Stocks continue to waver with some investors fretting about overall slowing global economic growth. The September Manufacturing PMI numbers were released this morning by the Institute for Supply Management showing a fall to 56.6 from August's 59.0 reading. The reading remains above 50 showing continued expansion but the pace slowed and that is feeding into those concerns noted above.
The one number that I found noteworthy was the New Orders index. That fell to 60.0 from August's 66.7, which was a multi-year high according to Dow Jones. Again, nothing strongly negative but it does reflect a slowing trend and that is spooking equity bulls somewhat.
That is bringing some strong buying into the bond market which notched a three week high today.
The flip side to this were numbers out of China. It's version of the manufacturing PMI came in at a 51.1 reading for September. That was steady with the August reading.
Investors/traders are looking at this and seeing the glass half full this morning ( especially in the copper and silver markets). The thinking is, "Yes, we knew China was slowing down but at least it seems to have stabilized". One month does not a trend make but for today, copper is breathing a sigh of relief and has thus managed to hold above $3.00. Silver seems to be taking its cues from the red metal and has clawed back above $17 on the number.
The weakness in the stock markets has sent some safe haven buying into gold this morning ( note the Yen is also higher confirming the safe haven bid seen in the gold and bond markets ) and that is keeping the metal afloat above psychological and round number support at $1200. Even the HUI is bouncing today.
Something also I am watching this morning is the further melt-up in the feeder cattle market. In going over the COT data for this very small and thinly traded futures market, I noted that the small specs or general public, have been holding the bulk of the short position in there and they are being mercilessly brutalized by the hedge funds who are squeezing them to kingdom come. Again, this market is currently experiencing a parabolic blow off run which I want to hasten to add makes it EXTREMELY DANGEROUS for all by the most experienced and nimble trader. Be careful with it unless you have some very deep pockets.
Every now and then a mania comes along in the futures world and this market is one of them. When the panic buying out at the auction barns in the country is going to come to an end is anyone's guess but with replacement feeders fetching such nose-bleed prices, my view is that once the panic ends, the fall will be quite dramatic. Oh would I have loved being a cattle guy at this time in the industry with calves to sell! it was not that long ago when you could not GIVE them away.
Crude oil has erased half of yesterday's massive losses as an unexpected drop in supplies.
More later....
Thanks Dan. Silver up over 2% today (against the trend) and the day is not done. Can we call that volatile yet?
ReplyDeleteI am not buying the fake bounce on Silver today. Jobs report tomorrow and historically the first 2 weeks of silver positive return performance in October are terrible...even after awful Septembers...
ReplyDeleteHi! Ho, Silber! The Lone Ranger staggered out this morning on his shambolic old nag. Gold made a slight nod upwards, groping forward with senescent drooling, fumbling in the dark. The HUI, which was thought to have expired, shuddered into life, but only just still breathing, slightly misting the mirror.
ReplyDelete"And, hast thou slain the Jabberwock?
Come to my arms, my beamish boy!
O frabjous day! Callooh! Callay!'
He chortled in his joy."
Thanks Dan
ReplyDeletePlatinum was collapsing this week
SLV had some inflows yest., like it has had during the last few weeks: Silver saw derivative holdings rise yesterday by a somewhat significant 3.9 million ounces.
ReplyDelete..of course all these inflows have not been a sign of capitulation, but perhaps the size of the non-commercial long in silver is at capitulation levels.
Egypt's GASC buys 120,000 tonnes of French #wheat.
Ethanol stocks rise to 18.8 million barrels in week ending Sept 26, versus 18.6 mln previous week & 15.5 million the previous year.
New-crop corn bids in SDakota as low as $1.96 per bushel, with soybeans approaching $7.50.. no rail cars to be had up there.
not-me: definitely livestock is too much the 'widow maker' ...but all the ag commentaries contain livestock comments at the end, so it's fun watching and really it's about time our usa livestock people made some money!!
CL crude fairly unimpressive now, couldn't get thru 50% of yest. range and the 20-day MA touch was a sell.
moo-moo!
Interesting times. SPX is right at the bottom of channel channel support @1950. But MACD still looks negative. Will we get bounce or will profit taking from Q3 End + global worries push for a larger correction?
ReplyDeleteWithout the Central banks it looks like things are going to continue deflating into recession around the world.
ReplyDeleteAnother 10 billion shaved off the Fed's QE this month, just 15 billion left now.
Perhaps the equities guys are starting to exit the stock markets too now as the Feds QE tide keeps going out and possible recession on the horizon as deflation continues.
1945 is very border line for SP500 on my chart.
ReplyDeleteThis might be the beginning of the break of the support of the steepest upwards channel.
If we go below 1945, I'll monitor my scenario : something like :
1) back down towards 1900 area
2) final bounce upwards, maybe back to the 2000 area.
3) real correction of SP500 towards 1700.
Let's see
...More carnage for oil & gas issues today, and no bounce for miners despite gold's small pop. Not pretty, but let's see what the end of the day holds.
DeleteFor weekly and monthly trendlines, the support 193x.Within 1 week it not going up from there, 16xx or 14xx would be a base
DeleteSP500.
ReplyDeleteA little recap of my charts on several time units.
This is not a forecast, I'm simply sharing with you to explain how I try to use T.A in my decision making, and how I have a "main scenario" in my head, in case the markets would eventually follow it, so that I know what to do.
Monthly time unit : http://i58.tinypic.com/28modn4.jpg
This would be a nice time for a pause and a real correction of SP500 based on Andrew's pitchforks. Watch the green one : we hit the mlh sup, which is a resistance. At the same time, the MACD is extremely high and starting to reverse downards. These are some of the reasons why I repeatedly shorted small quantities of SP500 near 2000. OK...I kept only one short CFD in the end :) What would be the target of this correction? I'd say I could at least target 1700 because this is the fibonacci ratio of the whole 666 to 2020 movement upwards. So 1700 is a number to consider as a target longer term.
Weekly time unit : http://i61.tinypic.com/6pb8le.jpg
Here we can really see the fight between the 2 upwards channels of different slopes, leading to a rising wedge at the end. The black resistance held twice, and now the green support is about to give way in the 1945 area. Watch out, because this may lead to an acceleration down...towards? I'd say 1905, because this is the area of the previous bottom, but it is also the level of the inf bollinger band going up quickly (support).
Daily time unit : http://i60.tinypic.com/ifbzo4.jpg
IF we break down under 1940 and bounce near 1900, we'll start having a potential Head & Shoulders figure in formation. If then the bounce goes up towards 1980-1990 area as a pullback towards ex green support and fails to go higher, then more and more, the H&S would take shape, making it more and more likely that we head back towards 1900 then 1700 area eventually.
As you see, this approach is using several time units, several concepts of T.A, and is only a scenario. I can't know if the market is going to react that way. Especially now on 1945, the channel is so long term that the support zone is not a fixed price, but let's say that the more me go down from 1945, the more it will look like the green channel has been broken. The danger is SP500 can bottom at 1940 and suddenly reverse towards 2000. Hitting briefly 1940 won't be enough to invalidate the green channel. So this is tricky. But I'm following it and sharing it just for showing how I'm trying to use T.A to identifiy potential support/resistance areas and some kind of timing.
ouch :(
ReplyDeleteI can't have access to feeder cattle futures on CFDs via my platform...only live cattle futures, but it doesn't seem to be the same market, nor the same chart with that great exageration upwards forming now on the feeder cattle indeed.
I'm going to have to watch the train of the collapse coming soon... :(
But by curiosity, how much does one single contract on the futures represent for this market? I'll nearly regret I closed my account at global futures :)
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ReplyDeleteStk Indices and cocoa giving off fresh sell signals.
ReplyDeleteLast bulls standing are the 10 & 30 Year, Fats, Feeders, and of course, the $. New month, new quarter, and Friday's close a bit more important than usual I would think.