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Market Recon Tuesday

Good Morning,

                      The European economy is roaring?  Well that may be something of an exaggeration, but the numbers that we are seeing this morning are impressive.  Flash PMI’s for both the Manufacturing & Service sectors out of France? Beat, beat.  Germany? Beat. beat.  Ok, how about the EMU in general? Beat, beat……no way.  Here’s a good one….Italian Retail Sales?  Beat !!…and beat solidly.  Like the fictional ballplayer Roy Hobbs in the movie, “The Natural”, these guys are suddenly hitting every pitch they see.  Maybe they’ll take a swing at the latest pitch from Greece.  We have a full plate of macro here on this side of the pond today.  Let’s see if this trend can continue.

                     As far as that plate of macro goes, there are several items on the menu today.  We’ll start out at 08:30 ET with a fairly high focus release, and that would be May Durable Goods Orders.  When it comes to this one, the core print, which omits transportation, is the key print.  Without transportation we are looking for month over month growth of 0.6%.  With it, the expectation is for -0.6% m/m.  For the core print, if it works out this way, that would put together a three month winning streak.  Winning streaks rule.  Next, the retail crowd will get their Redbook at 08:55 ET.
                     At 9am, we’ll see the FHFA House Price Index for April, and at 09:45, Markit will print their Flash Manufacturing PMI.  Our Flash PMI’s are not the market impacting events that Europe’s are.  The crowd will notice neither of these items, so you don’t have to either.  What you will have to be cognizant of will be May New Home Sales at 10am ET.
                     We’ve already seen encouraging May data for Housing Permits, and Existing Home Sales, so why not an improvement in this space to something like 525K, from last month’s 517K on a seasonally adjusted, annualized basis?  The skew slightly favors a miss on this today, but it is very close.  You will also get the Richmond Fed Manufacturing Index at 10am.  This one can go either way.  Sometimes the crowd notices it, and sometimes they don’t.  For some background, this month has already seen a miss for the Empire State, and a Beat for the Philly Fed.  We are looking for a positive 3 here today.
                     Just a heads up.  You do have one Fed speaker on the docket today, and it’s an early one.  Federal Reserve Gov. Jerome Powell will speak from Washington D.C. at 8am about decisions currently facing the FOMC, so it will be relevant.
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Sarge’s TRADING LEVELS
SPX: 2147, 2135, 2128, 2120, 2113, 2106
RUT: 1304, 1299, 1293, 1288, 1283, 1278

Market Recon Monday

Good Morning,

                     Some of you guys who’ve been around for a while might remember the expression “The ‘take em” boys are here”.  When I was young, and the market would head sharply in a northerly direction, some body somewhere on the NYSE trading floor would yell those words, as if he had spotted a marauding horde in the distance.  Well, in this day and age, the crowd may not be so much boys, but a mix of boys, girls, robots, whomever, but whoever, or whatever is doing the taking ….is doing it all over the globe this morning.  What’s the deal?  Yes, it’s Greece again, gang.  Apparently, as the EU holds that summit today to discuss the Greek debt crisis, the Greeks themselves have pitched a new plan.  While we are all too worn out to actually believe that this is the end of the crisis, as Fox anchor Nicole Petallides said this morning on FBN AM, “this could be the beginning of the end” of said crisis.  European equity traders certainly seem to be drinking the Kool-aid.
                    We only have one domestic macro data-point to peruse this morning, but it’s a fairly important one.  May Existing Home Sales are expected to improve to an estimated 5.26 million units, when seasonally adjusted, and annualized.  This is the biggest slice of the housing pie, kids, and it has been a real struggle to keep this item above the 5 million unit mark.  To see an improvement like this, despite the rise in interest rates seen in the mortgage market for the month would be a fairly big positive.
                    There are no Fed speakers on my radar for today.  There are a few high profile earnings releases scheduled later this week, but all we have today is SONC, and that is for after the closing bell.  Alright, it’s Monday.  Yesterday was Father’s Day.  I know it hurts, just keep on moving…. you’ve got this.
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 Sarge’s TRADING LEVELS
SPX: 2147, 2135, 2127, 2119, 2113, 2106, 2098
RUT: 1304, 1300, 1296, 1287, 1283, 1278. 1272

The Friday Wrap

The Friday Wrap

1) Small Caps ruled as the Russell 2000 closed unchanged.  The S&P 500, and DJIA both gave up half of one percent, while the Nasdaq Comp. surrendered a third of a percent.  Trading volume was extremely heavy on quadruple witch expiration day.
2) Utilities, Financials, and Energy names took the brunt of the selling, as you might expect with Oil getting a beat down, and Treasuries enjoying a very positive day.
3) Health Care, buoyed by the Providers, and Consumer Staples, supported by Food Products were the day’s out-performers.
4) Gold, quite notably held it’s ground today, after yesterday’s run.

Market Recon Friday

Good Morning,

                     It’s Friday, gang.  Of that I am sure.  I am also sure that you’re ready for a weekend, I know that traders in China probably are.  The Shanghai Composite gave up almost 6.5% today, bringing it’s slide to over 13% for the week.  That index is now up a “mere” 120% for the year, so it’s all in the angle of the prism that you’re looking through.  Today, we’ve got nothing coming our way from Planet Macro….absolutely nada.  That does not mean that you’ve got nothing on your plate.  Far from it.  Today brings us a triple…errrr, make that a quadruple witching.  Everything expires today, everything that is…except your marriage licence.  You can expect heavy volume across the board in futures, options, and equity markets, and you can expect much of that increase in volume to be concentrated on the two bells.
                    On top of that, we’ve got a couple of Fed speakers on the docket, which is a pleasant change.  San Francisco Fed Pres. John Williams speaks at 11:40 ET on monetary policy from San Fran.  Cleveland Fed Pres. Loretta Mester will give it a go from Pittsburgh at 12:15 ET.  So, you may have to stay at 50% alert, while you enjoy your lunch, kids.  Williams is a voting member of the FOMC this year; Mester is not.
Sarge’s Gripe 
                   I keep seeing in various media circles this week, that the market has rallied over the last couple of days since Janet Yellen’s press conference, because she was perceived as being dovish. Really?  That’s sticking in my craw a little bit.  Did they ask any practitioners?  Did they pay attention to the press conference?  Janet Yellen basically told you that she’s still intent on raising the Fed Funds rate this year, with residual hikes to come. She told you this despite understanding what the first quarter did to GDP.  The economy in her opinion, is still improving.  That’s slightly hawkish, gang, not dovish.  We’ve had a ZIRP policy in place now for many years.  Saying that you are still on tract to change that policy this year is NOT dovish.  We all thought that September was going to be the month for a slight increase.  Nothing has changed there.  Most traders expect that the equity market can continue to go higher despite small, gradual interest rate hikes, because there still is not a lot of competition for you investment dollar.
                  The reduction in GDP expectations, and that tiny Core CPI  number yesterday were more dovish factors than the Fed Chair was in what she said.   What traders liked from her, was they correctly read the playbook.  They’re on the same page as the Fed Chair.  We understand that the FOMC has to go slow.  To some degree, at least for now, the uncertainty from that corner is somewhat reduced…..and we like that.  C’mon, if you’re going to report on this stuff, you have to get in tune.  If you don’t know…..just ask….and don’t ask some guy who has never risked his own money.
Sarge’s TRADING LEVELS
SPX: 2147, 2135, 2127, 2119, 2112, 2106, 2098
RUT: 1304, 1300, 1296, 1288, 1283, 1278, 1272

Market Recon Thursday

Good Morning,

                     Good news !!  If you’re up early in the morning, reading stuff like this….then you’ve already proven that you’re in the fight.  Half of winning a fight is simply showing up for it.  The rest takes some brains, and some guts.  I bet you’ve got that too, so let’s do Thursday.

                     There’s kind of a lot on your plate today, in fact there’s too much to focus on.  Sooooo, let’s burn off some of this haze.  That way, you trader types can key in on what’s important, and get rid of what’s just noise.  First off…… just throw out the Q1 Current Account print at 08:30 ET, and the Conference Board’s Leading Indicators at 10am.  They may be important to economists, they may important to some kid writing a term paper.  They don’t make markets move, and they won’t make you money.  Gone.

                     Today, we do get the CPI.  A day after the FOMC announcement, we’ll get a read on consumer level inflation.  Party on, dudes.  At 08:30 ET, the Bureau of Labor Statistics will hit us with these numbers.  The headline consensus is for a m/m increase of 0.5%.  The skew seems to me to be on the low side, but a little birdie (who is smarter than I) told me that it may come in just a smidge higher than consensus.  Can’t wait to find out.  The Core print is expected to post a gain of 0.2% m/m.  Same little birdie told me that the core may come in a bit light.  Forget money, I’m bird watching.
                     There is another key item due at this time.  That’s the weekly Initial Jobless Claims print, which traders generally do overreact to, impacting the futures market. For the Claims number, we’re looking for something close to 277K, with a tight range, so anything outside of 265K to 285K will surprise the crowd.  FYI, there has been no volatility in this report for quite some time.  We’re sitting on the four week moving average.
                     There’s more.  At 10am, the Philadelphia Fed releases their Manufacturing Index, which is usually a focus item, but after the Empire State fell flat on their face earlier in the week, it’s even more important than usual.  The projection (hope) here today is for an improvement from May’s 6.7 to something close to 8.1.  After that, the Nat Gas crowd gets their weekly number at 10:30 ET, and at least economic data-point wise, we then call it day.
Don’t forget to say a prayer for those folks in South Carolina, and their families.  Do it now.