Bill Cara’s Blog for Mar 25, 2013

CTA Trading Desk Morning Report

[7:00am ET] Good morning, Geoff here.

Equity futures are higher this morning following a deal being struck in Cyprus.

As I stated last week, the index is seeking new highs. However, supporting Bill’s analysis in the WIR, you can see internal weakness in the index that is pointing towards a decline – probably after price makes new highs.

Unless the following breadth measures improve, I would doubt a sustained higher price without a decline first.

ggimage01_032513.png

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
^ATX ATX 2,444.87 6:45AM EDT Up 23.19 (0.96%) Components, Chart, More
^BFX BEL-20 2,615.40 Mar 21 Up 0.90 (0.03%) Components, Chart, More
^FCHI CAC 40 3,831.31 6:59AM EDT Up 61.02 (1.62%) Components, Chart, More
^GDAXI DAX 8,018.24 6:45AM EDT Up 106.89 (1.35%) Components, Chart, More
AEX.AS AEX General 354.24 6:45AM EDT Up 3.50 (1.00%) Components, Chart, More
^OSEAX OSE All Share 523.92 6:45AM EDT Up 2.07 (0.40%) Components, Chart, More
^OMXSPI Stockholm General 376.37 6:44AM EDT Up 3.24 (0.87%) Components, Chart, More
^SSMI Swiss Market 7,793.96 6:45AM EDT Up 49.63 (0.64%) Components, Chart, More
^FTSE FTSE 100 6,445.18 6:45AM EDT Up 52.42 (0.82%) Components, Chart, More
FPXAA.PR PX Index 984.25 7:00AM EDT Up 3.64 (0.37%) Chart, More
MICEXINDEXCF.ME MICEX Index 1,441.36 7:45AM EDT 0.00 (0.00%) Chart, More
GD.AT Athex Composite Share Price Index 930.53 Mar 22 Up 5.67 (0.61%) Chart, More

http://finviz.com/futures.ashx

http://finviz.com/fut_chart.ashx?p=m5&t=ES

http://finviz.com/fut_chart.ashx?p=m5&t=ZB

http://finviz.com/fut_chart.ashx?p=m5&t=DX

http://finviz.com/fut_chart.ashx?p=m5&t=GC

http://finviz.com/fut_chart.ashx?p=m5&t=SI

http://finviz.com/fut_chart.ashx?p=m5&t=CL

The team will check in during the day, reporting in the Discourse when there is a new entry.

Enjoy your day.


Cara 100 Company research notes from Seeking Alpha


Vad’s Catch of the Day


Kaimu’s Sound Money


Harp’s Roadmap



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airjordan321
airjordan321
March 26, 2013 6:20 am
Bill Cara
Admin
March 25, 2013 10:12 pm

The server might be down for maintenance sometime between 6 and 10pm ET this evening.

MoKat
MoKat
March 25, 2013 8:46 pm

American bank depositors sleep comfortably at night thinking their account is safe up to $250,000. Taking a look at the FDIC, they guarantee around $10T in deposits and have approximately $25B in the bank. That’s $1 covering $400. Just a few large bank failures would wipe the fund out. Only the government printing press is backstopping the whole system. A mass printing excercise by the Treasury/Fed to cover systemic losses would only further dilute the value of the dollar…. so depositors pay one way or the other. Since 2008 the Fed has been engaged in stealth confiscation of depositors funds… Read more »

Grym
Grym
Reply to  MoKat
March 26, 2013 12:36 pm
tbar
tbar
Reply to  MoKat
March 26, 2013 9:55 am

oh the insurance is there, they just never said who the beneficiary is.

ZaiusJr
ZaiusJr
March 25, 2013 6:20 pm

Following the confiscation of average Joe’s savings through inflation – Come on, those inflation numbers are only valid for the top 1% I suppose – they simply don’t hide it anymore: new taxes everywhere, austerity and more austerity. And indeed the media does not report what exactly went wrong in Cyprus, but we know every single detail of a famous murder case and the pregnancy of a famous sports person. Well I guess that’s what people REALLY are interested in. What Joe doesn’t know, won’t hurt him. Let’s just boil him, but slowly. Wikipedia: “The boiling frog. The premise is… Read more »

Bull Hunter
Bull Hunter
Reply to  ZaiusJr
March 25, 2013 6:59 pm

“Any form of advice would be greatly appreciated.”

Hi ZaiusJr,

One word: DIVERSIFY

I’d suggest you Google “Permanent Portfolio”, an ingenious investment program attributed to the late, Harry Browne. You basically divide your assets into 4 equal parts: cash, gold, stocks and bonds.

I prefer to do-it-myself but you can buy an ETF that does it for you: PERM

This is not the only way to invest, but it works.

Another adage that I live by : “Only buy when there’s blood in the streets.”
This helps provide a nice margin of safety.

Good luck,
BH

Flight Plan
Flight Plan
March 25, 2013 6:15 pm

Anyone have any thoughts on what happening with RGX?

papadynamite
papadynamite
Reply to  Flight Plan
March 25, 2013 6:48 pm

There are problems at RGX. Specifically, the Quebec politicians are stirring a lot of negativity in the mining industry in Quebec by talking about initiating new Royalty taxes and profit taxes on the miners. Furthermore, Rio Tinto, which had a $4 billion TIO2 slag facility in Canada scheduled has now decided to shut it down. Argex has also indicated that “companies mothballing production, or operating at 80% capacity (in the case of Kronos) while announcing price increases” could be a concern although Argex denies that. Argex also indicates that they have no plans to develop mines on their iron ore… Read more »

Flight Plan
Flight Plan
Reply to  papadynamite
March 25, 2013 7:17 pm

Thanks Papa. Good work!

bsi87
bsi87
March 25, 2013 5:10 pm

well they hit the stop limit orders and threw the kitchen sink at it at the open. Generated a nice kangaroo tail reversal. Putting a sell stop limit order on halfway down the tail at 16.15, risk is 8 cents per share.

Moved 2 days’ ATR in 30 minutes. Trading above the opening price now. Gotta love the game rigged as it is. see if it closes above Friday’s close

FD: long GDXJ

Bill Cara
Admin
March 25, 2013 4:07 pm

Hey Bill,

You blogged today that you were interested in Cyprus opinion from some experienced/informed individuals.

FWIW, here’s an opinion well beyond MSM linked below from Armstrong. Also, KWN interviews with former U.S. Assistant Sec to the Treasurer and Sinclair indicate a major shift on insured deposits that the MSM is starting to address today.

http://armstrongeconomics.com/cyprus-more-than-jus

Jay (aka Dr. Strangelove)

Bill Cara
Admin
March 25, 2013 3:22 pm

After opining strongly in the WIR that equity markets are going to tumble for a couple weeks, I was dismayed when checking Europe early today. At that point, the French CAC was up +1.61% and the German DAX up +1.15%. I look now and the CAC is down -1.05% and the DAX down -0.05%. That’s a serious drop in a few hours.

Bull Hunter
Bull Hunter
March 25, 2013 3:03 pm
J D Wingert
J D Wingert
Reply to  Bull Hunter
March 25, 2013 7:07 pm

Yes, “technically” the government did confiscate gold in 1933 (with few exceptions); of course, I have never seen any reference to “the Feds” raiding homes or safe deposit boxes, digging up back yards, etc, searching for gold and only one person was ever prosecuted for violating the “law”. As a matter of fact, the confiscation would only happen if the individual “cashed their gold in” – DUH!!! Today there are a lot of records kept that COULD be used to identify gold buyers BUT it’s not that hard to buy gold while leaving no foot prints. One possbile example of… Read more »

Vadym Graifer
March 25, 2013 3:02 pm

(EU) Eurogroup’s Dijsselbloem: Bank restucturing program in Cyprus could be used as a template for the rest of the EMU
– Calls on EMU countries with large banking sectors to restructure and bring down the size of the sector in efforts to move the risks from the public sector (mentions Luxembourg, Malta, Slovenia)
– Notes that the process would mean that a direct recap of banks by the ESM may not ever need to happen

Not that we didn’t see it coming

davefairtex
davefairtex
Reply to  Vadym Graifer
March 25, 2013 3:57 pm

So, this whiz-bang newfangled “bank restructuring program in cyprus” is simply a normal bank restructuring program – i.e. one that happens without dumping the burden of making up all the losses on the taxpayers. Its also called a debt-to-equity conversion. Perhaps that is a revolution for today’s observers. Its capitalism reborn! I.e. the bank fails, and people who are creditors to the bank take losses, insured deposits are protected, just like the FDIC does it on the small banks here in the US. It might actually encourage people to select their bank carefully, rather than just blindly picking the one… Read more »

Vadym Graifer
Reply to  davefairtex
March 25, 2013 4:40 pm

Dave, I see similarities you mention, but there is something that feels off in this case and makes it a bit different. I can’t quite put a finger on it in its totality, but part of it probably is this: unlike cases where bank fails and deposit holders suffer (beyond insured amount), in this one it feels (and is) orchestrated by an unelected entity from outside. It’s not a mismanaged bank that people get most of all angry at; it’s not their sovereign government that they can to a degree get back at at the next election cycle; it’s a… Read more »

davefairtex
davefairtex
Reply to  Vadym Graifer
March 25, 2013 7:32 pm

Vad – The eurozone “distant masters holding sway over us” issue was something I didn’t address for sure, and I probably have underestimated its effects. I’m sure you’re more sensitive to it given your background. For sure they acted like a parent – witholding money, setting conditions, and so on. The US Federal government does that to the states too, but we’ve had 200 years of cohesiveness (oops I mean 148, counting the Civil War) to make that somehow more acceptable. And we don’t have a “Germany” with an unfortunate history and all the money (and a distinct reluctance to… Read more »

Vadym Graifer
Reply to  davefairtex
March 25, 2013 7:57 pm

All true, but let me offer even better example: Iceland which imposed solution largely similar to Cyprus, on its own volition (not under pressure from above), got sued by foreign depositors, won the case – AND started repaying that money now even despite that win, again on its own volition and to repair the relationship, reputation and to secure working relations in the future. That’s much closer to how capitalism should work, IMO. To add the the unfolding drama, notice that EU now backtracks that unfortunate comment: (EU) Spokesperson for EuroGroup Chief denies that Dijessbloem described the Cyprus bailout as… Read more »

davefairtex
davefairtex
Reply to  Vadym Graifer
March 25, 2013 7:59 pm

“adjustment programs are tailored to the situation in the country concerned and no models or templates are used”

And we are most definitely NOT making this up as we go along.

bigwad1
bigwad1
March 25, 2013 2:59 pm
terryC
terryC
March 25, 2013 2:12 pm

It is early days for BlackBerry to be shown as a technologically-inept competitor in the US smartphone market. With the power of the media behind Apple, when the NYT and WSJ influence so many with their “trash BB” content, with short-sellers and HB&B playing games with computer-driven trading schemes – it is hard to keep thinking that BB can prevail. Here is a comment I made to the WSJ today that was rejected from publication, presumably because I wasn’t drinking their Kool-ade: It should come as no surprise that BB10 seems to be failing to gain traction early in the… Read more »

Ventilation Blues
Ventilation Blues
Reply to  terryC
March 26, 2013 7:48 am

I was in (rightly or wrongly) this week at 14.8. Blackberry have a fine product and over the last year appear to have invested a lot of time and money on both their core product, intellectual property and protection, security issues related to mobile devices, they delayed the release of their new phone and OS (to perfect rather than rush) , but you get a sense that this is a firm with commitment. Outside of the US , most serious mobile users and business men use BB and there is no business persons alternative out there. Asia, especially in the… Read more »

Bull Hunter
Bull Hunter
March 25, 2013 2:03 pm

GILD – Gilead Sciences PT Lifted from $43 to $48 @ Maxim Group. Buy

MRK – Merck Reiterated with Buy @ Bank of America. PT = $47

Bill Cara
Admin
March 25, 2013 1:07 pm

For a population of just 1.15 million, Cyprus certainly has a lot of banks, including Barclay’s and Lloyds and many Russian banks. http://en.wikipedia.org/wiki/List_of_banks_in_Cyprus Were all these banks affected? While I don’t understand what is going on there — and do not trust the media accounts whatsoever — I do know the vast majority of deposits in Cyprus are (or were) not from the locals. So was it the intention of the IMF/ECB to attack the foreign depositors as part of their strategy of eliminating tax havens? Was the attack directed against Russia in particular? Does anybody have a link to… Read more »

Jimymac
Jimymac
Reply to  Bill Cara
March 25, 2013 2:56 pm

“independent, objective and knowledgeable”. Perhaps, perhaps not. Former Treasury Secretary Dr. Paul Roberts offers keen insight into what may be behind the Cyprus Affair. How do you go after offshore banking centers and mafia money in the same heartbeat. Likewise I don’t trust MSM. I think this is an attack on all unreported income. “The EU has given in to Washington’s demand for “free access to the banking data of the central financial service provider, Swift, in Europe. All financial flows in Europe (and between Europe and the rest of the world) will now be monitored by the CIA and… Read more »

cheapy
cheapy
Reply to  Bill Cara
March 25, 2013 2:16 pm

I have no knowledge to offer, but just want to say that if after having passed the ECB’s stress tests a couple years back without problems, as did most EU banks, that if these are failed, then why would anyone think it wasn’t also true for a similar percentage of the other EU banks who also passed those same tests. What I find unpalatable is that there is little discussion of WHAT is causing these banks to fail, and no mention of equity and bondholder losses, which I would expect to be complete wipeouts if depositors funds are being confiscated… Read more »

Grym
Grym
Reply to  cheapy
March 25, 2013 3:25 pm
bluesky
bluesky
Reply to  Grym
March 25, 2013 5:09 pm

Grym – Do you have a link to his commentary on this? – Thanks

Grym
Grym
Reply to  bluesky
March 25, 2013 6:15 pm
Bull Hunter
Bull Hunter
March 25, 2013 1:02 pm

Good morning.

CELG – Celgene Downgraded to Hold from Buy @ WallachBeth.

CEO – CNOOC Upgraded to Buy from Neutral at Bank of America.

CEO – CNOOC Upgraded to Hold from Underperform at Jefferies.

ORCL – Oracle PT Lowered from $38 to $36 @ Macquarie. Neutral

WFM – Whole Foods Markets Downgraded to Neutral from Overweight at Piper Jaffray. PT Lowered from $103 to $89.

——

“Every day I get up and look through the Forbes list of the richest people in America. If I’m not there, I go to work.”

~ Robert Orben

Bill Cara
Admin
March 25, 2013 12:54 pm

http://www.horizonsetfs.com/Pdf/PressReleases/2013

Horizons terminated six ETFs as at March 22, including two that had been managed by Dennis Gartman. They may have been under-performing, but I am guessing these were dropped as they were too small to be profitably managed by the Horizons group.

davefairtex
davefairtex
March 25, 2013 11:05 am
  • 3 in Buy alert
  • 5 in Distribution Zone
  • 14 in Sell alert
  • Accumulation Zone (8%): Monthly 3, Weekly 9, Daily 13
    Distribution Zone (20%): Monthly 23, Weekly 24, Daily 15

    davefairtex
    davefairtex
    March 25, 2013 11:04 am
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