Bill Cara’s Blog for Dec 30, 2011
CTA Trading Desk Morning Report
[9:00am ET] Good morning, Geoff here.
Yesterday’s Italian bond auction was successful. The 10 year notes went for 6.98% which is lower than last months 7.56% rate. Staying below the 7% mark will be important to the market moving forward. This news combined with a better than expected Chicago Purchasing Managers Index and a rise in pending home sales lifted the stock market.
Gold has rallied and could have put in the low that I mentioned yesterday. Obviously next week will give us a better indication, but getting long in this area with a stop below yesterday’s lows would not be a bad strategy for traders who want exposure to the yellow metal. One indicator that I have used for spotting past bottoms in gold is the amount of gold bears that CNBC trots out AFTER the price has declined substantially. If that indicator still has merit, gold shorts are toast.
Today is the last day of trading for 2011. After all of the volatility and wild swings in the stock market, it hasn’t moved for the year. I fully anticipate continued drama and look forward to 2012 as our best year yet!
Have a great day and Happy New Year!
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|
||10.60 (0.56%)||Components, Chart, More|
||3.50 (0.17%)||Components, Chart, More|
||4.90 (0.16%)||Components, Chart, More|
||9.16 (0.16%)||Components, Chart, More|
||0.20 (0.06%)||Components, Chart, More|
|^OSEAX||OSE All Share||439.78
||0.40 (0.09%)||Components, Chart, More|
||0.56 (0.18%)||Components, Chart, More|
||29.91 (0.51%)||Components, Chart, More|
||24.35 (0.44%)||Components, Chart, More|
||1.90 (0.21%)||Chart, More|
||2.42 (0.28%)||Components, Chart, More|
||8.70 (0.63%)||Chart, More|
|GD.AT||Athex Composite Share Price Index||671.69
||4.39 (0.66%)||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
Jeff Borsato’s Hidden Truth
2011 a look back on the year that was
No seriously Im not doing a post about looking back at the year. I did hope to reiterate some of the basic observations that held this year and are likely to continue into 2012:
1. Gold and the US dollar are at best loosely inversely correlated. Its no longer a simple matter of gold up/dollar down over a week to week basis. There is nothing to suggest a change in 2012.
My thoughts for 2012: US dollar continues to appreciate from current levels while gold moves ahead to new highs with extreme volatility.
2. Commodity story changes as people are opening their eyes. The notion that we are quickly running short on commodities be they base metals, aggregates or crops is turning sour. Only the uninformed or conspiracy nuts actually believe we are one bad harvest away from mass starvation or food riots en masse.
Its been painfully clear that the media elect to focus on the negative, if crop prices are too high its bad, too low: its bad. There has never been a time where consensus is that farmers are okay and prices are comfortable. The corporate culture is one of unrelenting complaint about the difficulty of doing business, there will always be stories about CEO’s saying taxes are way to high, the climate unfriendly to business and supply or demand tight.
Eventually people will tire of the “we are running out of stuff” meme and commodities will begin to drop in price along the trends they have for the past century. This may take some time and occur only in parts of the market gradually but as we have seen in Natural Gas the past 3 years, in spite of the fluff pieces about diminishing energy resources, the price speaks the truth: supply glut.
3. Massive upheavals in the mid-east and a Nato-led mission in Libya all contributed to a crude oil price just below $100 a barrel.
Think about that for a moment… oil could barely move above $100 during what most would consider the greatest upheavals in the mid-east in 30 years. When oil was $40 most experts claimed it would take WW3 to bring it at or above $100 resulting in an economic death-spiral. That never happened as oil advanced well beyond and settled in a range that just a year or two before would be considered unsustainable. Shortly after these same experts claimed mid-east supply disruptions and conflict would send crude to the moon. It failed to take place.
$100 oil may be the new normal until the next shock that will move contra to what most predict. That is the only consistent observation one can really make about oil the past 5 years imho.
4. Stock in general are poor choices for investment vehicles, especially resource stocks, and will continue to under-perform. Too much faith is placed in nonsense metrics about balance sheets, PE ratio’s and earnings. Data has reached the level of financial alchemy, we have no real sense of what it means becuase it is so heavily doctored.
Those who go by data solely, will find themselves sorely deceived in 2012 as they were in 2011.
5. Many predictions of a late year surge in the markets failed, as they always do. Look for more sunny predictions into 2012 until further market weakness turns the sheeple away from the market entirely. That’s when Ill be touting my selected gold mining stocks. But not a moment sooner.
6. China is the elephant in the room. They are growing at a pace that creates an entire Greece-sized economy every year. Should this slow from %10 to %7, will it be taken as a recessionary indicator or a slowing of already over-heated growth? Will the much touted China bubble finally pop?
7. Real-estate: who knows which way the wind blows. I have spoken to this before, newspapers love a monthly “real estate is in a bubble” story that gets folks hot under the collar. Year after year predictions about Canada’s real estate market have been totally wrong but the stories continue until eventually they may be right.
In the meantime predictions have become so confounded as to avoid making any hard calls and appear right now matter the outcome, a typical real estate prediction from a brokerage now reads:
“We anticipate a possible slowdown in the rate of growth in new home starts in some sectors of the Canadian real estate market while some areas of current strength remain buoyant. Should GDP continue along its current rate of Quarterly growth we could witness a %5-10 reduction in some home prices for the first quarter of 2012 with increased volatility marking the market for the remainder of the year.”
How this type of data is actionable is beyond me. It has made the typical research arm of banks and brokerage homes nothing more than an exercise in speech-writing.
Good luck gang, and have a happy new year.
I’ll see you on the beach.