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[BRIEFING.COM] S&P futures vs fair value: +2.9. Nasdaq futures vs fair value: +4.0. Futures suggest a slightly higher start to the trading day, which follows yesterday's steep declines. Financials are likely to be in focus, after The Wall Street Journal reported Lehman Brothers (LEH) may raise billions in new capital. In earnings news, luxury homebuilder Toll Brothers (TOL) posted a quarterly loss of $94 million, although the results were better than expected.
 
The major indices extend their losses as disappointing auto sales data from General Motors (GM 17.20, -0.24) hits the wires.
General Motors reported May North American sales fell 28%, compared to the expected decline of roughly 20%. Truck sales plummeted 39%, while car sales fell 17%.
 
[BRIEFING.COM] S&P futures vs fair value: -6.0. Nasdaq futures vs fair value: -8.5. Futures indicate a lower start ahead of a batch of economic data, including May ADP private employment payrolls (8:15 ET), revised first quarter productivity (8:30 ET) and ISM Services (10:00 ET). In addition, the government's weekly energy inventory report is set for release at 10:30 ET. Meanwhile, Lehman Brothers (LEH) is once again in the spotlight. The Wall Street Journal reports Lehman is looking overseas for capital, and rumors that the firm was buying back its own shares yesterday were true, citing souces.
 
[BRIEFING.COM] S&P futures vs fair value: -3.2. Nasdaq futures vs fair value: -7.9. Futures quickly give the small boost they received from the better than expected ADP employment report, and then recover some lost ground on a better-than-expected productivity reading. Just hitting the wires, first quarter nonfarm productivity was revised to a gain of 2.6% from 2.2% (consensus +2.5%).
 
08:42 am : S&P futures vs fair value: +9.0. Nasdaq futures vs fair value: +10.0. The futures market strengthened in the wake of the weekly initial claims report, which showed an 18K drop to 357K (consensus 375K). The 4-wk moving average, meanwhile, dipped tp 368,500 from 371,250. The level of claims simply isn't at recession-like levels. This realization, combined with the generally pleasing same-store sales reports, has the market on track for a positive open.
 
So what's the play tomorrow?

Monday we have the Pending Home Sales Report (PHSI). The forecast in
May called for a few flat months in a row:(http://www.realtor.org/press_room/news_releases/2008/soft_existing_homesales_rise_midsummer
Looks like the market went up slightly when the report was released May 8th.. Not many earnings reports on Monday but I did see Krispy Creme. Been closing lots of stores lately... Bernanke gives a speech at 8:15 PM EDT (http://www.federalreserve.gov/whatsnext.htmon) Outstanding Issues in the Analysis of Inflation. Maybe everyone will sleep through it and it won't affect Tuesday..

I think I'm holding over the weekend.. How's everyone else looking at it?

John
 
[BRIEFING.COM] S&P futures vs fair value: -8.2. Nasdaq futures vs fair value: -13.2. The futures market takes a dip in response to the May employment report, which contained the unsettling headline showing the unemployment rate jumped to 5.5% from 5.0%. Nonfarm payrolls were down 49K, which was a bit ahead of the consensus estimate that called for a 60K decline. Hourly earnings rose 0.3%, above the view that they would be up 0.2%.
 
More rising Inflation on the way ... and more financial write offs.

All indications are that inflation is moving faster than most are expecting.
1. The 10 Year Yield broke its 10 month resistance line to the upside in March. As you will see in today's chart, the 10 year yields have been rising sharply since that break out.
2. The 30 year yields have a significant relationship to the rate of increase and mortgage rates. Today's TYX chart shows a clear, inverted Head & Shoulders pattern which means more upside movement. The final projection for the Head & Shoulders pattern is 53, so we have a lot more movement coming in the coming months.
3. Noteworthy: A couple of billion more in bank/financial write downs have to be done based on yesterday's down grades. According to reports, one in 15.86 home owners were 1 month late in paying their mortgage yesterday.
Please click this link for today's update and chart(s):
http://www.stocktiming.com/Friday-DailyMarketUpdate.htm
 
08:05 am : S&P futures vs fair value: -10.2. Nasdaq futures vs fair value: -12.0. Stock futures point to a lower open following some hawkish comments regarding inflation risks from Fed Chairman Bernanke. Bernanke noted the risk of a substantial economic downturn has fallen, while cautioning there are upside risks to inflation and inflation expectations. The dollar is up 0.8% as a result. Crude oil is back on the rise, up 1.5% to $136.32 per barrel.
 
08:31 am : S&P futures vs fair value: -13.7. Nasdaq futures vs fair value: -18.5. Stocks futures point to a sharply lower open as they slip toward their session lows. The April U.S. deficit increased 7.8% to $60.9 billion, compared to the expected deficit of $60.0 billion.
 
Buy grain!
Tuesday, June 10, 2008

Morning update:

Bulls need to hold NQ 1962.50 at all cost (50% Oct/Mar).

Overnight session:

Gold lost support on some Asian panic. There is a gap at 880/886, bulls will need to hold that area. Oil is still at the 134 level, even though the dollar has taken a tumble. Wild session.

ER is struggling with the 730 level and is looking increasingly bearish. We are having the strange combination of bond selling and equity selling. Someone has to give.

Inflation will be a problem, no matter what hype we get from Bernanke.

June 10 (Bloomberg) -- Rainstorms sweeping the biggest corn states in the U.S. are damaging a crop that's already failing to keep pace with global demand for food, fuel and cattle feed.

Click to expand...
 
A guy on Fast money suggested that we could have a huge rally if the G8 meeting in Japan (Friday and Saturday) if they talk up the dollar and get OPEC to increase production. Interesting idea.
 
clester said:
A guy on Fast money suggested that we could have a huge rally if the G8 meeting in Japan (Friday and Saturday) if they talk up the dollar and get OPEC to increase production. Interesting idea.
Click to expand...

I don't see it a RALLY on what $120+ Oil. The problem is Oil and it's killing the World Economy. OPEC is a fraction of the problem. If they increase production then China will just burn it up. In Mexico a Gallon of Gas is $2.00 and they are a poor Country. Supply vs. Demand = China will demand more. The dollar would rise on a rate hike but that would squeeze more money Housing, Food, Credit Debt. Either way now we are screwed so we might as well get it over with and raise rates now 50 basis points for the next 3 meetings to bring it up to 3.50% and take the hit good now. Or this will go on for 5 years and great Obama wants to raise capital the gains tax as President right in the middle of the worst Financial Chrsis since the Great Depression. If Obama is elected we will be in one and I don't even care for McCain but once again either way we are screwed so I would hope it's McCain at least he has some experience while Obama has a speech called I have a nightmare !!!!!!!!!!!
 
From Ahead of the News:
Calling tops in crude is dangerous. I would wait for a break of the trendline before doing that, currently just under 120, putting heavy pressure on 121 recent lows. First clues will come from the 5 dma momentum line. The 135 level (May high) is definite reistance, so there is selling pressure. But that does not mean gasoline is cheap or that oil bulls are done.

Vix trading is usually smart money. Here is an update from Phil's stock world:
VIX- Declines in the tech and financial sectors bridled hopes of a very meaningful recovery in stocks today (despite a modest close higher), keeping the composite measure of implied volatility in the S&P 500 well above the 20% line to read 23.12 by day’s end. Late last week we noticed a strong current of VIX call buyers positioning for further turbulence in the S&P in June and July via call options near the 30-line. With today’s revelations out of Lehman Brothers keeping financials tethered to the downside and the spread of losses to other consumer-exposed sectors, traders have extended their volatility-bullish outlook by trading heavily calls at the August 27.50 strike on a volume 3 times the open interest. These contracts, which switched hands 16,000 times, commanded premiums of $1.50 per contract – a price reflecting about a 40% chance of VIX closing above 27.50 by August 19.

Talk of windfall profit tax should be called war profiteering tax? Interesting historical tidbit sent to me by a reader: link.

Learn from history, not from your bias, just as in trading (no political vitriolic comments please, this is just added info "outside of the box", which is what I do in my trading).

Yesterday's close:

Techs hold on to important support, however, NQ (NDX futures) continous contract closed a hair above its 200 dma (1973). A sign that the cash index is headed down there?

The dollar and gold both got clobbered, but EUR/USD is still holding 1.5450, an important area. As for gold, when it lost 890 overnight it was all over. If it holds 867, there is a chance we avoid a retest of 850. I am somehwat skeptical of all this dollar bullishness as I doubt we will be raising rates quite yet, whereas Europe will. Their economy is much stronger (so much for all that "old Europe" talk a few years ago).

SPX fund buyers at the 1350 area and ended the day in a doji. Up for grabs, but somehwat oversold.

Nasdaq had a 176 new year lows versus 20 new year highs. The background outlook is not very rosy. This could set up a very negative op-ex next week (quad witching).

Interesting to see the gold sell-off the same week they introduced options to GLD. Was it a sign of a top, or are we just clearing out the decks before the next move higher? We probably will not know until next week. GLD option sentiment has quickly flipped from quite bullish to bearish.


Techs hold on to important support, however, NQ (NDX futures) continous contract closed a hair above its 200 dma (1973). A sign that the cash index is headed down there?
Click to expand...
 
Asia Biggest Bear on Treasuries as Yields Boost Bunds (Update4)

By Wes Goodman and Kyoungwha Kim

June 23 (Bloomberg) -- Asian investors, who own 28 percent of U.S. government debt, are becoming bigger bears on the bond market now that inflation shows no signs of decelerating and the Federal Reserve isn't prepared to raise interest rates.

South Korea's pension service said U.S. yields are ``too low'' after accounting for inflation. Mizuho Asset Management Co., part of Japan's second-biggest bank, favors euro- denominated debt and plans to purchase more. Kokusai Asset Management Co., which runs the world's second-largest managed bond fund, owns a record amount of European fixed-income securities.....

....Consumer prices will rise 3.8 percent this year in the U.S., versus 2.8 percent in the euro region, according to the median estimate of economists surveyed by Bloomberg News. U.S. 10-year notes yield about the same as the inflation rate, compared with an average of 2.03 percentage points more over the past decade. Investors can get more protection in Germany, where 10-year bunds yield 1.52 percentage points more than inflation......
http://www.bloomberg.com/apps/news?pid=20601213&sid=aX1KJzyTxW6M&refer=home
 
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