam may have narrowly avoided a default, the freshly inked legislation failed to curb concerns about a potential credit-rating downgrade. Earlier in the morning, economic data only fueled the bearish selling, with reports on personal incomes and spending exacerbating fears about the health of the economy. Specifically, the Commerce Department said consumers unexpectedly tightened their purse strings for the first time in nearly two years in June, while incomes rose by the smallest amount this calendar year. The DJIA swallowed a loss of almost 266 points by the time the bell sounded, settled at a session low, giving up 265.9 points, or 2.2%, to end beneath its 200-day moving average for the first time since September 2010. In addition, the blue-chip barometer gave up its perch atop the 12,000 level for the first time since late June. S&P 500 Index -SPX – 1,254.05 extended its retreat as the session progressed, finishing with a loss of 32.9 points, or 2.6%. Like the Dow, the SPX ended south of its 200-day trendline for the first time since September 2010. This is clearly a negative for long term holders.

Deep Correction To Continue First announced May 23rd, 2011 here

Where should one invest during a Market Correction. Read here for a list short based ETF’s

US Triple-A Rating In Question

Moody’s Investors Service on Tuesday confirmed its triple-A rating of the United States, citing the decision to raise the debt limit, but kept the pressure on the government to move toward a long-term fiscal consolidation plan. The ratings agency affirmed the United States’ triple-A rating after congressional lawmakers agreed to raise the country’s debt ceiling which will allow the Treasury to keep servicing U.S. debt obligations. It assigned a negative outlook on the rating, however, in a sign that a downgrade is still possible in the next 12 to 18 months. In a statement, Moody’s said there would be a risk of a downgrade if “(1) There is a weakening in fiscal discipline in the coming year; (2) If further fiscal consolidation measures are not adopted in 2013; (3) If the economic outlook deteriorates significantly; or (4) There is an appreciable rise in the US government’s funding costs over and above what is currently expected.” Earlier, Fitch also backed its triple-A rating on the U.S. but said that could change if “fundamental weakness” in the economy isn’t addressed and said the U.S. rating ”will remain under pressure” for some time.

Chinese credit-rating agency Dagong Global Credit Rating Co. again downgraded U.S. sovereign debt Wednesday and warned of further downgrades, the state-run Xinhua news agency reported. Dagong cut U.S. Treasurys to A from A+, with a negative outlook, saying growth in U.S. debt is still outpacing revenue growth. The latest move followed a Dongang downgrade of U.S. debt from AA to A+ in November, citing the launch of the Federal Reserve’s second round of quantitative easing. “The agency said the approval to raise the debt ceiling indicated that there will not be any positive changes in factors that will influence the country’s debt-paying ability in the long run,” Xinhua reported

Room To Raise Revenue By 2013?

Since the debt-cutting deal was a down-payment to our debt and clearly  spending cuts not excessive, will this open the door to consider new revenue streams? Geithner said that the Republican leadership is still open to considering new revenue streams. “Leading Republicans have begun talking about tax reforms that will raise revenue and help reduce the deficit. Democrats recognize that we have to find savings to preserve programs for the elderly, the middle class and the poor, and to create room to help rebuild the economy,” he said, according to an advance copy of the editorial provided by the Treasury Department. While staunch opposition from fiscally conservative Republicans kept any tax hikes out of the debt deal signed into law Tuesday, Geithner appeared to signal that the expiration of the Bush tax cuts at the end of 2012 could be used as leverage to force reforms to revenue.

Geithner also sought to reassure those concerned that the current austerity cuts will lead to heavy economic pain. “The near-term cuts in spending will not materially add to the pressures on the economy,” he said. Geithner cited a Macroeconomic Advisors estimate that the “direct effects” would be “about one-tenth of one percentage point of annual gross domestic product growth, far less than the damage that would have been caused by a prolonged impasse, by adopting the budget proposed by Republicans or, certainly, by default.” But he also urged more action be taken in Washington to boost the economy, saying that “lawmakers should return in September prepared to act to strengthen the economy and get more Americans back to work.”

S&P Marks to keep in mind

6 Month 300 day Moving Average/61.8% retracement- 1220-1225

2nd support – 1195

10 year 200 day Moving Average/Ultimate Support/50% retracement – 1103

Below 1103 – Double-Dip Recession -Highly unlikely

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , ,
Posted in Contributors, Debt, Economics, Facebook feed | No Comments »