Did my eyes deceive me?

I’m thinking that my eyes are playing tricks with me.  Did I really see a two sided market last week?  I have to stop doing mind altering drugs (just kidding).  It was a refreshing thing to see that the market does actually have two sides to it.  Friday’s rally really threw me off.  Especially after seeing the President come on television and talk about bombing Iraq and the insurgents.  The futures markets were down a good amount.  Friday morning I woke to find that the futures were up in the morning and the US had bombed Iraqi insurgents with 500lb bombs.

Now, the President did say that we will not bring our troops back into Iraq on Thursday night, but I read in the paper that Saturday the President said we will bring in troops to fight and get the Iraqi army to be able to defend itself.  Apparently ISIS has over run most of the Iraqi military and taken over most of the country.  And these ISIS insurgents are now attempting genocide on the Christian population of Iraq.  I’m all for protecting people, and I’m glad that the President sees fit to take on these bully’s.  I never believed for a minute that we wouldn’t have troops back in Iraq tho.

The Middle East has been fighting for thousands of years.  Why do people believe that they can bring peace to that region of the world?  Anyway…I digress.

What confounded me about Friday’s trading was the large rally in the equity market.  We did have a huge move up in the bond market, as one would expect given that it is a flight to safety.  But to have people pile back into equities while pile into bonds was very confusing.  I posed the question to myself.  Is the bond market telegraphing that there is much more downside coming to the equity market, and people are just getting ahead of that move?  My answer to said question was, yes.  I think with the recent, large, up move in the bond market it is showing us that there will be more volatility in the markets to come.

I sent a message to a friend of mine (former CBOE trader) that Friday was the hook to sucker in the widows and orphans in the market as the last leg of people sitting on the sidelines get involved in this bull market.  Now, I was joking about getting widows and orphans in the markets at the top, but my point is that it appears that they are trying to hook the last bit of John Q. Public in the markets at the top.  Which we all know how that story ends.

My hope is that the volatility continues and we really start to see some acceleration to the downside of this market.  I was looking at the business section of the paper this morning (Sunday for people not checking the date) and on the front page of that section it was showing how the markets have been selling off big and the DOW is down 0.14% for the year.  You did read that correctly.  0.14%, not 14%, not 1.4%, but 14 1/100ths of 1%.  Oh crap, the sky is falling.  They also said that the Nasdaq is down 2.6% from its high and the S&P500 is down 2.8% from its high…not for the year…from the absolute highs made recently.  I swear, if we get any real sell off, these people will be bleeding in the streets with a mere correction of 10%.  I really hate these alarmists.

Coming up this week week we have no economic reports for Monday.

Tuesday we have the NFIB small business survey.  We also have the Federal budget numbers.  I wonder if they will include the extra costs of a new war in Iraq (sarcasm).

Wednesday we have retail sales with a flat estimate from the previous month.  Along with that we have business inventories showing a forecast of a build that is less than the previous month.

Thursday we have our weekly jobless claim numbers.  Last week we had a surprise drop of claims down to 289K from an estimate of 305K.  It also looks from the estimate that import prices will be rising.  I wonder how that factors in to the Fed’s assessment of inflation?  (a little poke at Janet Yellen for thinking there is no real inflation).

Friday we have the Producer Price Index with signs that the cost to manufacture goods is not jumping up.  Consumer sentiment numbers will be in full view as well, showing the forecast of 82.4 which is 0.6 better than the previous month.  Obviously we have people more optimistic of the economy.  That is interesting since I just had another friend laid off of work, my good friend in the real estate world who is busting his butt just to try to get business, and another friend seeing business at his company drop.  There are a lot of complaints (other than my friend in the A/C business who is running ragged with the hot weather).

Happy Trading!

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August arrives with a little heat under the Bulls’ collar

The last couple trading days were proof to me that there may be a slight bit of sanity returning to the markets.  Thursday was the best sell off we have seen since February, and hoping against all hope, the start of something good for the bears.  The sell off was blamed on the hawkish descent of Philadelphia Fed President Charles Plosser, who voted against the dovish Fed statement of Janet Yellen.  He objected to holding the interest rates at near zero, which we all would be happy to see interest rates up.

You may think that with the GDP number coming out on Wednesday (the same day as the Fed statement) at 4.0% growth for Q2 would be a good thing for the markets.  Isn’t that what everyone wanted?  Real growth in the economy?  Well, you got it.  And what did it produce?  An actual sell off (thank you God!).

It always surprises me the type of things that set a market off that had been evident for a LONG TIME!  I mean, they can’t blame the sell off on the issues in Israel/Gaza.  That has been in the news for weeks.   They can’t blame it on the Ukraine or Russia and the downed airliner (MH17).  That has been in the news for weeks.  They can’t blame it on a growing financial crisis in Europe.  That has been going on for weeks.  Nope, none of those things mattered, until Thursday when people in the markets finally woke up and said…”hey…the market may be a bit risky”.

Thursday’s big sell off, which any other time this year would have been met with equal of more buying of the dips, did not do so on Friday.  There is a definite change to the tone being emitted by the markets.  Volatility is finally moving in the good direction for traders (that would be up for you perma-bulls).  Thursday we saw a 20% rise in volatility and a continued rise on Friday.  This gives me a glimmer of hope that we may see some normalcy return to the markets.

We are still only a couple percent off of all time highs in the index.  A reasonable pull back in the markets over the next couple weeks would be 10%.  That is about 190 S&P500 points, nearly 400 Nasdaq points, and 1700 Dow points.  With the way the market has been treating the bears lately, you would think those numbers are incomprehensible.  But that could be the start of something good.  My wish would be a 20% correction.  It would be extremely healthy for the market, remove the huge amount of air the Fed has pumped into the equity markets, and give the market more solid footing to advance from that point.

Currently NO ONE IS SHORT THE MARKETS!  We could see this downdraft really accelerate when the bulls, who have been in total control, think about taking some profits.  What fund manager in their right minds would take their remaining cash position and buy at near all time highs when they haven’t booked any profits?

I like this tone change, and there are no bears in the market that want to save the bulls after the beating they have received for the last 5+ years.

Last week’s economic news should also provide a bit of reality to the bulls.  While things looked good on Wednesday with the GDP numbers and the Fed speak, Thursday and Friday told a different picture.  Employment costs rose more than expected.  Chicago PMI was much lower than expected.  Non Farm payrolls were 13% off of their estimate.  Unemployment rose 0.2% to 6.2%.  Consumer spending did not rise as much as was forecast.  Markit PMI was lower than the previous month.  Construction spending was negative.  And motor vehicle sales came in 200K less than the forecast.

I’m hoping this is the tipping point.

Coming up this week, we have a light economic calendar.  Nothing is scheduled on Monday, and earnings season is starting to wind down.

Tuesday we have the ISM non manufacturing numbers and Factory orders.

Wednesday we have the trade deficit.  Not likely to be market moving.

Thursday we have our weekly jobless claims and the consumer credit numbers.  Consumers have been levering up their credit lately, let that keep going and it should scare the bulls more with too much leverage hanging out in the credit markets.

Friday we have the productivity numbers to round us off.

I cracked a smile for the first time in months from Thursday’s sell off.  I’m a much more fun person when I’m happy.  Please market, make me happy!!!

Happy Trading!

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Sounding like a broken record

Well, what can I say?  This ongoing optimism in the market is like groundhog day.  We have the same concerns as last week with escalating violence in both the Ukraine and Israel and still, no one cares.

This morning I was reading in the papers (yes, I still like to read actual printed information from time to time) that Russia is providing the rebel forces with more heavy artillery, and have actually fired into the Ukraine.  Interesting how the Russian President says he is staying out of the fighting, but is in fact not only adding to the fuel, he is contributing to the fighting.  Our President has discussed providing limited intelligence in regards to the locations of the sites that house rocket launching, to the Ukrainian government.  That is a double edged sword.  On one hand, it shows the type of intelligence capabilities of the US, and secondly it brings us into the conflict directly.  It was one thing when we had the cold war back in the 80′s, but to go in, provide support and intelligence to the Ukrainian people will put us right in the forefront of this battle.

I do feel that the Ukraine has full right to defend itself, and support them completely.  However, do we need to escalate the US into another battle?  We are fighting on too many fronts as it is.  My hope is that a more peaceful resolution can be found in that part of the world.  Even with all the Russian involvement against the Ukraine, the Russian stock market has risen, and Vladamir Putin is becoming more popular among the Russian people by measurement of the polls.

As I have stated and proven, NO ONE CARES!!!  How do I know this?  Well, market volatility would suggest there is not a care in the world with the VIX still below 13.  Even with all the conflict in the Middle East (and we do have one bit of good news, Hamas has allowed a temporary cease fire) we see oil prices actually dropping.  Crude oil is below $102 per barrel.  Gasoline prices have fallen over $.20 per gallon in the last couple weeks in my neck of the woods.  With these facts, you know no one is concerned over any disruption in oil distribution.  So again, the broken record over here says, NO ONE CARES!

Well, let’s move on to see what is upcoming in economic news this week.  Because with last week’s Chicago Fed national activity index falling to almost half of what it was last month, FHFA house price index not rising at the rate it did last month, new home sales coming in woefully short of expectations by almost 15% (475K estimate, 406K actual sales) there are no problems in the economy (sarcasm… for those that don’t see it).  This week will bring some reports that could cause some fireworks (hopefully).

Monday starts us off with pending home sales.  I did not see an estimate for the number.

Tuesday we have the consumer confidence numbers with a lowered expectation from the previous month of 0.2%.  Along with that we have the Case-Shiller home price index.  The previous growth for May was 10.8%yoy.

Wednesday we have the ADP employment numbers, a precursor to the Jobs numbers Friday.  Last month the number was 281K added.  A BIG number on Wednesday is the GDP number.  With the final count for Q1 coming in at an abysmal -2.9%, I’m chomping at the bit to see how they do with their estimate of 3.2% positive growth.

We also get the FOMC statement.  How long can the Fed blow sunshine up our skirts with how well the economy is doing, yet they have not backed off of their stance to keep easy money flowing, and will do everything they can to keep this market propped up at all time highs.  I still feel the Fed should wake up, tell people how things really are, let the market take its hit, then it can build on a more solid foundation.  But we have all seen, that is apparently illegal.

Thursday we have our jobless claim numbers.  Last week’s surprise drop from the 310K estimate to the actual 284K was one of the biggest drops we have seen and (on the surface) shows a growing economy.  Unfortunately it doesn’t take into effect the people that have given up.  Chicago PMI comes out as well with its estimate of 64.

Friday is going to be the granddaddy of the week.  Non farm payroll numbers ( aka the jobs report) comes out with its estimate way short of the previous month’s surprise upside.  Maybe they are lowering estimates in order to get an upside surprise and fuel the markets further past the 2000 mark in the S&P500.  We all know the market likes large round numbers, like the DOW surpassing 17K.

The unemployment rate number also comes out with its estimate of 6.0%, just one tick lower than last months number.  Personal income numbers are showing a flat estimate vs the previous month.  Expectations are higher for consumer spending, doubling the growth of last month’s 0.2% increase to 0.4%.

To round the week off we have consumer sentiment numbers, the ISM, construction spending, and motor vehicle sales.  To say that Friday is a monster day for economic news is an understatement.

Friday also is the start of August…so bye bye to July.

Happy Trading!

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My hopes crushed again

I think I have a permanent headache.  Can you believe what is going on?  Thursday, I felt a slight bit of relief.  We had a real, honest to goodness, sell off.  It was the first time in 63 days that we got a 1% move in the indexes, and it was in the good guys direction.  But what happened Friday?…the bad man came out and not only took back what was given to us, but took more.  People say there is no manipulation going on in the markets, but when you have a market that was at all time highs, and a big sell off, then resume to all time highs again…something stinks in Denmark.

With all the world turmoil going on in the markets it is unfathomable that we can continue higher.  But here we are again.

Before discussing the turmoil, I want to first let everyone know that my thoughts and prayers are with the friends and families of the downed Malaysian airline plane over the Ukraine.  It was a tragedy of epic proportion.  That said, Friday it was confirmed that the airline was shot down by a rocket over the embattled area of the Eastern Ukraine.  Blame is being placed on the separatists who are being armed and trained by the Russian government.  (Thanks Vladimir)  Along with that, Israel has invaded the Gaza strip with full military armament.  They say they are going there to destroy the tunnels going into Israel. (does anyone else believe that?).  All this and we keep our resilient market.

Even Janet Yellen tried to help the bears this week by saying that biotech stocks were stretched in valuation.  Not that she substantiated that statement.  When was it the Fed’s job to do stock fundamentals?  Apparently there is a new mandate I’m not aware of.  There was, however, a backlash from the analysts in regards to the Fed Chair’s comments citing that the valuations were no bargain, but were in no way to any extreme.

Again, I don’t know what it will take to get an actual sell off in the markets, but it would have to be something of Biblical proportion at this point.

Last week’s economic news didn’t seem to faze the markets either.  Retail sales were about half of the estimates for growth, so we are growing at a slower pace than expected on people spending.  University of Michigan consumer sentiment took a dip from 83 to 81.3.  Leading indicators were down to 0.3% from 0.7% the previous month.  And the big slam that should have kept the markets down was the housing starts.  That number missed by over 10% coming in at 893K starts vs the estimate of 1.02million.  That is a massive miss that should not have been overlooked.

Coming up this week (if I don’t put a gun in my mouth and pull the trigger) we have Monday’s Chicago Fed national activity index.  Doubtful it will be market changing.

Tuesday we have the consumer price index and core CPI, both showing an estimate lower than the previous month by 0.1%.  The existing home sales numbers are due out with a slight increase of 110,000 over the previous month.  FHFA housing price index will also come out to see they year over year gain of housing prices.  The previous month was at 5.9%.

Wednesday holds no economic reports.

Thursday we have our weekly jobless claim numbers with an estimate of 308K, 6k higher than the previous week.  Another report that will be looked at will be the new home sales.  They estimate the number will be at 475K which is 29K lower than the previous month.  Not a good direction for a growing housing market and lower interest rates.

Friday gives us the durable goods report.  Last month was a disaster with a contraction of 0.9%, now showing an estimate of 0,0% growth.  You have to love this growing economy when people aren’t buying.

I’m done for now.  I need a very large drink, and for something to change to give me hope for the truth.

Happy Trading!

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It’s about time they scared the children

Have you ever been so frustrated in something that you knew it was time for that thing to change?  That’s how I feel right now.  I’m fed up with this bullshit market and its utter resilience to anything thrown at it.  The Fed has done all it can do.  Interest rates are, for all intensive purposes, zero.  The Fed is well into the taper of quantitative easing.  Citing that they will be done with QE within the next few months.  The Fed has acknowledged that the economy is not as strong as they would like to see it, but unemployment is in their target zone.  Job creation is on target (according to them).  We have recovered the jobs lost since the great recession (but no one counts the amount of new people that have entered the workforce since then).  But the big factor that is looming over this picture of the US being in great shape is the fact that inflation is higher than the Fed would like to see it.  The only way to stop the run away inflation is to raise interest rates.  Now, everyone I know would welcome higher interest rates.  I’m sure you would too with your money earning nothing in savings accounts.  But, if the Fed does raise rates, it will raise the rates on mortgages.  That will kill the housing market, which will kill the economy, which will finally hit this market.

You would think that with the market so bullish, that some smart people would be preparing for an inevitable pull back in the markets.  But Nooooo!  There is still record complacency.  The pundants are still waiving the bull flag.  No one feels that there is anything that can bring the markets down.  Think about it.  We have a high likely hood that war will break out in the middle East with Hamas sending rockets into Israel.  Syria sending rockets into Israel.  Fighting still continuing in the Ukraine.  And…the raising of the concerns of more credit defaults in Portugal, and Greece.  These can start another round of monetary woes reverberating through Europe, which can spread across the globe.

Asia is also not doing that great economically.  With a slow down in China (the world’s second largest economy), it will just take a small push for people to realize that there is more risk in the world and the markets than anyone is expecting.

I, for one, am salivating for the ONE time that when the markets drop in the morning…they do not recover, and there is no one to buy.  The air gap that is already built into the market needs to come to fruition.

The upcoming week is loaded with reports that could send more negative messages to the markets.

Starting Tuesday we have the retail sales, which are paramount to the economy growing.  If the consumer starts slowing its purchases, that will be a good sign for the bears.

Janet Yellen will be giving her testimony too.  Let’s see if she starts to harden her dovish position on the Feds stance with easy money and interest rates.

Wednesday we have the producer price index along with the home builders index.  Janet Yellen will be speaking again.

Thursday we have the weekly jobless claims which came in better than expected last week with an expectation of 315K, coming in at 304K.  Housing starts will also be in the forefront of the news with expectations of 1.01million starts.  Last month we saw the first time of 1million starts since 2007.

Friday brings us the University of Michigan consumer sentiment numbers.  The estimate is higher than the previous month.

Happy Trading!

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Go USA!!!

AMERICA!!!  Yeah!…go USA!!!  All time highs again.  I thought we would get a little upward bias on a holiday week, but didn’t expect this much.

The markets are now hanging their hats (Thursday) on the jobs report and unemployment numbers.  The jobs number came in at 288K with an estimate of 215K.  The unemployment number is now down to 6.1%.  Of course that number doesn’t take into account the amount of people that are under employed or have stopped looking all together.  ISM non manufacturing numbers came out lower than expected.

We are back to the point that good news is good news, and bad news is good news.  The Fed doesn’t appear to want to take their foot off the accelerator, even tho they are saying the economy is getting better.  If the economy is getting better, don’t you think it would be a good idea for the Fed to back out, and start to raise rates?  They won’t, why?  Because they are afraid of spooking the markets.  If there were a time when the Fed should spook the markets it is now with the markets at all time highs.  This way if we get a pullback in the markets, it would be a healthy thing.

We have gone from May 16th with only 4 down days in the markets.  YUP!, 4 stinking days of minimal down.  The bears are no longer in a slumber state, they are dead buried and planted over.  Nothing is ever going to bring this market down.  NOTHING!

The reports say that the individual investor is not in this market.  Now they want to get the public in the market at ALL TIME HIGHS.  Great strategy for an exit from the big guys.

The VIX is now comfortably below 11%.  If you account for the rolls of the VIX over the years, we are at historic lows of volatility.  Options are cheap, protection is cheap, and there is ZERO fear in the markets.

The upcoming week is very light on reports.

Nothing is scheduled Monday

Tuesday we have the NFIB small business index and consumer credit numbers that will be in the foreground.

Wednesday we have the FOMC meeting.  What else can the Fed do to build this market higher?  I guess we will find out what it can throw at the market this time to keep everyone fully invested.

Thursday we have the weekly jobless claims numbers.  Last week the number was slightly higher than expected.  But the market doesn’t care.

Friday we have the Federal Budget numbers to end the week.

Happy Independence Day to everyone!  Be proud to be an American especially on its 238th birthday.

Happy Trading!

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Who cares about GDP?

Apparently the market doesn’t care about growth anymore.  Why should they, when the Fed is going to make sure that the market can never go down?  This week the final revision for the Q1 GDP came out.  It was abysmal at a -2.9%.  Is everyone blind?  They must be, or I’m just stupid.

This past week we had Markit flash PMI come out lower than expectations.  Case Schiller home price index slowing growth in home prices.  Durable goods orders going to a -1.0%.  Weekly jobless claims slightly higher than expectations.  Consumer spending cut in half from expectations.  Along with this…Thursday one of the Fed Governor’s (Brussard) came out to say that the Fed is much closer to hitting its targets and raising interest rates sooner than we all think.  The market tanked on that news.  Then, as always the market reversed all those losses.  Same on Friday, we were down early, and came back with the roaring of the bulls once more.

How many times can the bulls do this?  It is a common theme every day.  Each day, I think…yup, we finally got them…then the bulls pull themselves up by their bootstraps and charge forward again.  Buy the dips…that is the theme for eternity.  Market sell offs are now measured in minutes, not days/weeks/or months.  I think the bears have been permanently castrated.

What else can be thrown at this market and it still keep fighting back?  Even with fighting breaking out during a cease fire in the Ukraine, the market remains resilient.  Even with ISIS in Iraq killing innocent people and continuing their fight to take over Iraq, the market remains resilient.  Even with Obama sending troops (call them consultants all you want, they are trained elite military) to Iraq, with the possibility of being dragged into another war, the market remains resilient.

I’m beaten and bloodied, and fed up with this market.  I have actually walked away from my computer a couple days this week.  The reason being, I didn’t want to have an aneurysm with the pressure I have building inside.  The one thing that scares me in the upcoming week, is that we generally have a bullish week prior to a holiday weekend.

We have a shortened week next week with the Independence holiday on Friday.  That means the first week of the month, new money coming into the markets from fund managers, and more than likely an upward bias, barring any unforeseen circumstances.  Of course, that circumstance would have to be earth shattering, since negative GDP growth cannot get the market to sell off.

Monday we have Chicago PMI (purchasing managers index) starting us off.  They are looking for a lower number than last month.

Tuesday we have the ISM (institute for supply management).  They are looking for a modest gain there of 0.2% over last month.  Construction spending numbers will also be showcased.  Those numbers are looking to be in a positive direction.  It is understandable given that the pending home sales and existing home sales numbers last week were both better than expected.  Interesting that my good friend in real estate just told me that things are really drying up in Orange County CA.

Wednesday we have the ADP employment numbers coming out for the beginning of July.  Yes, half the year is gone already.  With the ADP numbers we have the factory order numbers due to show contraction in the factories.  That can’t be a good thing, but I’m sure the market will shake that off too.

Thursday we have our normal weekly jobless claims rising slightly to 314K in the estimate, or 2K higher than last week.  Due to Friday’s market closure we have some very important numbers that would have normally come out Friday, come out one day early.  Those numbers are the non farm payroll numbers, estimated to be 2K lower than last month, and the unemployment rate set to be flat at 6.3%.

Friday we can all celebrate our independence!  Hooray!   Market at new highs again!  (sarcasm)

Happy Trading!

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Fire all weapons!

What can I say?  This market is unbelievable.  Unrelenting buying does not seem to end.  We are in territories of extremes that have even caused the technicians in the world to say “I don’t know”.  That’s right, we have moved so far so fast and so high, that people that are the professional chart readers can’t tell you when it will end.

I have seen projections that the S&P500 will hit 2062.   DOW 17K, is almost a given at this point with the index coming within a few points of that number today.

What I find very strange is that with the market slightly positive today, most of the stocks I follow are in the red.

Volatility is in the toilet.  The VIX is under 11, the /VX (forward looking volatility) is below 13.  This means NO ONE IS AFRAID AND NO ONE CARES!!!.  Even my lady friend (at my age, I don’t think it is politically correct to call her my “girlfriend”) had to put her two cents into the markets with me this morning.  She started out by saying “don’t get mad at me”.  Nothing good can come from a statement that starts that way.  But her comment to me was, why could I not go long the market?   I tried to explain to her (for the umteenth time) that the market has done nothing but rally for over 5 years.  That we have not had a 10% pull back in this bull market during that entire time.  That we have been up 21 of 23 trading days.  Her reply was, “well, it keeps going up, so you should go in that direction”.   She is in the salon industry, so I tried to give her an analogy that she could understand.  I tried to use a commodity as an example.  I said to her…if you had a product that was a commodity.  And it was going up for years, and you know this product fluctuates with supply and demand along with market conditions.  This product was going up for over 5 years.  Would you buy a boat load of the product to protect against it going up more?  Her answer was yes.  At that point, I knew I couldn’t talk to her anymore or I would have to put my hands around her throat.  But it also pointed something out to me in regards to how the general public operates.  Every bear market was started by everyone being bullish.

All the news articles I read are saying how this bull market has much more to go.  I have seen “experts” say we have another 3-7% of up for the year from this point.  I can understand they have the Fed firing all weapons at the market as Janet Yellen came out this past week saying the Fed is going to keep interest rates near zero until 2016.  Ms. Yellen also said that they are lowering expectations for growth, meaning the economy is not doing well.  Along with that she said that if the economy begins to falter, the Fed stands ready to add more stimulus.  UNBELIEVABLE!!!   I want to tear my hair out.  With all the QE (quantitative easing) becoming less and less effective, how is more free money going to get things going?  The answer is, It will not.

We have a possible war situation still brewing in the Ukraine with Vladamir Putin building more troops at the Ukrainian border.  We have Iraq unraveling with ISIS looking to storm Baghdad.  Our president saying we will not have “boots on the ground”, and then sending 300 “advisers”  (Green Beret, Navy seals, and Airborne rangers) to Iraq.   And again…NO ONE IS AFRAID AND NO ONE CARES!!!!   We even know this by the oil market which hasn’t moved much since last week.

What will it take for people to wake up and see what is really going on?  How can someone be long this market, and not want to take some chips off the table with us at all time highs in the equity market, bond yields falling, and the possibility of being dragged back into Iraq?   Apparently I’m the only one that sees all of this, or thinks it is a problem…because I’m the only one still short the market…even tho I get proven wrong every day.    HELP!!!

The upcoming week, economically speaking, we have the existing home sales on Monday looking for a boost up to 4.75 million in home sales.  I know that a couple weeks ago when interest rated bumped up, my real estate friend told me that all business dried up.  Now with rates dropping again, maybe we will see more home sales.

Tuesday we have the home pricing index to see if home are rising in value.  Along with that we have new home sales showing a modest rise to 440K from 433K.   To round out the day we have consumer confidence number that are poised to be higher by 0.3% from the previous month.  Yay…more optimism by the consumer…just what I need (sarcasm)

Wednesday we have the GDP revision numbers for Q1 again.  As you remember, the original projection for Q1 was 2.6% growth, dropped down due to weather to 1.2% growth, then came out with an actual number of 0.1% growth.  Then the first revision was -1.0%, not the projection for this revision is -2.0%.  Yeah, that’s great economic growth (MORE SARCASM!)

Wednesday also brings the durable goods orders.   Last time we had an upward surprise in durable goods, but this month’s expectations is to drop by 0.6%.

Thursday we have the weekly jobless claims.  Last week we had 2K more than the estimate.  This week we are looking at an estimate of 313K, or 1K higher than last week’s number.  Not the direction you want to go with a growing economy.

Consumer spending will be a big number for the week, under the guise of a 0.4% rise in the estimate.

Friday ends us with the consumer sentiment number set to show a higher sentiment.

Someone please have the market get it’s foot off my throat.  I can’t breathe!

Happy Trading!

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Protracted, Parabolic, Unyielding!

Pick your adjective in regards to this market.  We have had three straight weeks of nothing but UP in the equity markets.  It is unfathenable to consider after a 60+ month bull market that we have this protracted run to new highs every single day.

What news do we start with to show that there are some major problems out there that NO ONE cares about?  How about starting with Mario Draghi (the European Central Bank chief)?  On Thursday the ECB decided to bring interest rates down to 0.1%.   The real kicker is that the savings rate in the banks is -0.1%.  That’s right.  If you hold money in the central bank, you have a negative interest rate.  It costs 1/10th of 1% to house your money.  This is meant as a method to stimulate spending and keep the Eurozone from deflation.  The ECB is also poised to do the same as the US has done for the past 4 years.  They are ready for their version of quantitative easing (QE).  Time to flood the Eurozone with cheap money.

This past week we have seen ISM numbers contract, construction spending diminish, ADP employment drop by 36K jobs.  productivity drop by 3.2%, the trade deficit increase to $47.2 billion per month,  jobless claims higher by 8K claims from last week, household debt growing by 2.0%.

I guess people are really hanging their hat on the non farm payroll numbers coming out at 217K vs the estimate of 210K.  The news agencies are all puffy chested saying that we have regained all the jobs lost in the great recession starting in 2007.   That would be awesome if we did not have new workers entering the work force.  But that is not the case.  From estimates I have seen, we require 350K jobs created to keep up with the population entering the workforce.

Is everyone blind?  Or am I?  All time highs again???  Seriously!!!???

To help pile on the great news for the remaining bears, the volatility indexes are parked in the basement.  The VIX (S&P500 volatility index) is sitting just above 11%.  That is the lowest since just before the housing debacle.  The /VX (the VIX futures) are sitting just above 12%.  This means that no one thinks there are no problems in the near term that anyone can see by virtue of the VIX and no one can see any problems in the future with no real disparity on the /VX.

As I said last week.   It is going to take an act of God to bring reality to this market.  Because the reality of what is going on in the economic world is not what is reflected in the markets.

CNBC (CNBS in my vernacular) is already talking about S&P500 going to 2000 (currently 1948), and the DOW going to 17,000 (currently over 16,900).

If you were just entering this market, and looked at the past 5 years, would you buy this market?   That is the question I ask myself every day!

Next week starts off with no reports on Monday.

Tuesday we have the NFIB small business index numbers due out.  We know the current administration thinks of small business, since it has done everything to kill small business.

Wednesday we have the Federal budget for May.  My guess is that we have blown our budget  (sarcasm!)

Thursday we have the jobless claims.  I don’t yet have the estimates, but my guess will be in the very low 300K’s.

The retail sales numbers that were so anemic last month with at 0.1% growth will be closely watched.

Friday we have the producer price index (PPI), and the University of Michigan consumer sentiment report.  But with everything else going on, the numbers won’t matter…the market will still go up no matter what happens.

I will get more positive when we get some type of appreciable pull back in this ridiculous market.

Happy Trading!

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Only an act of God

At this point with the repeating pattern of a market that is parabolic once more, it appears that the only thing that will be able to bring back a bit of sanity to this market will require an act of God.  I know this because everything has been thrown at this market, and it doesn’t even shutter at bad economic data, or world events.

Let’s look at what transpired last week.  After memorial day we did have some good news in regards to durable goods orders being much higher than the expectations.  Home prices did grow, albeit at a slower pace than last month.  Consumer confidence was steady, and the jobless claims were lower.  All good signs for the bulls.

On the other hand we have the Q1 revision of the GDP numbers which came in at a -1.0%, yes…after the initial estimate of 2.6% growth that was lowered to an estimate of 1.2% growth due to the weather.  The initial number came in at .1% growth.  That number is now revised to the aforementioned -1.0%.  This is the first time in three years that the GDP number has shown a negative growth for the economy.  Along with that, we have consumer spending (the driving engine for the economy) coming in at a -0.1%.

After a 60+ month bull run, with waning economic growth by the largest measurements, we have a market that shakes it off as it was a piece of dust on its shoulder.  No worries…all is well.  This is why I say that it would require an act of God to bring this market down.  Because all the acts of men and nature haven’t diminished the power of this raging bull market.

Coming up this week we have the start of a new month.  With that, we will have new monies for the fund managers to invest and continue to drive the markets higher.

Economically speaking we have the Markit PMI, ISM and construction spending numbers to start off June.  All the numbers look to exceed previous numbers with their current estimates.  More fuel for the bulls if this holds true.

Tuesday we have factory orders and motor vehicle sales.  Both estimates are very close to their previous month’s numbers.

Wednesday we have the ADP employment numbers.  This will be one of the big reports for the week, and one the market will be keyed into.  Another item of note on Wednesday will be the Beige book numbers that come out at 2;00EST.

Thursday’s only number are the jobless claim numbers.  The forecast is for 311K, which is higher than last week’s 300K, but less than last week’s estimate of 322K.

Friday will be the big end to the week with the non-farm payrolls and unemployment rate.  Both estimated results for these reports are anemic with 200K on the payroll numbers, and a jump up to 6.4% on the unemployment rate.  How much longer can they keep blaming bad numbers on the weather?  At some point the numbers have to stand for themselves as the reality of what is.

Happy Trading!

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