Essential Charts and Market Update
Another extremely dull morning in Europe. Occasionally one needs to check whether the intraday charts are updating. Biggest “news” is that Italian yields are falling and the 10 year yield is trading at 6,31, after people “cheer” Monti’s budget cuts. Now we just need to get the growth going…
Meanwhile investors are practically paying to park their money in Berlin. The Buba bill bid to cover came in at 3,8. People are once again thinking of the return of their money.
Dynamics of trading in this mornings session is lacking both volume and liquidity. Let’s wait for the US open. Meanwhile find some important charts below. We are approaching short term resistance levels, everywhere.
News That Matters
Ft.com
Banks face paying more to raise finance in traditional bond markets – and some will continue to be locked out completely – as a growing demand for collateral from other lenders is undermining the strength of their balance sheets, http://ftalphaville.ft.com/thecut/2011/12/05/778711/uk-banks-face-higher-financing-costs/
Businesses breaching EU privacy rules will face fines of up to 5 per cent of their global turnover under sweeping proposals to be unveiled next month, says the FT. In the first significant update of data protection legislation since 1995, http://ftalphaville.ft.com/thecut/2011/12/05/778671/eu-eyes-big-fines-for-privacy-breaches/
French president Nicolas Sarkozy and German chancellor Angela Merkel meet in Paris on Monday under pressure to align their positions on eurozone budget co-ordination, reports Reuters, ahead of an EU leaders’ summit in Brussels on Thursday and Friday. http://ftalphaville.ft.com/thecut/2011/12/05/778691/little-expected-from-merkozys-monday-meeting/
Australian coal miners Whitehaven Coal and Aston Resources have confirmed they are in discussions over a potential $A4.65bn (US$4.76bn) merger, the WSJ reports. Such a deal would make the combined company one of the country’s biggest coal producers with a combined output comparable to Peabody Energy’s Australian operations. http://ftalphaville.ft.com/thecut/2011/12/05/778441/australian-coal-miners-in-talks-over-4-7bn-merger/
Market reverses after Rumor Index soars
Rumor index hitting highs, as latest is Spain to be downgraded over the weekend. As we wrote earlier this week, it is a war between central planners and rating agencies (manipulation vs reality). Let us see how this plays out. We wrote of indices showing fatigue this morning. Europe is trading rather week into the close, as the Euro collapses. Dax and Stoxx are already trading very close to those high levels on the day central planners decided to (try to ) bail out the world. We’d love to see 200 points lower on the Dax, just to see how it breaths, despite the fact that Fitch just denies downgrading Spain.
Some closing charts below;
Chart Update-knee jerk post figures reaction
Another knee jerk reaction after the figures today. Dax is down 50 points from the high print. Mind you, this is HDT Algo market only, where indices move on no volume. We are getting up to resistance levels here, and the shorty term charts are showing signs of fatigue. Short term charts below;
Chart Update
With markets in mean reversion heaven, where investors witness sell offs followed by huge “coordinated” moves up, many hedge funds are feeling the pain. With markets having had a “lost” year. The US indices are pretty much unchanged (not USD adjusted), while the Europeans have had a rather negative performance. Time to check out some important charts, and levels to look out for. Will Ben & Co push through those resistance levels? We are once again aproaching the 200 day moving average….
News That Matters
Ft.com
China’s manufacturing sector contracted in November, marking the first decline since February 2009, the FT reports. The official purchasing managers’ index (PMI) fell to 49.0 in November from 50.4 in October, http://ftalphaville.ft.com/thecut/2011/12/01/774641/china-pmis-go-negative/
Asian markets retained their gains on Thursday on the back of the previous day’s central bank liquidity moves, despite poor manufacturing data from China. The wave of central bank action around the world to avert a liquidity crisis cheered financial markets on Wednesday but highlighted the depth of international concern about possible economic turmoil in Europe,http://ftalphaville.ft.com/thecut/2011/12/01/774701/markets-remain-bouyant-on-liquidity-move/
Zynga, the fast-growing online game maker, plans to value itself at as much as $10 billion in its forthcoming IPO, says NYT Dealbook, citing two people briefed on the matter. The company plans to file an amended prospectus on Friday with an estimated price range of about $8 to $10 a share, http://ftalphaville.ft.com/thecut/2011/12/01/775001/zynga-said-to-seek-10bn-ipo-valuation/
Japan’s two biggest carmakers warned that the record strength of the yen could drive more car manufacturing overseas and called for more aggressive official intervention to push the currency lower, reports the FT. http://ftalphaville.ft.com/thecut/2011/11/30/774551/toyota-and-nissan-call-for-more-action-on-yen/
Market Recap-Rally lacks volumezzzz
We hinted about the rally on Friday evening, “Yes, it was an interesting session today, but the move up earlier today was probably telling us to cover the shorts. Despite our bearishness, we believe the market is reaching levels where the reward of shorting further is limited.”. Friday’s candle was a very nice reversal candle, telling all the new smart shorts to look out for the upside, and upside we got. Our only recap commentary today is actually the low volumes theme. A rally in panic with low volumes, will only produce more volatility and not a sustainable reversal to form a base. This is what HFT dominated market produces, frustrated hedgers, chasing their tails. Volume Chart of the Global Squeeze below. Not very impressive.
Time to cover (some) of the Shorts
Markets have been rather volatile this “calm” week. With the US traders on Thanksgiving holiday, only the juniors will be trading the European markets. With extremely thin volumes, we won’t consider the moves statistically significant. As we have reached some short term support levels, it is time to take some of the short positions off the table. Ten days ago we suggested the market was about to fall hard as we wrote;
Note how the SPX managed to touch the 200 day average briefly on this last run. At the same time, the SPX index has developed another dynamic formation, that could easily take this lower. Compare to the other “top”. The DAX is trapped in the negative trend, and a breach of the support levels, slightly lower, will cause another “flashy” move to the downside. With lack of volume, all moves will be magnified by the HFT. These guys are not closing the books because Christmas is coming up…(full post here)
SPX and DAX about to break down hard?
Two important charts below. The SPX and the DAX index. Note how the SPX managed to touch the 200 day average briefly on this last run. At the same time, the SPX index has developed another dynamic formation, that could easily take this lower. Compare to the other “top”. The DAX is trapped in the negative trend, and a breach of the support levels, slightly lower, will cause another “flashy” move to the downside. With lack of volume, all moves will be magnified by the HFT. These guys are not closing the books because Christmas is coming up…
Chart Update as Risk On Dominates
Markets gapped lower this morning, but as the Central banks of the World have decided, there is a huge put, assets will not go down. ECB is seen actively buying all the PIIGS crap nobody wants to buy, pushing yields lower, and creating that false sense of security. When central banking has become central planning, you can only join them, until the bubble is too big. European futures spiking, Euro soaring, and the shorts are yet again squeezed in this no volume melt up. Charts below.
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