Bill Cara’s Blog for Sep 11, 2012
CTA Trading Desk Morning Report
[7:00am ET] Good morning.
Yesterday I referred to the Wall of Worry. As an example, the trend for equities, commodities and precious metals has been up but news reports today are affecting the market:
Germany’s high court rejected a last-minute plea Tuesday to postpone its ruling on a request to block the country’s approval of a permanent bailout fund for the European Union. And global markets are focusing intensely on the U.S. Federal Reserve, whose monetary policymaking body gathers Wednesday for a two-day meeting.
Definition of ‘Wall Of Worry’: A ‘Wall Of Worry’ refers to investor uncertainty in capital markets in the face of numerous negative factors, particularly macro economic, political or geopolitical stories that would normally be enough to affect crowd psychology in a bearish way.
I call it ‘Headline Risk’ and I believe the headlines, quite frequently, are purposefully crafted to bring about an intended result rather than to focus the audience on the facts. Yesterday morning I received seven headline articles — the same headline — sent by one news service that basically told me that the market was headed south because of soft economic data from China. It wasn’t until later in the day that the market went south, and Apple had a lot to do with that.
In my career I was dismayed to discover that the journalists who investigate, analyze and report the news are not the ones who write the headlines. Knowing that the public is either too lazy or short of time to read and consider the detail of a report, the headline writers hold the power of influence, which, bottom line, is the power of the media.
What are the biggest worries for investors today? What keeps you up at night?
• Greece sovereign debt
• Spain sovereign debt
• Italy sovereign debt
• Fiscal Cliff
• The Euro
• European Economy
• US economy
• Global economy
• Food inflation
• Credit market
• US Treasury market
• US Presidential election
• Stock market technicals
• Consumer sentiment
• US healthcare
• Syria’s civil war
• Underwater mortgages
• Naked short-selling
• Peak oil
• Student loans
• Global capex slowdown
• G-20 fiscal situation
• Too big to fail banks
My point is that it is always something. If you stick to reading the headlines and not watching the underlying price series data you will not understand the trends and cycles of the market.
Good morning, Geoff here.
Today’s date is one that will remain ingrained in many of our minds for the rest of our lives. Most of us in America remember exactly where we were when the planes hit the World Trade Center with many of us losing loved ones that day.
Our sincere condolences go out to those who lost friends and family on this day just over a decade ago.
As to the markets, they should be rather tame until tomorrow’s ruling from Germany’s High Court on the permanent bailout fund and the FOMC announcement on Thursday, although speculation is rampant. Will it be a confirmation of QE or not?
By the end of the week, we should find out if the US Dollar, stocks and gold are either forming continuation flags or getting ready to reverse trend leading to a risk-off trade.
As I wrote a number of days ago, there are signs that some form of stimulus has already begun and should the Fed announce a new bond buying program it could actually turn into a major “sell the news” event so be prepared for that possibility. Actually, it wouldn’t shock me at all if the following occurred; Big Ben announces stimulus, the market rallies hard for a few minutes as buy-stops are triggered and then reverses strongly to the downside and sell-stops are triggered leaving a very wide daily bar. Once the carnage is cleared, the market can then find its trend.
Of course all the speculation on what will be said is kind of silly. The trade that I am waiting for is weakness in PMs because it is a buy the dip environment imo. As you can see in the following chart, gold can drop to under $1700 and still be trading above the 10 dma. If you are looking for a good place to buy, $1700 wouldn’t be a bad place.
Watch the US Dollar. In the intermediate term it looks like a dollar down, stocks and commodities up environment but Thursday could drive the opposite in the short-term.
Have a great trading 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|
||18.44 (0.87%)||Components, Chart, More|
||3.50 (0.14%)||Components, Chart, More|
||15.40 (0.44%)||Components, Chart, More|
||8.58 (0.12%)||Components, Chart, More|
||1.60 (0.48%)||Components, Chart, More|
|^OSEAX||OSE All Share||494.34
||1.73 (0.35%)||Components, Chart, More|
||1.10 (0.33%)||Components, Chart, More|
||35.12 (0.54%)||Components, Chart, More|
||25.31 (0.44%)||Components, Chart, More|
||8.40 (0.88%)||Chart, More|
||5.34 (0.36%)||Chart, More|
|GD.AT||Athex Composite Share Price Index||719.39
||6.66 (0.92%)||Chart, More|
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.