What a day! It all started off in Japan as a mild up action day when a noted analysts confirmed that his discussions with officials both in Japan and China quietly assured him that each intended to continue to buy our U.S. Treasury debt instruments, dollar problems or not. And why not. They are both very dependent on the U.S as their prime trading partner –- read market to sell their “stuff.” You don’t kick the kid that brought the cash to the party, do you?
From there the mild up move in the markets continued right across Asia, Europe and when it got to the U.S. two very important reports -– consumer confidence and Retail Sales came in well ABOVE what was expected. Well, the rest of the day was a good one for the bulls. No, we didn’t move above the key resistance on the S&P at about 1,130-40, but the market held on to nice gains and closed the week very happy. And this was despite several very heavy tries by the bears to knock down the bull seven month rally.
The good news on the consumer front, however, had a very bad effect on the bond market. The good news said to bond holders that THE Fed might consider raising interest rates in the near future (2-4 months) and that sent many to the sidelines after they sold their bond holdings. It was the second straight hard sell of bonds and took the index down to within striking distance of my Keyline at 117 20/32, just 7 ticks below the Friday bond close. So what do I make of this? Well, a cross below the Keyline would signal the possible inevitable rise in interest rates sooner than some expect and that means a possible dent in earnings out 6-12 months. Not a good sign. Not a lot more to say for now, but if the Keyline is broken come the close next Friday, I will have lots to say in the Weekly letter I post each Monday.
I will be closing a bit early tonight, as I need to get some family business done before the banks and stores close, so hope you will excuse me. I will have more about his week in the regular weekly Monday Report.
So, until Monday, I do hope your day was a profitable one. Will be back here on Monday after the market close (will have the Weekly Report by posted by noon Monday, too), the Lord willin’ and the creek don’t rise.
NEED SOMETHING TO TALK ABOUT TONIGHT?
SIX MAJOR IMPACTS ON THE MARKET TODAY
1. Retail sales up almost twice expected. Markets surprised, but loved it.
2. Bonds took a big hit on the good consumer news. Price fell, rates increased. Future uncertain here.
3. Consumer Confidence (by Univ. of Michigan) rose more than expected, giving support to Retail sales!
4. Sweeping financial sector control bill passed House. Uncertain how Senate will respond. Pile on?
5. Oil continues to fall in price, but some expect higher prices as consumer numbers improve.
6. VP Biden goes to Conn. to support friend Sen. Dodd as Conn. turns against Sen. Dodd big time
Do you think Dodd is in that much trouble? And the controls on the financial markets, will they be enough or too much? But, I love the consumer numbers!! That was exciting news.
Closes as of Fri. 12-11-09 CHANGE (cash index prices)
DOW INDU. 10,471.50 +65.67 points
S&P 1,106.41 +6.40 points
NASDAQ 2,190.31 -.55
30 YR BONDS 117 21/32 -24/32
GOLD 1,132.50 +$2.00
DOLLAR 76.57 +.52
OIL 70.48 -$.36
COPPER $3.133 +$.0285
*The name Super Chart Keyline is a registered Trademark of Max Whitmore.
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Max, great synopsis. One stop shop for all of the important numbers.
And… Yes I hope that Dodd is in terrible trouble. Can’t imagine how Biden could possibly help!