Bill Cara’s Blog for Apr 10, 2012
CTA Trading Desk Morning Report
[8:45am ET] Good morning, Geoff here.
Following yesterdays decline, stocks are stable this morning.
The S&P 500 found support on the February high of 1378. The next support is that 1370 level. Quite frankly, I expected a “turnaround Tuesday” morning with a bigger bounce in the futures because of two things; Apples strength and the piercing of the lower Bollinger Band which usually leads to a rally. However, we didn’t make any major portfolio changes yesterday, preferring to see if bids enter the market today.
Bonds continue to hold yesterday’s bid and should until stocks move higher.
Gold held the .236 Fib at 1618ish and looks to be finding some footing. We have our core positions in place and will feel more comfortable adding in another week or so. Sentiment has been extremely negative on the metals and one more push down into our timing band would be the last shaking of the tree barring an all encompassing global asset meltdown.
Other than that, its pretty slow this morning but there is some Fed speak later today that might move the markets.
Have a great trading day!
This from Bill:
Bloomberg has reported that the California city of Stockton (pop. ~300,000) is facing bankruptcy. Is anybody surprised?
In 2004 and 2005 I wrote in this blog about what the problem was.
I wrote about this problem some time ago, using southern California as a case study.
A California landowner, who has been biding his time for price appreciation to kick in (so he can make a real estate killing), has used that land to grow tomatoes. But Americans won’t take those low-paying and backbreaking tomato pickers’ jobs, so Mexicans are brought in.
Americans would prefer to be financiers, like the ones who take the savings of other Americans and invest it in modern plants in Mexico, for example, that manufacture food products and glass containers for those food products, which are high value-add industries that pay their workers well.
These plants then import cheap California tomatoes, picked by cheap Mexican labor in California, and produce in their factories a variety of value-added products like salsa and tomato paste, which are then exported and sold back into California as high-cost staples.
At the same time, Americans are inflating the real estate price of the tomato fields in California, which are going to be developed for houses, for which there is additional demand to meet the needs of the immigrant Mexican community. So when the house is actually built and sold, it is now very expensive because of the higher cost of the land and imported building materials.
This is one vicious circle of transferring wealth abroad and building higher economic cost locally, which will continually pull down the price of the USD, or at the least work against those who are working hard to build it up.
To get off that treadmill, America has to stop financing wealth-creating capital expenditure abroad, and start doing it at home. For as long as they continue to invest in foreign plants and equipment, then traders like you and me have no option but to invest in emerging foreign economies because that’s where the wealth is going to grow fastest.
This is not rocket science. The problem is rooted in greed.
Have a good day.
Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
|Symbol||Name||Last Trade||Change||Related Info|
||23.11 (1.12%)||Components, Chart, More|
||0.90 (0.04%)||Components, Chart, More|
||49.21 (1.48%)||Chart, More|
||49.48 (0.73%)||Components, Chart, More|
||5.71 (1.81%)||Chart, More|
|^OSEAX||OSE All Share||470.17
||6.45 (1.35%)||Components, Chart, More|
||3.40 (1.04%)||Components, Chart, More|
||53.27 (0.86%)||Components, Chart, More|
||45.51 (0.80%)||Components, Chart, More|
||1.00 (0.11%)||Chart, More|
||9.05 (0.60%)||Chart, More|
|GD.AT||Athex Composite Share Price Index||723.16
||15.56 (2.20%)||Chart, More|
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Cara on Trends & Cycles
Vad’s Catch of the Day
Kaimu’s Sound Money
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report