Market Updates to be Halted

thedailycable — Wed, 21 Jul 2010 05:08:43 +0000

Dear all,

I am in the process of moving to a new server and a new domain (thedailycable.com). While this is happening, there will be few updates, because I want to get this thing up and running ASAP. Hopefully by Monday, the transition will be over.

Thank you for your patience,

Ivan

The Daily Cable

thedailycable — Tue, 20 Jul 2010 02:04:15 +0000

20/07/2010

Since the last update…
In Australia
Yesterday, the market experienced a rather severe drop due to the US lead from Friday. Despite the market, attempting to gain back ground, it failed, and ultimately ended up approximately as it opened, losing a touch over 64 points at the closing bell. It was pretty red across the board, due to a much weaker currency, which dragged on resources and stocks. At the end of the day, the biggest movers were Aquarius Platinum LTD down 24.52%, and once again Nufarm, which is closing in on that $3 target, down a further 4.41%, closing at 3.25.
In Europe and beyond

During the European session there was a bit of data that the markets seemed to ignore. Headlining these news was downgrade for Ireland, in light of which FTSE actually started rallying. It ran a range of about 100 points, from 5100 to 5200, before reversing and returning to where it opened, mostly due to US dragging it back down.

From the US, we had a disappointing report from the NAHB Housing Market Index, which showed a gain of 14 on its gauge, as opposed to the expected 16. This caused stocks to initially move lower. This was however reversed rapidly with the volume drying up, and overall a move to the upside. While indices closed in the green, this was reversed immediately after close by the futures.

Today and moving forward…

Once again, we will be looking at a session light on economic data from the local market, and the Monetary Policy Meeting Minutes at 11.30 will lead the way. Later in the day we will have a look at the Swiss Trade Balance, and at 10.30pm US Building Permits, which is anticipated to remain generally unchanged from last month’s 0.59M figure, coming in at 0.58M. We are still looking at a downward pattern in stocks from a technical point of view, and risk declining to around the 4100 area, before any form of bounce back. If the pattern changes, we will see a move above 4490-4510. At this rate, moving forward, its still profit taking in correlated stocks.

thedailycable — Sun, 18 Jul 2010 23:34:00 +0000

The Daily Cable
19/07/2010

Since the last update…
In Australia

Well the Friday was another pretty boring session from any point of view. The weakness came in the market, as expected, right at the top range of my 4400-4450 prediction. There was really nothing much happening that I can comment on other than the fact that it was, for lack of a better word, and interesting Friday for me.

In Europe and beyond

The main movement came out of the US. As we expected, the major data surprise came out of the UoM Consumer Sentiment. The number came in at 66.5 vs the forecast 74.2. Other than this, there was essentially nothing out from the US, other than more troubles with Apple, which hit the NASDAQ, though surprisingly did not affect Apple that much.

Today and moving forward…

Today, we find Japan closed, and a very light day of data, again. It is not until 6pm that we will have a look at the Euro Current Account, which is expected to come in at negative 3B. Today, will be a very important trading session from the US, to see if they will continue this sell-off or rebound from it.

Sorry to keep this short, however I will be back in full swing from tomorrow.

thedailycable — Thu, 15 Jul 2010 23:15:00 +0000

The Daily Cable
16/07/2010

Since the last update…
In Australia
Yesterday, the market lost ground, mostly from the resource and financial sectors. We were down by just a touch under 20 points, and gained half of this back in futures just after close. Essentially our local market did nothing. Again. No follow through on the previous few days of gains could be a worrying signal for the bulls. At the same time this weakness came from slightly weaker than anticipated data from China during the middle of the day. One of the biggest news came from Nufarm (down 28%), which reported really bad results and Intoll (up 20%), which was the subject of a non-binding and conditional offer for a takeover from the Canada Pension Plan Investment Board.

In Europe and beyond
We sent out some information yesterday about the BDI, which we will now follow daily. We have had a 35th consecutive down day, and we closed at 1700. This has got to be one of the worst declines in history. In other news, FTSE got hit, closing down by 43 points, however once again, as US erased its futures losses, FTSE futures rallied after close. In actual fact all the markets have not moved at all in 24 hours. The good news is that we got through a load of really weak data without blinking. The bad thing is that we have not gained at all either. Last night, the US released a weak Philly Fed Manufacturing Index, at half the expected rate (5.1 v 10.2). Also we had a marginal weekly improvement in Jobless Claims, but this was offset by a bigger than expected drop in PPI m/m, which once again raises questions about deflation.

Today and moving forward…

We have a very quiet day ahead of us, and there are not data movers. We have had some positive news come out of OZ Minerals, so we will be interested to follow how they trade today. However, we will be looking at a rather dull day that will be lead by technicals more than fundamentals. Today will be a day, where the major stories will most likely come from individual stocks. Tonight, at 7pm, there is data out of the Euro Zone, with their trade balance, which has expected to come down from last months gain (0.8b exp v 1.6B prev. month). Out of US, at 10.30pm, we receive the CPI numbers, which are expected to stay unchanged from last month at a gain of 0.1%. We will also receive the University of Michigan Consumer Sentiment at 11.55pm, which has been a leading factor over the last few months. This has an unstoppable power to push markets more weeks than not. It is expected to be 74.2 from last month’s 76. Watch the revision.

thedailycable — Thu, 15 Jul 2010 11:35:00 +0000

The Daily Cable
15/07/2010

Since the last update…
In Australia

Yesterday, the market had a decent up move, barely moving from the open, finishing up by 82 points for the day. This brings the 6 day up move to 280 points or 6.6% overall. Generally the rally has been led by financials, which will come under question as soon as the banks earnings start coming out. The stocks that we have been looking at, that have not participated in the rally have been Boral, Brambles, Aristocrat, Cabcharge and AXA. Other than that, there were no significant moves out of the local market at all.

In Europe and beyond

There was a day of dismal performance from economic stats, which wiped all the gains from the Techs after market post Intel’s report. The only positive that came out was from UK, which reported a better than expected 7.8% Unemployment Rate, however last month’s was reversed to 8.0% from 7.9%. US Retail Sales came out very poor, shedding ½ a percent, as opposed to only a 1/5 of a percent that was expected. Import prices also fell by 1.3%, more than the expected 0.3% fall.

The VIX went higher again, adding 1.3%, and now just below 25. Above 30, would probably push us through the lows on the back of more falls out of the US. Options Activity is crucial to the overall movement and underscores the psychology of the guys who are in charge of the market. FOMC minutes were also very worrying, and suggested that they see the US economy weakening. Rest assured, this will impact everyone, contrary to what many analysts suggest.

Today and moving forward…

Of course, we could get two scenarios, a short squeeze like Charlie expects, or the VIX shows us again what its made off, and the lack of buying from global markets over the last 24 hours pushes us back lower. If we break here, which is what we expect, then we will with no doubt hit a lower low. We can expect a short-term bottom at the 4000-4100 level, which would depend on how quickly everything moves. In any case, while I don’t think its smart to go completely short, it is a good idea to take profit of the table. From the data point of view, we are watching multiple events. First out of Australia, we have the New Motor Sales at 11.30, which came in at –3.2% last month. However the big news will not come until 12, which has a range of Chinese Data. We have:

· CPI y/y – exp 3.3%, last month 3.1%

· GDP q/y – exp 10.5%, last month 11.9%

· Fixed Asset Investment ytd/y – exp. 25.2%, last month 25.9%

· Industrial Production y/y – exp 15.2%, last month 16.5%

· PPI y/y – exp 6.8%, last month 7.1%

· Retail Sales – exp 18.8%, last month 18.7%

Later we have ECB’s update, and UK’s Equity withdrawal q/q, exp –3.3b, last month –4.0b. The big ones again will be the Unemployment Claims out of US at 10.30pm, which is expected to drop under 450k to 448k, however still significantly over the crucial 400k that we should be under by now. We will also have Core PPI m/m and the Empire State Manufacturing Index at the same time, but will not be the crucial market movers.

Another big mover will be the Philly Fed Manufacturing Index at 12.00am that is expected to grow to 10.2 from 8. This has been a big disappointment in the past, and we shall be interested to see how it goes this time.

thedailycable — Tue, 13 Jul 2010 23:56:00 +0000

The Daily Cable
14/07/2010

Firstly, I apologize that this is the first update for the week. I was away in Sydney over the Monday and Tuesday.

Since the last update…
In Australia

The first two trading sessions of the week have been quiet and have had a 35 point range. Today this will change, but other than that really not much has happened while I was away.

In Europe and beyond

Last night, during the EU session, Portugal was downgraded by Moody’s and this had little effect on the equities rally. The main question is will this be the same story as with Greece, or is the market just over it? When the first downgrade came, it was Portugal, followed closely by Greece. The market rallied to new highs. Once the actual credit problems occured, then the market started believing the world was over. Despite this downgrade DJIA rallied by almost 150 points, and S&P almost 17 points. They are now sitting at resistance around the 1100 mark, which could be very significant. 1120 is secondary resistance, and from where the market dropped 100 points in less than half a month.

From the economic news, there were a few worrying results from last night, including the German Economic Sentiment, which came in at 21.2 instead of the anticipated 25.2. Further to this, the news that will affect all market sooner, rather than later, the US Trade Balance that is getting worse and worse, widened by a more than expected 42.3B instead of the expected 39.3B. On the bright side, the amazing Intel outperforomed again, which has always seems to happen. Of course, the only thing it has ever affected in the past were the futures, as it reports after close. The worrying signal after collapsing for more than a week, the VIX has actually added last night, up by half a percent.

Today and moving forward…

The market is set to open higher by 70 points after the US rally, and expected to push the market up to around the 4430-40 mark. This is still in the 4400-4450 resistance that I wrote about last week, and nothing much has really happened since then. So based on this, I expect us to lose at least some gains today. At 10.30 we have Westpac Consumer Sentiment coming out, which has no forecast. Out of UK, we have the Unemployment Rate, which is expected to stay at 7.9%. Form the Euro zone, we expect CPI, which is expected to stay unchanged at at 1.4%. Out of US, we are expected to get the Core Retail Sales, which is expected to fall by 0.1%, which would be better than last month’s 1.1%. I will send an earnings calendar a little later.

thedailycable — Sun, 11 Jul 2010 23:09:00 +0000

Hello,

I will be away from Melbourne between the 12th and 13th, so there will be no Daily Cable for these two days. Sorry for this inconvenience.

Kind Regards,

Ivan

thedailycable — Thu, 08 Jul 2010 23:42:00 +0000

The Daily Cable
09/07/2010

Since the last update…
In Australia

Thursday saw some very large gains on the ASX, however it unfortunately it tells us nothing of underlying strength. I say this because the market did not add to the gains that we opened with, nor did it lose them. It appeared that the smaller caps helped the market stay up, as a lot of the bigger caps lost value throughout the day.

The good news is that the advance/decline line was rather positive; the bad news is that it on a 100-point day, you want it to be much more than 589-275-1018 (All Ordinaries, gain/loss/flat). As we expected banks led the gains, mostly due to the AUD surging. It is trading at around the 87.5-88 this morning, right at expected resistance. The best news about yesterday is the Unemployment Rate. We were expecting the employment number to come out a little weaker than last month, and on the contrary we got a higher number.

In Europe and beyond

The trend has continued to be strong out of Europe. The rates have been kept by both the ECB and U.K., as expected. FTSE was up a touch over 90 points in a very strong trading session. All news from that region are mostly surrounding BP, with news suggesting that Shell CEO openly suggested he is considering assets of the troubled company, while it struggles capping the oil well early, as they promised.

In the US, the day started off with a kick, with unemployment claims dropping more than expected. The bad news are from consumer credit, that was expected to come at negative 1.9b, and came in at negative 9.1b. If that wasn’t bad enough, last month’s number was revised from positive 1b to negative 14.9b. This obviously did not hammer stocks, however these numbers take time to play out. And such a bad number will affect everything, from retail sales to home starts. Highly reputable analyst and Managing Director of Nine Points Capital Partners, Damon Vickers, suggested that a sell-off similar to 2008 is around the corner. He blames liquidity and no access to credit. This number confirms this view. Without credit, there is no spending in our world. Without spending, earnings are going to be bad across the board.

Today and moving forward…

Not much data in the Asian zone, until 4pm when we get a look at German CPI numbers. Once again, the volatility will come at night, with PPI and Trade Balance out of UK, and Canada’s Employment and Housing Starts. The reason that Canada’s numbers are significant is because their currency is a competitor to our currency. They are both classed as commodity currencies, and a move up there will help our dollar. I still continue to think that its time to take some off the table as we approach the 4400-4450 levels. I find it hard to believe this market can move much higher above 4500 without getting some sort of sell-off. The weakness has been too strong.

In news today, we have had some interesting news from politics, with Julia Gillard reported to retreat on her refugee process. While this has no impacts on markets directly, it raises questions about her commitment to her decisions. With such strong will and constant back-flipping in such a short timeframe, she is sure to lose the election.

The market is set to open higher, with futures up 28 points at 4375. We should get an open around 4400, and it will be hard to imagine a rally of more than 50 points. As we are in the business of predicting and acting on probabilities let me lay out 3 possibilities:

We fail at these levels and break 4200 to the downside.

We break the 4450, sail to 4600 and establish a sideways pattern.

We break both 4450 and 4600 and we get a higher high.

Based on these, the chances of ending up lower than 4400 in the next few months is almost inevitable. Especially considering we are still in a clearly defined down pattern. Chart is attached.

thedailycable — Mon, 05 Jul 2010 23:18:00 +0000

The Daily Cable

06/07/2010

Since the last update…

In Australia

We have had a very interesting trading session yesterday. After an initial sell-off in the morning we have had a very interesting move forward into positive territory. We have had positive data out of Australia, which definitely helped push the market higher. This was from the morning’s Trade Report that came in at 11.30am, which showed inflow of 1.65B as opposed to the expected 0.53B. The news that missed the headlines was that there was also a significant revision to last month, with a move to 1.12B from the previous report of 0.13B.

It appears that BHP led the rebound, and this was shortly followed by a move from the banking sector. The major winners from the ASX 20 were Toll Holdings (6.31%), Challenger Fin Services Group (6.18%), and Macquarie Group (4.42%).

In Europe and beyond

Other than the obvious; Euro zone on steroids, it could be interesting to note that Tate & Lyle sold its sugar arm to American Sugar Refining. This is an echoed move from CSR the other day locally and raises questions about what these companies see down the road for sugar prices. This could be a coincidence, or it could mean these guys are factoring in a deflationary period.

In other news,

Today and moving forward…

Today is a light day data-wise, and the recent trend on Wednesday’s has been to reverse whatever we have started with in the morning. At the same time, yesterday’s rebound is nothing to be sneezed at. It was a typical short-term bounce pattern, with a sell-off across the board on a Tuesday on elevated volume followed by a snapback and a significant close up. In the evening, post-close, there will be a few things going on in the US. ICSC-Goldman Store Sales leads the way, however rarely impacts the market. On Thursday however, there will be a significant dose of it. Aside from those in the calendars we sent out on Monday, there will be announcements for the 3yr and 10yr notes, 30yr bonds, and 3mnth and 6mnth bill sales. However, I will write more on these tomorrow.

Daily Cable – 05/07/2010

thedailycable — Sun, 04 Jul 2010 23:38:00 +0000

Hello All,

Well we sure had a quiet Friday night and an even more quiet weekend. Some things that I noticed since we last closed:

• After our market closed, futures rallied by 30 points in the last 5 minutes of trade (4.25). We will see if this means that the short-term bottom is in, especially considering that just under 4200 seems like a citadel at the moment. A close below will reconfirm the downtrend.
• The VIX had another massive fall in light of a lower DJIA session, falling by over 8% to a touch over 30. This is a very important signal for the bulls, and essentially suggests that the options traders are pricing in a bounce.
• The initial response to the jobs number Friday night was actually positive, as the Unemployment rate came in to 9.5% as opposed to the expected rise to 9.8%.

In the news:

• A lot of news around BP ahead, and they are estimated to cap the leak within a week to two. After this the expectation is of a reshuffling to the board.
• Julia Gillard pushes a new asylum seeker policy. The Age quoted her as saying: “[Australian’s] should feel free to say what they feel”. The policy could be revealed tomorrow as she is scheduled to adress the Lowy Institute.
• “Foreign investors are worried about Australian debt” – The Age (http://bit.ly/cMgyon)

As more news happen I will send some further updates.

Going forward there isn’t much economic data coming out until the European Session. An economic calendar will be forwarded shortly.