Is $SPY Exhausted Yet In Uptrend? $EURUSD Just Spiked to 1.317! (Technical Update)

Here is some technical analysis for $SPY (the S&P 500 ETF) and EUR/USD. EUR/USD just pierced through October 2011 resistance and hit 1.317. The euro spiked against the dollar yesterday after the Fed (FOMC) said they anticipate "exceptionally low levels for the federal funds rate at least through late 2014." The FOMC kept the rate at 0-0.25%, and are continuing to reinvest principal payments from agency debt and agency mortgage-backed securities in agency MBS. It is interesting that EUR/USD's current uptrend line has the same exact slope as the October 2011 uptrend line. Y=mx+b algo? While the Euro is flying high, there is still a risk it could breakdown if there's a negative euro-zone catalyst, negative ECB catalyst, or expectations of a disorderly default by Greece. Simon Derrick, chief currency strategist at Bank of New York Mellon, told Bloomberg TV on 1/19/2012 that he thinks the Euro could trade down to 1.15-1.20 during the quarter. Other euro bears believe it will eventually hit parity with the dollar. For now, EUR/USD is climbing in an uptrend inside a descending channel.

EUR/USD (source: freestockcharts.com)

As the U.S. Dollar fell yesterday, $SPY rose 0.84% to close at 132.56. Since EUR/USD has already made a decent move to the upside after breaking through a multi-month downtrend line, I think the S&P 500, or $SPY in this case, is setting up for a trend reversal, or correction at least, in the steep uptrend from 12/11/2011 (blue line). If there is a strong trend reversal and confirmed technical breakdown, it could be a decent short down to the ultimate uptrend from the October 2011 low (white line), which would then decide its fate. That's if and when it tests the uptrend again. Remember the whipsaws in EURUSD this month before it finally made its decision to breakout? Last Friday on Bloomberg TV, Tom DeMark, creator of the DeMark Indicators that signal market exhaustion, predicted that the S&P will top out between 1,338-1,342 this week (SPY: 133.8-134.2). The S&P hit a high of 1,328 today, and the downtrend using the 2007 and 2011 peaks hits around 1,333. So the market is at interesting levels. As always though, it's all about timing. Trend lines always win in the end, not someone's price target. Below are short and long-term charts of $SPY. Check out the volume as well. It's been trending down since the August crash.

Continue Reading »»

Something's Fishy in Tripoli - Guest Post

Guest post by Daniel J. Graeber of Oilprice.com

Something's Fishy in Tripoli

Way back in early 2011, members of the U.N. Security Council had no problem getting a resolution through that authorized military force in Libya ostensibly to protect civilians from attacks by forces loyal to strongman Moammar Gadhafi. The year before, lawmakers on both sides of the Atlantic were bickering over who did what and why in terms of the cancer-stricken Lockerbie bomber. This Scottish decision to release him, depending on which U.S. lawmaker you spoke with, was tied to a BP deal to drill for oil in Libya. Despite fractures in the new interim government in Tripoli and reports of renewed protests, a decision by the Italian government to quietly discuss trade relations suggests something isn't quite right in the way Western allies pick their fights.

Continue Reading »»

Fed Sees 0% Fed Funds Rate Through 2014! (Economic Projections Table)

In today's FOMC statement, they decided to keep the federal funds rate at 0-0.25% and anticipate "exceptionally low levels for the federal funds rate at least through late 2014." ZIRP! They also "decided to continue its program to extend the average maturity of its holdings of securities as announced in September" (operation twist). Below is the full release and a table of their projections for GDP growth, PCE inflation and the unemployment rate. They lowered their GDP growth projection for 2012 and 2013 from November, lowered their unemployment rate projection, and kept PCE inflation slightly unchanged. I also embedded Bernanke's press conference.

Continue Reading »»

Live Video of President Obama's 2012 State of the Union Address

I embedded the live Youtube video: "The online-only enhanced version of President Obama's third State of the Union Address features charts, stats and data that helped inform President Obama's policy decisions." You can now follow The White House on Google+.

Continue Reading »»

IMF Lowers Global Growth Outlook, Europe is Epicenter (IMF Videos, 1/24/2012)

The IMF (International Monetary Fund) lowered its global growth outlook from its September projections. Europe tipping into recession is the greatest risk ("epicenter") to world growth. Read more: World Economic Outlook Update: Global Recovery Stalls, Downside Risks Intensify -IMF). In the three videos I embedded below, the IMF talked about their global growth outlook, fiscal challenges advanced economies face, and financial sector risks. Issues raised by IMF analysts have been addressed by the United Nations, Ray Dalio on Charlie Rose, Robert Prechter, David Rosenberg, and Richard Koo, on this blog (views vary): Fiscal consolidation and private sector de-leveraging by households and banks threaten global growth. The question is how governments manage it. Do they spread out the deleveraging process, or clear the debt quickly. George Soros, who manages billions and trades the macro environment, told Newsweek that he expects either a deflationary environment, or, worst-case scenario, a collapse of the financial system.

2012/2013 growth projections (full chart at IMF)

"In an update to its World Economic Outlook (WEO), the IMF said that the euro area would fall into a mild recession in 2012 after the euro area crisis entered a “perilous new phase” toward the end of last year, affecting other parts of the world including the United States, emerging markets, and developing countries.

Overall, activity in the advanced economies is now projected to expand by just 1.2 percent in 2012—a downward revision of ¾ percentage points relative to the forecast last September—picking up to a still tepid 1.9 percent the next year. The global growth outlook for this year is 3.3 percent."

See a chart of the IMF's downside scenario (% deviation from WEO baseline) for World and Euro area GDP growth at Zero Hedge.

Continue Reading »»

George Soros: Deflation is Best-Case Scenario, Collapse of Financial System is Worst-Case Scenario

Famed macro trader/hedge fund manager, George Soros, was interviewed by Newsweek and issued a warning for the developed world.

Image Source: NorwayUN

"“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”"

Read more at the TheDailyBeast. What are Soros' thoughts on Central Banks printing money?

Jon Stewart on Newt Gingrich (Daily Show Clip)

This was an interesting clip on the Daily Show (h/t Zero Hedge via Daily Crux).

Continue Reading »»

Links: Greece Debt, Portugal, Japan, Treasuries, S&P 500, Natural Gas (1/24/2012)

• Eurozone finance ministers reject Greek debt offer - (Telegraph)
• Euro zone ministers reject private bondholders' Greece offer - (Reuters)
• EU Seeks Bondholder Concessions on Greece (Bloomberg)
• Timely Greek lessons on the eurozone crisis (by George Provopoulos, Bank of Greece) - (Financial Times)
• Fears Mount That Portugal Will Need a Second Bailout - (WSJ)
• Bids for Portugal REN with 30-50 pct premiums-sources (Reuters)
• Goldman Tells Clients To Short US 10 Year Treasurys (Zero Hedge)
• 10 Good And Bad Things About The Economy And Rosenberg On Whether This Isn't Still Just A Modern Day Depression (Zero Hedge)
• Credit Suisse: 11 Reasons We'll See S&P 1,400 This Year (PragCap)
  
• EU May Be Preparing for Greek Default, Bank of New York Mellon Strategist Simon Derrick Says (Bloomberg Video)
• Hussman: Recession risk remains very high (HussmanFunds)
• Hard Greek Default Likely This Quarter: Bob Janjuah of Nomura (CNBC Video)
• Nomura's Janjuah on U.S. Stocks (S&P 800 prediction), Economy (Bloomberg Video)
• Volume Crashes As Stocks End Unchanged (Zero Hedge)
• Stock Trading Lowest in U.S. Since 2008 After Fund Withdrawals, Job Cuts (Bloomberg)
• Granville Says Dow Industrial May Drop Toward 8,000 in 2012 (BusinessWeek)
• Japan Finance Minister Azumi warns of eurozone-type crisis, pledges Japan's fiscal reform (Mainichi Daily News, Japan)
• Japan’s Fiscal Pressure Intensifies as Tax-Boost Plan Insufficent: Economy (Bloomberg)
End of Era for Japan's Exports (WSJ) 
• JGB futures below Ichimoku cloud as euro pessimism ebbs (Reuters)
• Chesapeake Energy Pulls Back Drilling Amid Natural-Gas Glut (WSJ)
• BofA Targets $3 Billion in Additional Cuts, Moynihan Says (BusinessWeek)
• Starbucks to add beer, wine to menu at select coffee shops - (Los Angeles Times)
• A Sears Wager Stings at Goldman (WSJ)
  
• Fannie, Freddie writedowns too costly: regulator (would require $100 billion taxpayer funds) (Reuters)
• One More: George Soros predicts riots, police state and class war for America (RussiaToday)

EUR/USD is up 0.10% at 1.30096, and the S&P E-Mini March Future is down 0.40% at 1,305.75. The Federal Reserve meets today and tomorrow to decide monetary policy (rates, QE). FOMC members will now provide Fed Funds rate projections. Here is Goldman Sachs' preview of the FOMC meeting via Zero Hedge.

Watch The Republican Debate Live Here (NBC)

Tonight's NBC Republican debate is in Tampa, Florida and moderated by Brian Williams. Ron Paul, Mitt Romney, Newt Gingrich and Rick Santorum are left. Watch it live below.

Continue Reading »»

Tom DeMark: S&P is Close to a Top, Bullish on DAX, Bearish on Bunds (Charts)

Tom DeMark, creator of the DeMark Indicators (used to time market exhaustion), was on BloombergTV last Friday and made a call that the S&P 500 would top out between 1,338-1,342 this week (specifically on Tuesday). It closed on Friday at 1,315. Watch the interview after the jump for more details. The chart definitely looks like it's getting exhausted after this nice rally. On December 5, DeMark predicted that the S&P would hit 1330-1345 when it was trading at 1,258. He thought it would hit by Christmas, so he was a month off. The downtrend from the 2007 peak and 2011 high hits around 1,330 today.

He is also bullish on the German stock market (Frankfurt DAX) and bearish on German bunds (government bonds). I charted out the DAX and German Bund ETN (BUNL) below. Actually, BUNT (3x German Bund ETN) looks interesting as well. German bund yields are available at Bloomberg.com (10-year German bund yield). Interesting. So, are DeMark's indicators predicting that a "hard Greek default" will be averted? Or is his call for the short-term.

Greece can't make a €14 billion bond payment on March 20, so it is trying to cut a deal with private creditors to swap into new Greek debt at a loss so it can get bailout money from the European Union and IMF. Read the articles below for more information. There's a meeting today with finance ministers and an important EU summit on January 30. Wow, EUR/USD is up 0.83% at 1.30. Something is up, at least in the short-term.

Continue Reading »»

GOOG is Back Below 2010, 2011 Highs After Q4 Earnings, Will Google Finance Socialize With Google+?

Since DistressedVolatility.com gets paid by Google Adsense and is powered by Google services, I thought I'd listen to GOOG's Q4 2011 earnings call and look at its financial results. I embedded the call below via Youtube and put up a summary of Google's financial results from its press release. Google closed down 8.38% today at $586 after reporting weaker results. From WSJ:

"The weaker-than-expected results were hurt by Europe's economic woes as well as mobile and other new forms of online advertising selling for lower prices than Google's traditional ads. The issues come as Google continues its costly expansion beyond its core search-advertising business, which pits it against formidable competition in mobile, social networking..."

It would be cool if Google Finance built an online social bank with Google bankers and peer-to-peer lending, and Google+ had a social investing, trading and lending network. Or hook up with the financial Twittersphere and StockTwits. As of December 31, 2011, Google had $44.6 billion in cash and short-term marketable securities. Compete with the big banks, Google!

GOOG Technical Update

I see a false breakout above the 2010 and 2010 highs. It broke through the 50 day moving average today, but is still above the 200dma, 50 week moving average and 200wma. Also look at GOOG's trend from its IPO in 2004. It looks like a long-term ascending triangle formed using the highs in 2010-2012 (not perfect though with the 2007 high). If GOOG trades above $630 again that will probably provide confirmation that it wants to move higher, perhaps to $747 or the 2007 high. If it breaks through the long-term uptrend line, that would be bearish. The trendline hits around the 200 week moving average as well. Just looking at simple trends and support/resistance levels here.

GOOG 3-year Daily Chart

Continue Reading »»

What the Next Decade Holds for Commodities - Guest Post

Guest post by Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors.

What the Next Decade Holds for Commodities

What a decade! A rapidly urbanizing global population driven by tremendous growth in emerging markets has sent commodities on quite a run over the past 10 years. If you annualized the returns since 2002, you find that all 14 commodities are in positive territory.

A precious metal was the best performer but it’s probably not the one you were thinking of. With an impressive 20 percent annualized return, silver is king of the commodity space over the past decade with gold (19 percent annualized) and copper (18 percent annualized) following closely behind.

Notably, all commodities except natural gas outperformed the S&P 500 Index 10-year annualized return of 2.92 percent.

Last year did not seem reflective of the decade-long clamor for commodities. In 2011, only four commodities we track increased: gold (10 percent), oil (8 percent), coal (nearly 6 percent), and corn (nearly 3 percent). The remaining listed on our popular Periodic Table of Commodity Returns fell, with losses ranging from nearly 10 percent for silver to 32 percent for natural gas.

I think this chart is a “must-have” for investors and advisors because you can visually see how commodities have fluctuated from year to year. Take natural gas, for example, which posted outstanding increases in 2002 and 2005, but has been a cellar-dweller for the last four years as a result of overabundant supply and softening demand. The industry is also still trying to digest breakthrough technology that opened the door to vast shale deposits at a much lower cost.

On the other hand, oil finished in the top half of the commodity basket six out of the past 10 years. No stranger to volatile price swings, oil possesses much more attractive fundamentals as we continually see restricted supply coupled with rising demand.

Continue Reading »»

EURUSD Needs To Break Downtrend, Big Move Coming Either Way

EUR/USD is trying very hard to break through that downtrend line in the death channel. It tried for the fourth time earlier this morning but couldn't manage. It is inside both channels again and needs to decide which path to take. If it can breakout of the death channel with confirmation, 1.3146 is the next resistance level and then between 1.34-1.38 through March. Billions of Italian and Greek bonds mature in the next two months. If EUR/USD continues to ski down this slope, 1.18 support is next and then 1.08-1.10. Interesting article at Zero Hedge: A Shocking €1 Trillion LTRO On Deck? CLSA Explains Why Massive Quanto-Easing By The ECB May Be Coming Next Month.

A lot going on: S&P Downgrades France, EFSF; Greece Defaults Shortly (EUR/USD, Bond Yield Reactions)

Morgan Stanley's Adam Parker: S&P Hits 1,167 in 2012, Multiple Contracts With Low Rates, Earnings Plateau

S&P 500 through 2012
(via freestockcharts.com)

Adam Parker, chief equity strategist at Morgan Stanley, has a bearish outlook on the S&P 500 for 2012 with a year-end price target of 1,167. The S&P is currently trading at 1,289. The interesting part about his call is that he thinks the S&P's price/earnings multiple will contract "to 10x over time" because rates are low. He was on CNBC on January 3 and 9 discussing Morgan Stanley's report, see quotes below. To hedge himself, I noticed a CNBC slide that said he could be wrong if there is QE3, a meaningful cyclical upswing, or the U.S. government addresses the debt situation (wouldn't that sell off the market?). I found a quick summary of Parker's S&P call at Morgan Stanley's Global Strategy Roundup.

"US Equity Strategy: The 2012 Playbook
Adam S. Parker et al.

We establish a 2012 year-end price target of 1167 for the S&P 500, representing 7% downside from today's price and around 13% more conservative than the "muddle through" scenario implied by consensus. While 2011 was about multiple contraction, and further contraction is likely, we think 2012 and 2013 are likely to be more about earnings than the multiple. Our 2013 EPS estimate for the S&P 500 of $103.1 is 15% below the consensus bottom-up view of $121.1."

They also lowered their 2012 EPS estimate for the S&P 500 to $100 from $103. Parker discussed his market call with Jim Cramer and David Faber on CNBC on January 3.

Continue Reading »»

S&P 500 Chart Looking Into 2012, Key Trendlines To Watch (SPY, $SPX)

Source: freestockcharts.com

S&P Downgrades France, EFSF; Greece Defaults Shortly (EUR/USD, Bond Yield Reactions)

10-year Portuguese Bond Yield (Bloomberg)

European sovereign credit ratings are in the news again. Standard & Poor's downgraded nine European nations on Friday, including AAA France, AAA Austria, Italy, Spain and Portugal. Yesterday, S&P also downgraded the EFSF, or European Financial Stability Facility, which is dependent on France's creditworthiness since they fund a large portion of the fund. Moody's then spoiled the downgrade party by keeping France at Aaa with a stable outlook. However, markets, except for Portugal (see chart), treated the catalysts like they were priced in.

The 10-year French OAT yield opened at 3.06%, hit a high of 3.12%, but then closed at 3.03% (price moves inversely with yield). And the 5-year French OAT yield spiked to 2.05% at the open and then closed at 1.86%. The 10-year French-German yield spread opened around 1.35 but then tightened to 1.26 at the close. On the other hand, Portugal's government bond yields spiked after S&P downgraded the country to junk. The 10-year Portuguese bond yield opened at 12.65% and rose all the way up to 14.40% to make a new high.

Continue Reading »»

Republican Presidential Debate Live Streaming on Fox

If interested, the Republican presidential debate is live streaming at live.foxnews.com. Huntsman dropped out of the race and endorsed Mitt Romney.

Samsung Transparent Smart Window at CES 2012 (Video)

The Samsung Transparent Smart Window was presented at the 2012 Consumer Electronic Show last week. I thought it was interesting. Thoughts?

Continue Reading »»

Euro Couldn't Breakout Again, Now Selling Off Hard (EURUSD 1.2670, -1.24%)

Ugly day today for EUR/USD. It couldn't breakout again, which means it is still trading in a steep descending channel. Fears of France getting downgraded by S&P and JP Morgan's weak quarter are hitting stocks and the euro. On the chart, 1.258 is the next support level and then 1.18.

source: freestockcharts.com

Lampert Buys Sears Stock From ESL, Open Market; CDSs Spike (SHLD)

Source: Wikipedia

In two SEC Form 4 filings on 1/11/2011, it appears that Edward Lampert, chairman and majority shareholder of Sears Holdings Corp. (through his hedge fund RBS Partners et al.), bought 4,461,329 shares of $SHLD from ESL Investors LLC, his own fund, at $29.2 per share on January 9 for $130 million. Was this a redemption? The filing also said that ESL Investors LLC distributed 573,184 shares to the managing member of Investors (aka RBS Partners) "in lieu of a cash payment for management fees." Lampert also bought 409,000 SHLD shares on the open market between $29.52-30.99 per share on 1/9/2012-1/11/2012.

Yesterday, Sears sold off on news that CIT decided to halt loans to Sears' suppliers. Fitch released a note on this yesterday, see it below. As a result of the CIT news (or something else), Sears Holdings Corp. and Sears Roebuck Acceptance Corp's 5Y credit default swaps spiked. I was wondering if Lampert was buying Sears CDS back in December to hedge his position without having to report it in a filing. Why doesn't he own any puts!? The CDS rate is the cost to insure $5 million of Sears bonds per year, which can be a naked position. I was able to get a snapshot of SRAC's CDS chart at CMA (see below), and Zero Hedge posted both charts on Twitter. Sears' cash bonds were active as well. Sears Holdings Corp's 6.625% fixed note maturing on 10/15/2018 (SHLD.JE) closed at 78.375 today, yielding 11.287%. It was interesting to see the stock up 3% today with the CDS spike.

Continue Reading »»