Dartline™ First Look - morning directional planner
.... and Closing Thoughts.
September 24, 2009, 7:00 am ... 
The Standard & Poor's 500 index futures down 0.10 to 1058.89, as Germany's DAX down 1.2 percent, Britain's FTSE 100 down 0.7 percent and France's CAC 40 down1 percent. In Asia, Hong Kong's Hang Seng index was the biggest loser, falling 544.79, or 2.5 percent to 21,050.73. South Korea's Kospi declined 17.59, or 1 percent, to 1,693.88. The declines are blamed on the Federal Reserve reducing purchases of mortgage-backed securities, which have been part of the extraordinary support the central bank has given the U.S. economy over the past year. ... Benchmark crude for November delivery was down 79 cents at $68.18 in European trade Thursday. Crude supplies grew by 2.8 million barrels and gasoline by 5.4 million barrels last week, according to the Energy Information Administration on Wednesday. A weaker U.S. dollar has helped bolster oil prices in recent weeks. Crude is priced in dollars so it becomes cheaper when the dollar falls. The dollar is at a nearly one-year low against the euro, and fell Wednesday after the Federal Reserve said it would keep interest rates at a record low -- near zero. ... Maintain resistance at 1105.40 and support at 995.20 for the S&P 500 index. Use the current nervousness with values to take profits and reduce laggards without a "story".
Trade stocks on both sides without increasing longer term positions.
September 23, 2009, 4:15 pm ... Closing Thoughts The Standard & Poor's 500 index closed down 10.79 (1.01%) to 1060.87, as low interest rates continues to pressure the U.S. dollar and cause traders to transfer dollar based assets to currencies in countries with high interest rate to earn higher returns. The dollar slipped to 1.0229 Swiss francs from 1.0240 francs late Tuesday, and rose to 1.0697 Canadian dollars from 1.0683, while the 16-nation euro shot as high as $1.4842 in New York Wednesday immediately following the announcement, its strongest level since last September. ... The U.S. dollar drifted lower in late trading to $1.4802, compared with $1.4792 Tuesday afternoon in New York. The British pound rose to $1.6419 from $1.6352. The dollar dipped to 91.13 yen from 91.24 yen. ... The Fed said in its expected release -- "August suggests that economic activity has picked up following its severe downturn." It said it would keep the federal funds rate at its current record low between zero and 0.25 percent, and that economic conditions warrant very low interest rates for "an extended period" amid "subdued" inflation for the long-term. "While the language was subtle, the clear message is to keep inflationary concerns to a minimum and to curb talk of higher rates," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon. The Fed will keep interest rates near zero until at least next year, he said in a research note. ... The central bank also said it would wind up its buying of up to $300 billion in long-term Treasurys by October, and would slow its purchases of $1.45 trillion in mortgage-backed securities and debt issued by Fannie Mae, Freddie Mac and Ginnie Mae. Those liquidity-boosting measures have triggered some fears of impending inflation when the economy recovers, which would erode the value of the greenback. ...
Underreported: Federal manipulation of data has distorted foreclosure sales. Such action will prolonging the mortgage crisis and creating a growing "shadow" inventory of pent-up supply that will eventually hit the market. The size of this shadow inventory is a source of concern and debate among real-estate agents and analysts who worry that when the supply is unleashed, it could interrupt the budding housing recovery and ignite a new wave of stress in the housing market. Look for massive increase of bank-owned homes listings. When that happens home prices will fall further, particularly in markets with large numbers of foreclosures. As stated in prior commentaries, Dartline expects home prices to decline at least 18% next year.
September 23, 2009, 7:00 am ... The Standard & Poor's 500 index futures up 2.50 to 1069.80. Asian markets fell slightly overnight, while major European indexes inched higher in late morning trading. Traders are awaiting word from the U.S. central bank, which wraps up a two-day policy meeting later Wednesday, hoping for more clues about the strength of the economy's recovery. As for FREE MONEY POLICIES don't worry -- Bernanke's printing press working non-stop. ... A weakening U.S. dollar supports higher stock and oil prices. Because crude is priced in dollars, investors outside the U.S. buy it up when the dollar drops. Olivier Jakob of Petromatrix in Switzerland said that while the Dollar Index -- which values the dollar against a basket of foreign currencies -- was now at same level as in September 2008, back then the Nymex contract was worth $109 a barrel. The euro rose Wednesday in European trading to $1.4817 from $1.4788 the previous day while the dollar fell to 90.99 yen from 91.15. By midday in Europe, benchmark crude for November delivery was down 32 cents at $71.44 a barrel in electronic trading on the New York Mercantile Exchange. The contract added $1.83 a barrel to settle at $71.76 on Tuesday. Oil would remain in current range since battle between weak supply fundamentals and optimism for economic recovery remain at-odds. U.S. oil inventories rose unexpectedly last week, the American Petroleum Institute said late Tuesday. Crude stocks increased 276,000 barrels while analysts had expected a drop of 2.25 million barrels. ... Maintain resistance at 1105.40 and support at 995.20. Don't fight the tape and go with the flow --- maintain positive bias.
September 22, 2009, 4:15 pm ... Closing Thoughts The Standard & Poor's 500 index closed up 6.97 to 1071.65, as the dollar weakened against other major currencies and commodities -- i.e. oil and gold moved higher, lifting energy and material stocks. The U.S. dollar index, which measures the greenback against a basket of foreign currencies, fell 0.8 percent, after earlier hitting a fresh low for the year. A cheap dollar allows foreign investors to buy on the arm at low interest rates and unprecedented government spending designed to stimulate the economy exaggerates corporate earnings. Helicopter Bernanke's printing press has created excessive credit growth, and a robust stock market without an end point. ... The Fed is widely expected to keep rates at their record low of near zero. We need to say it again! Rock-bottom interest rates have helped fuel the market's nearly seven-month old rally, making cash plentiful and cheap and encouraging investors to buy up riskier assets. ... The market appears to be following a well-established pattern where brief sell-offs are met with more buying as investors fear missing out on a continued rally. ... The consensus on Wall Street is that the economy is growth despite high unemployment. With the government's FREE MONEY POLICY, a scheme is underfoot to underwrite the unemployed with extended, unlimited unemployment benefits, paid for and work subsidized retraining programs and a "Clunker Program for the Underemployed" to trade in old brain for a new one. Why not? The entire conspiracy can be underwritten from the $2 trillion gain in stock gains in the last quarter. Do it again, and you can fund anything. ... The 'engineered stock rally' has made believers of even the super conservative Republicans and the other kind. ... Dartline remains doubtful over how strong the recovery will be and whether the stock market's more than 50 percent move off of 12-year lows in March accurately reflects the still fragile state of the economy. Right now, it's a orderly market, as traders digest the data, trying to figure out exactly what really happened. .. The Russell 2000 index, which tracks smaller companies rose 5.97, or 1 percent, to 621.94. ... Gold and silver prices rose after three days of drops, while oil prices gained $1.69 to $71.40 a barrel on the New York Mercantile Exchange.
September 22, 2009, 7:00 am ... The Standard & Poor's 500 index futures up 8.20 to 1067.70, as Britain's FTSE 100 up 0.9 percent to 5,177.75, Germany's DAX up 1.1 percent to 5,731.85 and France's CAC 40 up 0.9 percent to 3,847.97. Asia markets were higher on headline noise from the Asian Development Bank upgrading its growth forecasts for major economies like China and India and said the region is leading a global recovery. Hong Kong's Hang Seng added 228.29 points, or 1.1 percent, to 21,701.14, and South Korea's Kospi gained 23.38 points, or 1.4 percent, to 1,718.88. India's Sensex was up 0.9 percent. However, when you read the entire 30-page report, the news was less than rosy--- without continuation of the various stimulus schemes the world economies will collapse. Meanwhile, traders have been piling into Asian equities this year as easy money made available by monetary loosening around the world flows toward regions with stronger growth prospects. ... Benchmark crude for October delivery was up 88 cents at $70.59 a barrel in noon European electronic trading on the New York Mercantile Exchange. The contract fell $2.33 to settle at $69.71 on Monday. A projected second-half recovery in demand from Europe and the U.S. combined with cheap U.S. dollar will keep oil prices from falling below $63 per barrel, while rising above $75 during the next month can push oil to $80 plus and carry equities along for the ride. ... Maintain resistance at 1105.40 and support at 995.20. Cheap U.S. dollars combined with worldwide FREE MONEY schemes have created a vacuum in values that keep equities and commodities cheap and tradable.
September 21, 2009, 4:15 pm ... Closing Thoughts ... The Standard & Poor's 500 index was down 3.64 to 1064.66, as the Conference Board's index of leading economic indicators increased 0.6 percent in August, marking the fifth straight month the index rose. Thus, forecast of economic activity further validated Bernanke's pronouncement last week that the U.S. recession was "likely over" from a technical standpoint. Trading reflected a shift out of risky assets, except for AIG - last $48.40 +8.49, that have benefited from the stock market's advance and into safe plays like the dollar and government bonds. ... Overseas, Hong Kong's Hang Seng index lost 0.7 percent. A number of other Asian markets, including Japan's, were closed for holidays. Britain's FTSE 100 fell 0.7 percent, Germany's DAX index dropped 0.6 percent, and France's CAC-40 fell 0.4 percent. ... Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.48 percent from 3.46 percent late Friday.Oil prices dropped $2.33 to settle at $69.71 a barrel on the New York Mercantile Exchange. ... Underreported: The study by Audit Integrity, which usually analyzes accounting risks, used a quantitative model to track liquidity, debt levels, profitability, market prices and governance and fraud risk measures at more than 2,500 companies suggested that U.S. companies in the airline, automobile, television and publishing industries are about four times more likely to file for bankruptcy in the next year than companies in other industries, according to a study. Bankruptcy filings have jumped sharply in the past year. "Even if we're coming out of the recession, companies have been substantially weakened," Audit Integrity Chief Executive Jack Zwingli said in an interview. "The concern was that the economic environment had changed and the risks on company balance sheets have changed." ... Zwingli said investors needed new models to detect bankruptcy risk as the combination of the U.S. recession and more complex corporate debt structures meant that bankruptcy could now happen with little advance warning. Among companies with more than $1 billion in market capitalization, the study showed that No. 3 U.S. drugstore chain Rite Aid Corp (RAD) was most at risk of bankruptcy in the next year. The study gave the company about a 10.5 percent chance of filing for bankruptcy in the next 12 months. To test its model, Audit Integrity also applied it retroactively to companies that recently declared bankruptcy. Companies such as Smurfit Stone Container Corp (SSCCQ.PK), BearingPoint Inc (BGPTQ.PK), Tronox Inc (TRXAQ.PK), Trump Entertainment Resorts (TRMPQ.PK) and Circuit City Stores all scored a 99 on Audit Integrity's bankruptcy measure, which would translate to about a 10 percent risk of filing for bankruptcy.
September 21, 2009, 6:30 am ... The Standard & Poor's 500 index futures are down 7.90 to 1053.74, as traders backup to determine what helicopter Bernanke and the Fed will say about the economy and the scale of the recovery after a two-day meeting that wraps up Wednesday. Look for the Fed leaving rock-bottom interest rates unchanged. Indeed, the FREE MONEY POLICY and "less bad is good" noise still rules. ... The U.S. dollar is the new carry trade, clearly referring to the practice of borrowing Japanese yen at a low cost to purchase risky and higher-yielding assets. Traders are borrowing the dollar at near zero rates to buy equities and debt, primarily in emerging markets, which remains the primary reason why equities worldwide are hot and will be remain so. Indeed, the main beneficiary of Western monetary easing and money manipulation are Asian asset prices, i.e. equities and real estate. However, , from a longer term perspective --- a new asset bubble will destabilizes the region's economies and pull worldwide equities lower. ... Early in Europe, Britain's FTSE 100 lost 0.4 percent, Germany's DAX fell 0.8 percent and France's CAC-40 dropped 0.3 percent. In Hong Kong, the Hang Seng fell 150.60 points, or 0.7 percent, at 21,472.85 in back-and-forth trade, while South Korea's Kospi lost 0.3 percent to 1,695.50. ... Benchmark crude for October delivery slipped 81 cents to $71.23 a barrel in Asian trade. The dollar gained to 92.03 yen from 91.46 yen. The euro fell to $1.4641 from $1.4686. ... Use resistance at 1105.40 and support at 995.20. With the index hitting a new 2009 high with the sideways on Friday market suggests a short term consolidation before moving higher. The 'engineered' performance of stocks defies fundamental logic, but to bet against the tape reduces opportunities.
September 18, 2009, 4:30 pm ... Closing Thoughts ... The Standard & Poor's 500 index closed the week up 2.81 to 1068.30, as stocks posting the biggest advances with lower-quality companies sporting weak and questionable balance sheets that traders just a month ago believed were going out of business. Consider the FREE MONEY factor for the anomaly. ... Trading was heavy because of the occurrence of a quarterly "quadruple witching," which marks the simultaneous expiration of four kinds options and futures contracts, but did very little to the market's underlying enthusiasm. ... Underreported: The next foreclosure crisis in the country's housing downturn is just weeks away -- payment option adjustable rate mortgages will begin to be reset. "Payment option ARMs are about to explode," Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama's administration to discuss ways to combat mortgage scams. "That's the next round of potential foreclosures in our country," he said. Because the new monthly payments can be five or 10 times what borrowers are accustomed to paying, they "threaten a much greater hit to the consumer than the subprimes," Goddard said, referring to the mortgages often extended to less credit-worthy borrowers that fed the first wave of the financial crisis. The mortgages tend to be "jumbo," or for significantly large amounts, Goddard said, making it even harder for borrowers to sidestep foreclosure. He said he expected to see an increase in scams as distressed homeowners become more desperate to refinance big debts. ... Underreported .. Stinky Pants Geithner said an emergency program that had guaranteed as much as $3 trillion in assets in money market mutual funds was being allowed to expire Friday. "As the risk of catastrophic failure of the financial system has receded, the need for some of the emergency programs put in place during the most acute phase of the crisis has receded as well,' Stinky Pants said in a brief statement that the financial system was healthy enough to begin unwinding some of the programs put in place a year ago after the collapse of Lehman Brothers triggered the worst financial crisis in seven decades. The program to guarantee assets in money market mutual funds had originally been established in September 2008 to last for three months but was then extended through Sept. 18 of this year. Treasury said it had suffered no losses under the guarantee program and had earned about $1.2 billion in participation fees paid by money market mutual funds. The program had been established after a large money market fund called the Reserve Primary Fund "broke the buck" -- meaning the value of its underlying assets fell below $1 for each investor dollar put in. The funds are a mainstay of financial management for U.S. families and companies, regarded as safe and easily accessible investments that offer returns exceeding those of conventional savings accounts. They generally invest in the safest types of debt such as Treasury bonds. ... A single "broke the buck" by any of the many funds in this category would trigger at 60 percent decline in equities. Use this barometer to monitor the health of the equity market, not just in the U.S., but globally as while.
September 18, 2009, 7:00 am ... The Standard & Poor's 500 index futures are up 1.20 to 1074.00, as lack of major economic indicators leaves traders with limited issues whether to take profits ahead of the weekend or remain committed. Add to the quandary -- more volatile due to an effect called "quadruple witching," in which four different types of options and futures expire, potentially causing stocks to whip about before the close. ... Meanwhile, oil prices weakened Friday, dampened by concerns that a recovery in U.S. demand may be slower than expected and as stockpiles of refined products continued to rise. By midday in Europe, benchmark crude for October delivery was down 67 cents to $71.80 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 3 cents to settle at $72.47 on Thursday. U.S. government data also indicating that economic recovery would be slow, which may mean less demand for energy in the near term by the world's largest crude user. ... Weekly new claims for unemployment benefits in the U.S. fell to the lowest level since July, while housing construction in August surged to the highest level in nine months. While on the surface that would suggest energy consumption may rebound, the jobless numbers remain far below levels that would indicate a healthy economy. ... UK retail sales were unchanged in August compared with the previous month, casting doubt on the strength of the recovery in consumer spending. Sales growth in July was also revised down, from 0.4% to 0.2%, the Office for National Statistics said. Food sales growth was more than offset by falls in clothing and footwear. ... In Asia, Japan's Nikkei 225 stock average fell 0.7 percent to 10,370.54. Consumer finance firms fund much of their high-interest lending to consumers by borrowing from banks and other institutions at lower rates. Indeed, weakness in Japan, which shows the financial sector remains shaky despite unprecedented government support, added to worries that markets have overestimated the strength of any economic recovery. "The markets have shot up a lot and the prices are getting too high. We may have room for more gains but you have to be careful," said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. "The economic fundamentals still aren't so good, and I think we may be getting near the last uptick in this rally." Hong Kong's Hang Seng dropped 0.7 percent to 21,623.45 and China's Shanghai index lost 3.2 percent to 2,962.67. Australia's market shed 0.5 percent. Bucking the trend, South Korea's Kospi gained 0.3 percent to 1,699.71. ... Use resistance at 1105.40 and change support at 995.20. The 'engineered' performance of stocks defies fundamental logic, but to bet against the tape reduces opportunities.
September 17, 2009, 4:15 pm ... Closing Thoughts ... The Standard & Poor's 500 index was down 3.27 to 1065.49, as traders discounted the weekly employment data. The reports on housing and manufacturing provided no insight into the economy. A surprise drop in unemployment claims Thursday couldn't fuel another day of gains for the stock market. The Labor Department said workers filing for jobless claims for the first time dipped to 545,000 last week from an upwardly revised 557,000 the previous week. Dartline expected claims to rise. Separately, the Commerce Department said housing starts increased in August to their highest level in nine months amid a jump in apartment building. Housing starts rose 1.5 percent to an annual rate of 598,000 units last month, just below the pace economists had forecast. ... The Philadelphia Fed's index of regional manufacturing conditions rose to 14.1 in September from 4.2 in August. The latest figure is the highest since June 2007 and the second straight positive reading. However a drop in new orders from August remains worrisome. ... Bond prices jumped, pushing yields lower. The yield on the benchmark 10-year Treasury note fell to 3.39 percent from 3.48 percent late Wednesday. The dollar was mixed against other currencies, while gold prices fell. ... Crude oil fell 3 cents to settle at $72.47 per barrel on the New York Mercantile Exchange. ... As previously report in Dartline's Yearend Summaries --- an update on U.S. Employment: Unemployment in the United States will peak in late 2011 not 2012 because the recovery from the global economic crisis is being underwritten by FREE MONEY policies. Even as the global economies stabilize from worldwide government schemes to pump money into the financial markets a double-dip recession is probable and will cause a 50-percent retrenchment in equity prices.
September 17, 2009, 7:00 am ... The Standard & Poor's 500 index futures up 2.20 to 1065.70, as overseas markets rose on trader confident economic rebound is worldwide. Britain's FTSE 100 rose 0.8 percent, Germany's DAX index gained 0.5 percent, and France's CAC-40 rose 0.5 percent. The gains in Asia tracked Wall Street's eighth rise in nine sessions after the Federal Reserve said industrial production jumped 0.8 percent in August -- a possible precursor of greater U.S. demand for mainstay Asian exports like cars, gadgets and computer chips. The news came a day after helicopter Bernanke said that the recession was over. ... Most of the biggest gains in global markets this year have been in Asia, driven in part by unprecedented liquidity from government stimulus spending and low interest rates set by central banks. "Asia is outperforming right now, but this is primarily liquidity driving the market up," said Peter Lai, investment manager at DBS Vickers in Hong Kong. "I feel the upside opportunities are quite limited but the downsides risks are high, and many people may start looking for opportunities to take profits." ... Japan's Nikkei 225 stock average was up 173.03, or 1.7 percent, at 10,443.80 as the central bank raised its assessment of the world's second-largest economy and kept interest rates at 0.1 percent to nurture a recovery. Hong Kong's Hang Seng gained 1.7 percent to 21,768.51, China's Shanghai benchmark rose 2 percent to 3,060.26 and South Korea's Kospi added 0.7 percent to 1,695.47. Elsewhere, Australia's market jumped 1.4 percent and India's Sensex was up 0.5 percent, while Thailand, Malaysia and Taiwan are also up. ... The unemployment report is due out at 8:30 a.m. EDT. The Labor Department is expected to say the number of workers filing for unemployment benefits for the first time crept slightly higher last week to 555,000 from 550,000. Whatever the number, look for positive spin to keep stocks moving higher. Forget the fact that the "official" unemployment is 6.1 million, while the real number is closer to 14.5 percent when considering all groups. ... The Commerce Department releases the report at 8:30 a.m. EDT on housing starts. Dartline predicts construction of new homes and apartments likely grew by 3.3 percent in August to a seasonally adjusted annual rate of 600,000. Building permits, seen as a strong indicator of future activity, are expected to have risen 3.6 percent to an annual rate of 580,000 units. A collapsing housing market in 2007 -- with mortgage defaults rising sharply and home prices and sales tumbling -- was a key driver of the recession. Recent reports on the sector have shown the housing market is beginning to recover, which is considered one of the primary drivers needed for renewed growth. However, with housing prices still contracting, the data appears suspect. ... Meanwhile, bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.46 percent from 3.48 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.10 percent from 0.09 percent late Wednesday. The dollar fell against other major currencies, while gold prices rose. ... Benchmark crude for October delivery was unchanged at $72.51 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. A weaker U.S. dollar has helped support oil prices. The euro rose Thursday in Asian trading to $1.4727 from $1.4706 the previous day while the dollar rose to 91.07 yen from 90.88 yen, Inventory data from the Energy Information Agency on Wednesday was mixed. Crude supplies dropped 4.7 million barrels last week, but gasoline stocks increased by 500,000 barrels and inventories of distillate fuels used for diesel fuel and heating oil rose by 2.2 million barrels. ... Use resistance at 1105.40 and change support at 995.20.
September 16, 2009, 4:30 pm .... Closing Thoughts ... The Standard & Poor's 500 index closed up 16.13 (1.56%) to 1068.76 on a strong tape and few sellers. Dartline's Post stocks, two of which, General Electric (GE), International Business Machines (IBM) kept the rally honest will robust gains. ... The "recession was likely over " was the noise pundits and financial media used to justify the run up. ... The gains also followed upbeat economic news -- the Commerce Department said its Consumer Price Index, a measure of inflation at the retail level, rose 0.4 percent in August, while the Fed said industrial activity surged 0.8 percent in August, better than the 0.6 percent forecasted. The Fed also revised July's figures to a 1 percent increase, twice as much as originally reported. ... Underreported: U. K. unemployment jumped to its highest level for 14 years in the three months to July, while the number claiming benefits topped expectations, reducing hopes a speedy economic recovery, official data showed. The Office for National Statistics reported that, according to the broader International Labor Organization measure, U.K. unemployment rose by 210,000 to 2.47 million in the three months to July, its highest level since May 1995. That pushed the unemployment rate to 7.9%, up 0.7 percentage point from the previous three months and level with the 7.9% forecasted by Dartline. The ONS also reported that the number of people claiming benefits rose 24,400 in August from July's upwardly revised gain of 25,200 - also topping expectations of a 20,450 increase. The corresponding claimant count rate was 5.0%, the highest since August 1997. ... Bond prices were mixed. The yield on the benchmark 10-year Treasury note rose to 3.48 percent from 3.46 late Tuesday. The dollar extended its slide and commodities, including gold, rose. They are priced in dollars and become less expensive when the dollar weakens. How strange? A month ago, Obama Nation insured the Chinese he would defend the U.S. dollar. Apparently, the Chinese are in with the scam? ... Oil rose after the government reported a large drop in crude supplies. Light, sweet crude $1.39 to $72.32 per barrel on the New York Mercantile Exchange. ... Overseas, Britain's FTSE 100 gained 1.6 percent, Germany's DAX index rose 1.3 percent, and France's CAC-40 surged 1.6 percent. Japan's Nikkei stock average rose 0.5 percent.
September 16, 2009, 7:00 am ... The Standard & Poor's 500 index futures up 5.70 to `051.60, on continual momentum from helicopter Bernanke's comments that the recession has ended. ... Data from the Fed at 9:15 a.m. EDT. on industrial activity will show output at the nation's factories, mines and utilities rose in August. Jump in production at auto plants was the factor based on the Clunker scheme. Even though a temporary blip, traders will buy the news and run with it to confirm the economy is back on track. No true, but so what? ... The Commerce Department releases its Consumer Price Index, a measure of prices at the retail level. Dartline predicts inflation remained in check in August, with the index rising 0.3 percent, after a flat July. Excluding volatile food and energy prices, look for a 0.1 percent increase. The report is due out at 8:30 a.m. EDT. ... Overseas, Japan's Nikkei stock average rose 0.5 percent. In afternoon trading, Britain's FTSE 100 gained 1.4 percent, Germany's DAX index rose 0.8 percent, and France's CAC-40 surged 1.3 percent. ... Meanwhile, bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.42 percent from 3.46 percent late Tuesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.14 percent from 0.12 percent late Tuesday. The dollar fell against other major currencies, while gold prices rose. ... Use resistance at 1105.40 and change support at 995.20. Don't bet against the tape and stay focused on the the level of negative news being 'spun' positively.
September 15, 2009, 4:30 am ... Closing Thoughts The Standard & Poor's 500 index closed up 3.29 to 1052.63, as traders made big bets that the economy is strengthening. Retail sales jumped 2.7 percent in August by the biggest amount in three years with the materially help of a FREE MONEY scheme. Even after stripping out the sizable gains from the government's Cash for Clunkers, sales rose 1.1 percent, ahead of the 0.6 percent expected by Dartline. Whether the data is consistent with other trends remains irrelevant when the herd wants to believe. However, the BIG NOISE to get the market hopping was --- Helicopter Bernanke saying, " ... the worst recession since the 1930s is very likely over." ... In other trading, bond prices fell as the dollar rose. The yield on the benchmark 10-year Treasury note edged up to 3.46 percent from 3.43 percent late Monday. Crude oil rose $2.07 to settle at $70.93 a barrel on the New York Mercantile Exchange. ... Citigroup (C) - last $4.13 is in talks with U.S. officials about selling part of the government's 7.7 billion shares in the bank. How such a sale would work is unclear. The intent would be to execute a joint stock sale in which the bank would issue as much as 500 million new shares to the public, while the U.S. Treasury would sell an undetermined portion of its 34 percent stake. Under the scheme, Dartline projects that the government would get their original investment back and retain a smaller stake that would be liquidated over time and within conventional market dynamics.
September 15, 2009, 7:00 am ... The Standard & Poor's 500 index futures down 2.70 to 1040.80, while Germany's DAX was down 0.2 percent at 5,607.99 , Britain's FTSE 100 down 0.1 percent to 5,015.63 and France's CAC-40 up 0.1 percent to 3,735.55. Asian markets were mostly higher. ... Consensus by pundits --- equity prices were not overvalued after rallying in recent months as analysts forecasting a 2 percent increase in U.S. retail sales for August, excluding auto sales. Whether retail sales holdup is not the issue, but the perception that 'things are getting better.' Considering that consumer spending accounts for 70 percent of the U.S. economy and 20 percent of the world economy, its outlook is crucial for an improvement in market sentiment. The fact that much of the gains in retail sales was caused by the 'cash for clunkers' schemes suggests weak demand ahead. ... In Germany, the ZEW institute's monthly confidence index -- which measures investors' outlook for the next six months -- rose to 57.7 points in September from 56.1 in August. "The economic expectations for Germany are consistent with the picture that the German economy is recovering, but at a slow pace," ZEW head Wolfgang Franz said in a statement. The ZEW said that the financial experts it surveyed are more optimistic about private consumption -- although prospects for the coming months are weighed down by the recent end of a government car-scrapping bonus scheme and by expectations that unemployment will rise. ... In Britain, official data showed inflation fell back to 1.6 percent in August from July's 1.8 percent amid lower food costs and domestic energy bills. Analysts were forecasting a sharper fall to 1.4 percent but expect the inflation rate to keep sliding in coming months. ... Oil prices were down modestly in European trade as investors weighed concerns about weak crude demand against hopes for a global economic recovery. Benchmark crude for October delivery rose 11 cents to $68.97. On Monday, the contract fell 43 cents to settle at $68.86. The dollar rose to 91.11 yen from 90.89 yen and the euro fell to $1.4589 from $1.4627. ... At the moment the herding effect confirms a social phenomenon that the collective feeling among investors is progressively positive that all is well in Stockville. Therefore, the economic data does not need to confirm the truth except to suggest better data ahead. ... Change resistance to 1105.40, while maintain support at 975.59 until a close above 1050.90 is confirmed. The 'engineered' performance of stocks defies fundamental logic, but to bet against the tape reduces opportunities.
September 14, 2009, 4:15 pm ... Closing Thoughts ... The Standard & Poor's 500 index closed up 6.61 to 1049.34, as less is more when have traders had little economic news to provide insight. Reports on retail sales, inflation, industrial production and housing are due later in the week. Obama Nation noise had no effect on stock prices, while warning the financial industry against the type of recklessness that led to the collapse and freeze of the credit markets that almost killer the world's economies. Apparently, buying the market dips is the main agenda, even as the six-month run pushed stocks in the Standard & Poor's 500 index up more than 50 percent. At least 60 percent of the jump was directly attributed to the misadventures of traders playing the market short and getting slaughtered more the a dozen times. ... Crude oil fell 45 cents to $68.84 a barrel on the New York Mercantile Exchange. Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.41 percent from 3.35 percent late Friday as the dollar traded mixed against other major currencies, while gold prices fell. ... Overseas, Japan's Nikkei stock average fell 2.3 percent. Britain's FTSE 100 rose 0.2 percent, Germany's DAX index lost 0.1 percent, and France's CAC-40 dropped 0.1 percent. ... At the moment, fundamentals are being discount based on P/E levels and dividend yields. Indeed, the market is grossly overvalued, but trader optimism clearly points to further robust gains. However, being careful and prudent still has value.
September 14, 2009, 7:00 am ... The Standard & Poor's 500 index futures down 8.40 (8%) to 1028.80, as international markets worked lower. Japan's Nikkei stock average fell 2.3 percent, while in afternoon trading Britain's FTSE 100 declined 0.7 percent, Germany's DAX index fell 0.8 percent, and France's CAC-40 dropped 0.9 percent. ... Oil prices fell 77 cents to $68.52 a barrel in premarket electronic trading on the New York Mercantile Exchange. Meanwhile, bond prices were little changed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was flat at 3.35 percent compared with late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.14 percent from 0.13 percent late Friday. The dollar rose against other major currencies, while gold prices fell. ... Underreported by financial media: Associated Press-GfK poll showed that 80 percent rates the economy as poor and a majority worry about their own ability to make ends meet. The survey of 1,001 adults with cell and landline telephones was conducted from Sept. 3-8 with a margin of sampling error of plus or minus 3.1 percentage points. ... The pessimistic outlook sets the stage for President Barack Obama as he attempts to portray the financial sector as increasingly confident and stable and presses Congress to act on new banking regulations. The public sentiment also poses a challenge to central elements of Obama's governing agenda. Half of those surveyed said deficit reduction should be a national priority over increased spending on health care, education or alternative energy. The president, in a CBS interview that aired Sunday on "60 Minutes," acknowledged the public's quandary. "This is a very difficult economic environment. People are feeling anxious," he said. "And I think it is absolutely fair to say that people started feeling some sticker shock." Financial institutions bore the brunt of the criticism -- 79 percent of those surveyed said banks and lenders that made risky loans deserve quite a bit of the blame. Sixty-eight percent held the federal government responsible for not adequately regulating banks and 65 percent blamed borrowers who could not afford to repay loans. Yet, 17 percent of those surveyed said the government's massive economic stimulus has improved the economy, a 10 percentage point increase over July. Nearly six out of 10, however, said they are not confident that $787 billion that Congress approved to lower taxes and inject spending into the economy will do any good. .... Continue to use 1044.10 in the S&P 500 index as resistance, while 975.59 as support. The 'engineered' performance of stocks defies fundamental logic, but to bet against the tape reduces opportunities. However, a short side bias would be advisable.
Beat the Dart is Wall Street's best source for investment advice and stock picks, featuring the unique Subjective Probability Model, better know as SPM+Game Theory matrix. Syndicated with Investment Message Board, Stock Research Bulletins, Dartline financial news commentaries and Investment IQ Forecasting, BTD Stocksmirf should be your primary Stock Research Center. Whether an institutional manager, day trader, investment club participant or private investor, you cannot beat the Dart for the best and personal investment ideas. Follow Free Zone's Market Outlook and/or Morning Line at the top of the page to the get the most successful research tools available today.