Cliff Diving – Day 11

Posted on November 26, 2012 by macromon

Resilient.

After last week’s low volume ramp, stocks were prepared to be flogged by the bears.  Two hours into trading and a 10-point flop in the S&P500,  the selling dried up and, led by Apple (+ 3.15 percent),  stocks began to move up to close at their highs.   The S&P500 (SPY) was down 0.21 percent.  The Russell 2000 (IWM) was up on the day.

Defense and utilities were in the green, the dollar and gold flat, and bonds up about 1/2 percent.   The VIX rose 2.38 percent.

Still no panic as the rhetoric begins to heat up.  The fact the market is rebounding has taken some heat off Congress and the Administration and even emboldened some to think going over the “cliff” won’t be so bad.

There’s only a short window before the sellers come back,  in our opinion.   Let’s use December 7th as the day of infamy.

The special interests are starting to crawl out from under the table as their babies are under threat.  Listen as to the National Association of Realtors as they hear that the mortgage interest deduction may now be on the table,

“Until Congress introduces specific legislation, there’s nothing to say about any proposed changes to the mortgage interest deduction,” Gary Thomas, president of the National Association of Realtors, said in an e-mailed statement. “However, it has always been the N.A.R.’s position that the mortgage interest deduction is vital to the stability of the American housing market and economy, and we will remain vigilant in opposing any future plan that modifies or excludes the deductibility of mortgage interest.”

–  NY Times, DealBook

How is thing going to get done in the next month?   Do you believe in miracles?

What would a real fiscal cliff panic look like?

Stocks down hard;  Russell 2000 down harder;  consumer discretionary down hard;  gold up;  dollar down;  VIX spiking;  and defense stocks in the tank.

Bonds?   Tough to extract a clear signal with the Fed’s financial repression, but,  initially,  the cowboys would most likely be in buying on recession fears and increased worries about going over the cliff.

(click here if chart and table are not observable) 

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How Low Can The Bears Go?

Posted on November 25, 2012 by macromon

Tomorrow is a big test for U.S. equities.

No doubt the bears will be banging on last week’s low volume ramp.  S&P futures are already down 6 points in overnight trading.  But will there be real sellers to feed the bears?

What will be the catalyst for selling?  Catalonia vote?  The potential for no deal in Greece?   Fiscal cliff fears?  The VIX certainly hasn’t been worried.

One bullish sign and counter argument to last week’s low volume holiday trading in the U.S. is that the global markets also ramped hard.  France and Germany were up over 5 percent.   And though the Shanghai continues to trade poorly, the Hang Seng, our favorite indicator species for global risk appetite, was up 3.57 percent and only about 1 percent from a 52-week high.

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Posted in Equities | Tagged , | 1 Comment

Quote of the Day: True Growth Locomotive

Posted on November 25, 2012 by macromon

Our greatness as a country is that we move on in spite of our government. We thrive, not because of Washington but by overcoming it. We succeed because half of our US economy is privately owned and independently managed. That’s right; over half the GDP comes from small business. The majority of jobs are created by those firms.
– David Kotok, Cumberland Advisors

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Catalonia’s Election

Posted on November 25, 2012 by macromon

BARCELONA, Spain — Voters in Catalonia delivered victory to separatist parties in a regional election on Sunday, raising the likelihood that Spain’s most powerful economic region will hold an independence referendum that Madrid has vowed to block.

But even as voters set up a fight with the central government by rewarding the independence cause, they delivered no clear message about who should lead it. The party of Artur Mas, the Catalan president who called the election two years ahead of schedule, actually lost seats in the regional parliament, falling to just 50 seats in the 135-seat body, from 62 in the last vote.

As a result, before holding any referendum on independence, Mr. Mas will first have to strike alliances with smaller parties that share his separatist goal, but not his economic and social agenda. After a vote that he had described as “the most significant in the history of Catalonia,” Mr. Mas told supporters that his referendum project was on track, while recognizing his party’s failure to consolidate its grip on power.
– NY Times

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Gold At Key Level

Posted on November 25, 2012 by macromon

The gold ETF’s (GLD)  closed above its 50-day moving average for the first time in over a month after its 1.22 percent move on Friday.  The chart below illustrates the 50-day has been key resistance since the correction from around $1,800 on cash gold began in early October.

The GLD was also able to close above ( just barely) a key Fibonacci level and paves the way to test its the 52-week high at $174.07 ($1,795.78 cash).  The risk is that gold becomes a risk asset and sells off on fiscal cliff fears.

We like its chances, however.   After all, Soros is buying.

Always with a stop.

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‘Toon of the Day: Showtime!

Posted on November 25, 2012 by macromon

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Global Trend Indicators

Posted on November 24, 2012 by macromon

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Week in Review

Posted on November 24, 2012 by macromon

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The Greek Resistance – Al Jazeera

Posted on November 24, 2012 by macromon

Greece – it is where Europe’s civilisation and the very idea of democracy began. But today the country is in crisis; a crisis that may well destroy the dream of a unified Europe. A dream born out of the nightmare of World War II, a dream to unite different nations under one currency, has become a tragedy. Ten years after joining the eurozone, the Greek economy has collapsed, living standards have plummeted, hundreds of thousands are out of work and thousands more have left the country to find a new future. Many Greeks blame the European Union, and Germany in particular, for the crisis they are in. Today, almost 70 years after its military defeat in World War II, Germany is the strongest economic power in Europe and its political leadership holds the future of Greece in its hands. Al Jazeera correspondent Barnaby Phillips travels to Greece to discover why these two countries, tied by history and culture, are now locked into a conflict. Why has the European vision, designed to heal the wounds of the past, instead brought them back to the surface? And who is to blame – the Greeks themselves, the EU or the old enemy, Germany?

–

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Catalonia’s High Stakes Election

Posted on November 23, 2012 by macromon

http://www.euronews.com/ It is the final day of campaigning in the regional assembly elections in Catalonia, a campaign that has become increasingly acrimonious and personal.

The stakes could not be higher for Madrid, as Spanish unity is on the line because the election could trigger a referendum on independence.

Rich but as financially troubled as the rest of Spain, seven and a half million Catalans, more than Denmark, account for a fifth of the Spanish economy, or about the same as Portugal.

(click here if video is not observable)

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