Wednesday, May 11, 2011
The S&P sold off again today hitting its low for the day of 1336.36. We bounced off the low to close at 1342. 08. The level of 1335 is significant support for the index and well worth watching. If we were to close below this 1335 level then we could go all the way to 1305 and we could do it quickly. The S&P 500 was trending down at the close so the opening will be important. Of all the numbers that will be reported over the next two days initial jobless claims is perhaps the most relevant. The consensus is for a number of about 430,000 first time claims anything above 440,000 could be the catalyst to tip the market.
The oil index closed below its recent low of 1301 at 1,299.10. The next support level is 1,295 should we close below 1295 then the next support level would be 1275. The swings in the oil market have been historic in the volatility.
With very little fan fair the yield on the 10-year T-Bond closed today at 3.16 yield the previous near term low was 3.21 so, we broke the recent low of March 16. The next major support is 2.94%. Most people didn't realize that the yield on all short-term Treasuries up to 90-days in maturity this week were yielding zero.
All three markets have seen significant reversals in momentum. Market do tend to over shoot in either direction so, we could see these secondary low hit just on momentum.
If you go back and look at my May 1 blog again, you will see that the notion that the bond market was telling us something different may be coming true sooner than I thought. I’m watching your money.
Thursday, May 5, 2011
If you read my blog from this past Sunday the events over the last few days should not be surprising. The dollar, that know body wanted, soared today with the Euro off almost 3 cents. The European Central bank said that it was not going to increase interest rates in June as was widely expected left traders disappointed.
Crude oil was off just under $10 at $99.99 down from $113.79 on April 28. Gold closed down $43.90 on the day, yes that is $43.90 in one day. Gold if off almost $100 per oz. since last Friday. Silver prices dropped over 12% today. Only two commodities were up for today, wool and lean hogs it was a very significant rout of all the commodities. The yield on the 90-Day T-Bill was 0% and perhaps the most interesting thing of all was that you had to pay the government 50 basis points to buy the 5 year TIPS. The yield is minus 40 basis points
So, did the inflation trade fall off the shelf today? a couple of days doesn’t make a trend, but if we follow through with a downward bias into Friday a lot of people will be very nervous about going into the weekend short anything.