Monday's VUE 4/29/2013

Monday's VUE 4/29/2013

Good Morning to all... I hope you all have a wonderful Monday morning.  Our daffodils are blooming so nicely this spring.  We love daffodils as the deer don't bother them, and the flowers are sooo cheery.

I won't rehash Friday's trading.  It is what is was or something or another.  

The stock markets around the world are up.  Italy and the European Union are operating on hopium.  The hope Italy has solved its government.  It hopes France does not loose AAA credit rating.  It hopes the Spanish problem does not get worse.  It hopes the small countries (like Slovenia and Lichtenstein) do not have a run on banks. It hopes the Eurozone recession is over, as Germany shows improvement. Don't worry... Be happy.

Everything Is Rigged: The Biggest Price-Fixing Scandal Ever

http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggest-financial-scandal-yet-20130425?print=true  

If this article turns out to be correct in most of its facts, the middle class of the USA and Europe is doomed.  Read it yourself, and decide.  

I won't write any more today.  According to Google statistics, the only ones that read this blog on a regular basis is my 2 acquaintances from Germany.  The three of us will soon publish a newsletter in Germany (they get to translate my work), and there will not be a need for this blog.

I've attempted to show the average reader how to think about the big picture -- the global economy - without becoming an economists.  Some readers have responded back that investing is all about common sense.  Of course, your common sense and anybody else's common sense is not the same thing as it applies to investing.  Why?  Because of emotions -- our emotional reactions to money are different in every one of us.

I wish every single reader the very best.  This will be the last blog entry I make for this blog.

Friday's Musing 4/26/2013

Friday's VUE 4/25/2013

Good Morning All, 

The markets were choppy yesterday, but with fairlywide swings. The US stock went straight up from the closing for well over 1 hour. Then it hesitated, and the ups and downs were small.  Then the market hit a liquidation, and contrary to what you saw in the WSJ this morning, the market's movement was in overnight trading and the 1st few minutes of trading.  

Opening VUE

1. S&P 500 is trading lower overnight. Not much mind you.  This follows along with the Euro Stoxx 50 index which lost almost 1%.  
2. Today the GDP for the US was released. The numbers missed expectations.  The report prints a 2.5% growth rate. The bright spot was consumer spending. The net export gap worsened to $480 billion from $387 billion last reported.  
3. June 10 year notes (You can view TLT on stockcharts.com) are up this morning.  
4. The dollar index is slightly lower this morning. 
5. The Japanese Yen is trading higher as the BOJ left rates unchanged after their meetings yesterday.  
6. June crude oil is down this morning.
7. Most of the companies reporting earnings yesterday beat expectations.  Weyerhaeuser was particularly good.

What will happen today?  The bias leans toward the long side with the GDP report and the good earnings reports  Look for the first hour to establish the market's direction for the rest of the day.  

The opening in NY looks like this could be another choppy day.  Consumer sentiment economic report comes out at 9:55 PDT.  Sometimes this report will move the market.

Thursday's VUE 4/25/2013

Good Morning World...

Opening VUE:

1. Yesterday was extremely choppy as forecast in the Wed. VUE.  
2. The Jobless Claims report was much better than expected.  It was reported that 339,000 made new claims, down from 352,000.  The report is certain to be a positive influence on the USA stock market today.  
3. The US dollar is losing ground today against almost every currency.  This suggests a risk-on day (which again will be positive for overall stock market - not just the DOW).  
4. Gold and Oil are both up substantially.  
5. UK 1st QTR GDP printed stronger than expected.  Can austerity be implemented and still eke out a small growth?  UK has done so, and will certainly celebrate what would be a 1% growth in GDP for 2013. None-the-less, from an outsider's perspective, the UK has far too many problems before the currency and the country's ability to compete strongly.
6. Over night trading is up.  The trading suggests today could be a trend, and it could (did I stress could - not would) be to the upside.  Traders should be cautious, however.  Economic news in April overall has been poor (again with a good initial jobless claim today helping.

6:51 PDT -- The 1st half hour looks like we will have a choppy day in the stock market.  The good news was factored in when it was released.  At 8:00 AM today, the Kansas City Fed Manufacturing Index will be released.  It will not usually drive the market.   Robert Schiller (Yale Professor and important market mover) said "The 32-year decline of interest rates and inflation may soon end with a thud."  

I suspect Dr. Schiller is looking at the numbers on a classical basis, and is still not factoring in the demographic change that has taken place with the retirement of the Baby Boomers.  I will warn every reader, that demographics (and their interpretation) are very important (and interpretations controversial).

10:29 PDT - market is trending up, and not chopping at the moment.  However, the market has struggled going up.  I will remind my readers that Price is what Price is, and whether the market justifies the up-trend is not important.  What is important is the market is going up, but losing momentum after the 1st hour of trading.

Worth Considering:

As usual, the stock market and the economy are giving confusing signals.  As my readers know, I look at currencies to understand more about the global economy.  The following is information that MAY (stress may) assist in understanding of short term directions in the USA stock market.  

Japanese Yen:

Readers, if we look no further than the currencies.  After the tweet that caused a market crash this week and then a recovery in minutes, the stock markets world-wide fell as no-one (except the hacker) knew for sure the Tweet was a hoax.  The inter-relationships of the markets caused a reverberation throughout the stock markets: to be expected.  This is the global interconnectedness of global trading today, and it is the world of High-Frequency-Trading.  

However, the currencies in the FOREX market did not move substantially against the US dollar.  The Euro, the Pound, the Swiss Franc, the Canadian dollar and the Australian dollar had a very muted reaction to the uncertainty.  It was a non-event.  

The EXCEPTION Japanese Yen:

The Yen indeed had a reaction and it mirrored the US stock market.  

(From ForexFactory.com)

Now that is interesting, because it provides us retail traders insight into a murky world called High Finance.  

While relationships like these may be temporary, they are important now due to the central banks QE.  (Such relationships may disappear if the markets are ever allowed to be "free markets" again.)  
There is little doubt there is a direct relationship between the path of the US indexes and the Japanese Yen ever since Big Abe took over Japan's leadership.

In order to understand then risk/on risk/off trading (because fundamentals - as asserted in this blog - have minimum effect now on equities at this point) the Japanese Yen provides the insight.

The Yen currency is weakening.  Do you have any doubts about that?  We could look at the USD/YEN pair, but that is confusing.  Instead, let's look at the futures contract from CME.

This is a "crash" if you are invested in YEN, but a god-send if you invested in the S&P 500 or the Nikkie Index. Do you understand that?  Now I will overlay the S&P 500 futures contract over the YEN (just daily, because the mini-crashed happened in only a few minutes).  

The chart shows Japanese Yen and the S&P 500 in 2013 are directly (and inversely) related.  As the YEN decreases in value the S&P rises.  (This holds true for the DOW as well.)  

As of yesterday, then, the YEN has shown strength at the bottom (technicians may be tempted to call this a double-bottom).  

This is clearly a risk-on correlation.  The concept is to use this a guide to what to what may occur in the US stock market on any real strength in the Yen.  Or in other words, investors would take out more insurance on long positions if the YEN strengthens.  

Watch for the YEN (FOREX markets) to "drop" to 92. If you want to get a better "FEEL" of how the "big money" thinks watch the risk-on / risk-off trade in Dollar/Yen.

If we think there will be a June swoon (ah those SF Giants and their June Swoon) then the Yen should provide warning.  If the Yen continues to weaken any upcoming pullbacks in the S&P 500 (and DOW) will likely be weak similar to what we are able to observe all through 2013.  Or in other words, any correction will be shallow and brief if the Yen continues to weaken.

You can get free charts at www.forexfactory.com on the USD/YEN pair.  
Finally - a should (but will it) 
Any break of the above 100 on the above chart will propel the S&P 500 above 1600.  If you've studied the "carry trade" you will fully understand why. 

Wednesday's VUE on Gold 4/24/2013

GOLD

What is with all this fascination with gold?  Just because the price of gold plummeted last week, it seems to me I'm hearing about gold and silver as if we are having a run up in price - not a crash. 

OK, according to Zeb's philosophy of investing :) we want to invest long in things that are going up and sell things that are going down.  There, it is that simple.  Buy low - sell high (or sell high and buy it back low).

No wait, human behavior is never that simple because we have all kinds of emotions attached to MONEY!.  For those that do not get upset by the Christian Bible: "For the love of money is a root of all kinds of evil.  Some people, eager for money, have wandered from the faith and pierced themselves with many griefs."  I Timothy 6:10.  

Now, view the USA's financial system (Federal Reserve, Banks and the liquidity), and then ask yourself what happens in those institutions when they pursue money at the expense of everything else?  They manipulate the currency and set up schemes that Ponzi would turn over in his grave with envy, and that gentle reader is why I study currency. The bankers have wandered from the faith -  and folks that faith is our faith as users of their services as a people that they will do what is honest and right executed with integrity.  They above all people must have integrity or we will lose faith -- this is not Christian faith in Jesus, but all people's faith in their government which includes currency and all finance. IN general politicians and bankers hate gold because it is very hard to manipulate gold's real value (whatever value means by the way).  

OK, Ron Paul, let me sidestep whether gold is money or not.  We can agree that gold for 1,000s of years is a store of value, and it is used off and on as a medium of exchange by the empire in control of the world.  We can also agree (Mr. Paul and I) that fiat money is always (in history) abused, and the "people" return to gold as a store of value.  

Let me try this on you.  Does it make any sense to you, that the price of any asset is what the price is?  The price is the only fact you have at this moment in time that is not questionable.  The only question is where is PRICE GOING from here?    If it is going up from here, give me some please, and a side helping would be welcome.  If the price is going down, I'll wait a while.  After all it is my money, and nobody cares about my money like I do.  

Do you want to know what the value of gold in terms of time and price is at the moment?  Sure you do, and I will tell you.  But you are not going to like it.  As a very general estimate, value is where most of the trading has taken place since the top that was reached September 5, 2011.  The number is more valuable if it is also an even number, something that humans react to, and there is no magical reason they should: they just do.  

And that number is?  1600.00.  

We are far below that, and yet taking a longer view, gold (and precious metals) are only in a correction.  Another behavioral measurement traders do is to look for a 50% retracement from the previous low to high.  

October 1, 2008 was the last significant correction before the high in 2011.  The low was 681 on the current futures contract.  The high on 9/2011 was 1923.70 (I thought I was going to be rich :(  That is a 1,242.70 move (round to 1242). 50% of 1242 is $621.00, and 1923.70 - 621 = 1302.70.  Would you like to see this?  Come on, you know you do, but be reminded that all your life you've been told that numbers are not meaningful; only science is.  None-the-less, all trading programs that try to measure human behavior (and take advantage of it) use these numbers.  There is no other explanation for how consistent certain patterns occur for no scientific or rational reason.

The following is a monthly chart:

 

The market turned and bounced upward close enough to the 50% retracement as to be, well astounding.  Now go back to the comment on 1600, and we have a tradeable range (not an investment - tradeable) between 1600 and 1300.  (Round the 1302 to 1300, and you will find this number, 1300, being analyzed and rehashed by all the talking heads.)  In the context of the long range, gold has nowhere even began to reverse the trend.  (Wait - though -- one is not ready to invest in a market like this because the market must consolidate and determine what the price that fair value is.  Is it in the range I just discussed?  Which brings one around to understanding liquid markets through Auction Theory and Behavioral Finance.  Dr. Richard Thaler discusses this in "Advances in Behavioral Finance".  However, Auction Theory is another field of study was started at Chicago Mercantile Exchange. )

Let's look at Gold on a daily basis, and the drop looks like and feels much worse than the monthly chart.

If you sat through this decline, then your goals are either as a long term investor or you are collecting gold (and silver) for possibly chaos.  Ha... I just know you are asking (not!! unless you are technician) does the 50% retrace hold on the upside?  Well if it does, look at 4/9 and measure to the low on 4/16.  THat is $268.60 --   50% * 269 = 135 -- from the low it is 1321.50 + 135 = 1456.50.  Interesting, Gold as of yesterday was not that far away from that point.  

Will you buy if it penetrates that point?  Well that depends on your system of determining when to buy in.  Investors should not in any way be buying at that point.  Patience is a virtue. AND DON'T YOU FORGET IT. (Would someone remind me of that everytime I get impatient on the fear or the greed side?) 

Ending on this note:

While the drop has spooked many people, others see this as an opportunity to accumulate the metal.  

That is fine, except the spread on the bid ask price of physical bullion has skyrocketed.  The premiums have gotten out of hand.  Asset Strategies International (ASI) is a boutique precious metals company.  My history with them is they treat one correctly, and Rich Checkan told me that Silver Eagle Coins are selling at a 24% premium to silver prices right now.  

Folks, that is no way to make money if you are investing.  Silver has to rise substantially to cover the premium cost, and we can expect the premium to narrow (which means you loose premium if you liquidate). Then you also have to pay commission.  

Just a few months ago, you and I could buy silver bullion coins for just 4-5% over the spot price.  

Forget about buying "junk silver".  Junk silver coins have been very popular ever since Howard Ruff recommended them back in the '80s.  It use to be easy to buy a bag of coins for about 4% over spot price, but not anymore.  There is very little supply on the market in the USA.  

Gold Bullion is available, but you must not buy it from your local gold dealer (unless you know she/he is reputable).  When you buy gold bullion coins be sure they lock in your price.  Reputable coin dealers will lock the spot price when you wire in your money, and even if you have to wait weeks for delivery you know what you paid per ounce.  

Finally, investing in any asset is about determining your BELIEF in the "big picture".  If you believe there will be global inflation in the next 5 years at the level we observed during President Carter's regime, then buy all the precious metals you can afford to buy.  However, here is a warning:  We are still in a deflationary stage -- which means liquidation of debt (and liquidation does not mean it is getting paid off).  (OK, gentle reader: I believe in portfolio allocation, but I know as well as you do that putting all your money in one basket and then leveraging can make you very rich  - or very busted if you guess wrong in either time or price or both.) 

Inflation? Deflation?  What will it be?  

Returning to Mr. Sinclair...  http://www.jsmineset.com/  I don't know if the Federal Reserve has gold or not. What I do know is that GOLD AND SILVER ARE HOT HOT HOT on the spot bullion market.

For my friends in California:

======================== Source (M Lobardi, MBA)

Hong Kong-based Chow Tai Fook, the world’s largest jeweler by market capitalization, reports some of its stores are completely sold out of gold bullion bars. The company said it has not seen demand like this for gold bullion since the 1980s. (Source: Financial Times, April 22, 2013.)

The Hong Kong Gold & Silver Exchange Society says it has run out of the majority of its holdings, as the society’s members are struggling to meet the demand for gold bullion from retail customers.
Meanwhile, volume on the Shanghai Gold Exchange reached a record high on April 22, when 43.2 metric tonnes of gold bullion changed hands. That’s a 42% increase in trading volume from April 19. (Source: Shanghai Gold Exchange web site, last accessed April 23, 2013.) China is the second-largest gold bullion purchaser in the world after India.

Similarly, sales of gold bullion at the United States Mint are nothing but robust. So far in the month of April, the U.S. Mint has sold 175,000 ounces of gold bullion in coins. In April of 2012, the Mint only sold 20,000 ounces of gold bullion in coins. Demand for gold bullion coins has increased 775% from the same period a year ago. (Source: United States Mint web site, last accessed April 23, 2013.)

And yesterday, the U.S. Mint reported it ran out of small American Gold Eagle coins. Sales of coins weighing one-tenth of an ounce were stopped due to strong demand.

Moreover, the demand for the other precious metal, silver, is very strong too. Demand for silver, according to the U.S. Mint, is up 100% so far from this time last April. The Mint has already sold almost 3.07 million ounces of silver in coins in April, compared to only 1.5 million ounces in April of 2012.

That sounds like awfully good marketing material for a business based in Silver.  

Look at:

http://www.gravyboatantiques.com/gravyboatantiques.html  They will be happy to discuss a business in silver that may reduce the premium to be paid at the moment.  

Wednesday's VUE 4/24/2013

Wednesday's Musing

Good Morning Investors.  Are you having a good day?  I hope so. 

Over the weekend I had decided to stop publishing the Hitchiker's Vue, as it did not seem to be helping anyone. (Or at least I had no feed back that it was helping.  I get several comments, but they are usually questions about investing in this or that; not comments that would be helpful to expand on the big picture.

Then out of the blue, yesterday, a couple of friends in California asked about Jim Sinclair's http://www.jsmineset.com/  You can read about Sinclair from his web site.  

I then committed to spend at least a week covering the gold market: not from the daily news perspective, but from an investment perspective.  What does that mean?  Investing in any asset requires you to have three things (that every one my age knows from the song the "Gambler" by Kenny Rogers).  

1. You must know when to enter the market.  
2. You must know your risk parameters and money management strategy
3. You must know when to exit (no when to stop out with a loss, or when to take your profits.

(Know when to hold them, know when to fold them, know when to walk away)

Mr. Sinclair is claiming there is no gold, and from the perspective of demand in the physical bullion and the markup in price, he is correct.  However, neither he nor I can know what the USA, Swiss, and others really hold in gold.  Hear-say and speculation does not really help us in investing. (However, if you are a trader, rumors are what drive the markets.)

Opening VUE:s

1. Yesterday's twitter hack caused a tremendous move in the stock markets.  Call this MIDDAY MADNESS.  Welcome traders to the new world order where technical snafus, hacks, high-frequency trading are tied to data real-time data mining using twitter (facebook, blogs and whatever).  A hack into Associated Press with a fake tweet, and boom, the market took a hit.  Then after the White House confirmed the President was all right and they confirmed the tweet was a hoax, the market recovered.
2. This morning , overnight trading in the DAX (Germany) suggests we will have a choppy day.  Look to the first 1/2 hour trading to give an indication whether we will have a choppy day.  All today's important economic reports are out, and the market is up slightly from yesterday.
3. Important:  The S&P 500 (and the DOW) have nearly erased the drop on 4/15/2013.  That was the morning that IBM, GE, and McDonald's plunged.  At the moment, there is every indication the market is headed up again.  WARNING:  Human behavior at this point is instrumental in what the market is going to do.  Now, how does one forecast what human's in mass are going to do?  Well, be attuned (in the short term 3-5 days) of support and resistance areas.  2013 high -- resistance  2013 low major support especially after the run up we've had.  Monthly (April) and Yearly high are the same.  Therefore, this is major resistance after the correction we've had.  The theory would be (if the big sharks don't run the stops) is that if the market penetrates this high, then we could observe a major move to the upside.  Even a blow-off move.  Don't go long unless you have a VERY good risk management plan.  Be sure to take out insurance on any long positions you have.  Yesterday indicates what can happen on the downside if any unexpected major event happens.
4. 
   

7:00 AM PDT

The overnight trading suggests a choppy day coming up, and the 1st half hour confirms this.  Unless there is some unexpected news that enters the market, the market has found value right at yesterday's close on the S&P 500. Right now the market is up fair value is positive.  There is no indication that program trading will be active at this point.

Friday's Musing 04/19/2013

Good Morning Everyone... an absolute great day...

Opening VUE:

• Thursday had a large number of economic news reports.   The economic leading indicators were disappointing, and investors are beginning to question if the global economy led by the USA is not headed into another recession.  Initial job claims increased as well.
• The price swings in the USA stock market are large (and violent).  This is the kind of market day-traders thrive in.
• Google and Microsoft released positive earnings late afternoon yesterday.  IBM, however, on a disappointing earnings report.
• The focus today will be on the G-20 meeting.  
• June 2 year T-notes are down just before the opening.  This usually suggests that traders (as opposed to investors) are looking to trade in risk assets today.  
• European stock indexes have rallied over night.
• Conclusion -- mixed opening...  Direction will likely be determined after the first 1/2 of trading in New York.

6:45 AM PDT

It may not be evident to most readers that the stock market can be indecisive during the opening in NY.  After all, last night the Asian stockmarkets and the European stock markets were way up.  

This morning INDU (DOW) headed down, while the S&P 500 and Nasdaq head up.  That is what I would call a mixed open.  

The downward pressure on the DOW will likely cause downward pressure on the other markets.  I look to the first 1/2 hour to set the opening range.  The breakout of that range to the upside will likely indicate the market will continue higher for the day.  A breakout to the downside will be find support at yesterday's close on S&P and Nasdaq.  The DOW is already negative.  

Have a look at Crude Oil.  Crude is up while the dollar is down.  The weaker dollar is putting a lot of upward pressure on Crude.  Crude Oil is one of the most volatile assets in the global marketplace.  Look for Crude to continue to climb, and in turn the US $ to fall.

Opening VUE

Good Morning Everyone... and here is to a very happy and prosperous day to you...

After several days in the gardens in the far north, I finished pruning an tying up the raspberries.  We seem to have caught a virus in the raspberries, and if so there is no cure.  It will require we move the patch and start again.  The patch has been with us for 12 years, and it was there long before we bought the property.   Well, until I get the energy to build a new place, I will do the best I can to bring a small crop through.  My daughter is working on the onions.  We need to get the peas in soon.  

Opening VUE

• After the move higher on Tuesday, the stockmarket on Wednesday continued to move lower.  The German DAX hit a four month low yesterday, and the weakness hit the US markets as well.
• Gold yesterday was still going down, but this morning is moving higher.
• We can expect a continue rise in volatility as measured by the VIX and by the range (high to low) of the day on the indexes.  There have been some large swings with the 2.3% decline on Monday as the point of performance (as Wednesday wiped out the Tuesday's gain).  
• S&P will likely to continue to test the 1550 level.  Because of the popularity of the 50 day moving average of all indexes, the "crowd" will be watching that level.  It is about 1542 on the S&P at this point,.  (There is nothing magical about MVA or any other number.  Behavior of people around those averages is what counts.)
• This morning, the S&P is trading positively as price is .2% above fair value.  
• The European market has rebounded over night, with rumors - love those rumors - the ECB will cut rates.  Also, the investors in Germany specifically seem to be in the mode of buying the dips.  
• Base metals (as reported a few days ago) has hurt the global economy outlook.  They are the building blocks for industrial growth, and large investment firms are concerned about what is taking place.
• While earnings continue (on the whole) to be excellent, revenue growth is weak across all companies except Goldman Sachs.  It all provides an indication that growth has stalled (possibly going down).  So, again a warning.  The market prices in the future expectations not what happens today.  (There is an exception to that observations.  Surprises in the news will affect the prices.)
• The initial claims report for April 13 showed a slight jump from 348,000 to 352,000.  At this point, the analysts are not expecting a large change in hiring (not more but not less), or in other words basically hiring is not picking up.  
• Gold - up slightly today.  If you have read this blog over time, you will know I've been reluctant to call Gold's direction.  I've heard the inflationary crowd call for $2,000 dollar gold this year, but that seemed unlikely to me as long as the sovereign debt crises in Europe and elsewhere continues. The money supply world wide is also contracting even though the central banks are printing money way beyond historical levels.  (That is a subject for my newsletter coming up.)  The pressures that are observable is still a world with huge debts.  Paying off or defaulting on debt is deflationary, and the central banks are trying to create inflation.  It is a war that one would think was being won by the central banks, but it appears they are just barely able to keep their noses above water. 
• At 7:00 AM PDT, the Leading Indicators from Conference Board will be released.  There is not expected to be any surprise.  If there is a surprise this is a report that will move the market.  However, what the report is most likely to show is small growth in the USA economy, and it will be spun by the pro-Obama-nation as positive, and by the doomsayers as proof the USA is ending.  

Market is Tanking --  

The leading indicators were down from a gain of .5% to -.1%.  The expectation was for a gain, and so this was not a good report.

Be sure to stay tuned, however, as the lip flappers in the Federal Reserve and later today from the G-20 will probably cause a reaction to the upside.  I would not be surprised if the market comes off the lows at the 50 MVA and/or yesterday's close and move to close higher than yesterday.  Wll it?  I don't know, but if I was a day-trader, I would be sceptical of this move down for today anyway.  

G-20 Meetings start today... 

Yawn...  

Japan continues to stimulate their economy at a rate that puts the Bernanke team looking like runners-up.  

Japanese Yen:

It will be interesting to listen to the G-20's reaction to Japan's announcements since last meeting.  Since the BOJ is printing $76Trillion dollars per month, it will double the monetary base of Japan within two years.  Wouldn't you stomp your feet and pound on the table with your shoe if you were China and the Asian tigers?  What we have to do is look at what Japan is doing against what the US is doing.  The Japanese economy is about 1/3 the size of the US, and is printing almost as much money per month ($76 B vs $84B) as the US. Japan is "shocking" as they try the "shock" treatment to a dead economy.

Brazil: 

Brazil's central bank hiked up their rates yesterday in order to stem inflation.  There is an oddity here (in my thinking) that needs more exploration.  While commodities tank in price across the world, Brazil is facing inflation. March consumer inflation breached the BCB's target range. The rate now stands at 7.5%.  

OK, that is it for 7:00 AM this morning.  Have a great day, and remember to Love because your are Loved. Don't wait until disaster strikes.  Hug your teenager (if they will let you), and always pray for them.  

Let's Review Housing

10:20 AM PDT

Corelogic www.corelogic.com provides useful information on property and financial data.  According to CoreLogic there were approximately 54,000 foreclosures in the US housing market in February.  In addition they report there were 1.2 million + homes in foreclosure inventory.  http://www.corelogic.com/research/foreclosure-report/national-foreclosure-report-february-2013.pdf

The top five sates with the highest level of foreclosure were the normal suspects: Florida, New Jersey, New York, Nevada, and Illinois.  

In addition, there are a large number of USA homeowners that have negative equity - where negative means the value of their home is less than the mortgage.  As discussed in this blog and  said discussion correlated with student loans, the first time home buyer is missing in action.  

Home builders are expressing worry again.  The National Association of Home Builders / Wells Fargo Housing Market Index (HMI) fell in April for the forth consecutive month. Currently the National Association of Home Builders (April 15, 2013) says HMI stands at 42.  Any number below 50 indicates that home builders view conditions as poor. The exceptions are in the south in Louisiana and Texas and in the far north in North Dakota where demand is far outstripping availability.  

Gentle reader, homebuilders see conditions changing long before the Case Schiller housing index picks up the trend.  Home builders pessimism should not be taken lightly, and maybe I do not need to remind everyone, but when times were good in the late 1990s, a huge percentage of US citizens were employed in home building, and employment in home building sector has not recovered.

These reports are contrary to the recovery in the housing market.  Yes, housing prices have increased, but they are far away from the highs made in 2006.  

The USA's Federal Reserve has pushed QEternity (IV) and mortgage rates have plummeted.  The Home Affordability Index - a measure to show if a typical U.S. family can afford monthly mortgage payments on a home - is hovering near its all-time high. Still, the family buyer is not buying, and first time buyers are non-existance (as shown above).  Of course, gentle reader, you will recognize that is because factors such as lack of jobs for young people, the salaries of people going down, and people who still have housing mortgaged before 2006 are under-water play into the lack of family buyers.

If we take the time to look back in the news and reporting while housing prices increased, we would observe that it was institutional investors how moved the home prices higher in the USA housing market through aggressive and massive absorption of depressed housing units. http://www.forbes.com/sites/morganbrennan/2013/03/18/wall-street-institutions-behind-home-price-surges-in-markets-like-phoenix/

If we exclude Texas, Louisiana  and North Dakota, and remove institutional investors was there any housing recovery?   

On the other hand, the stock market rise indicates that investors should not fight the Feds.  As long as the Federal Reserve continues to pursue its bond-buying program, it will place downward pressure on financing rates.  This will make housing improve - specifically, though, where employment is rising.  It is all about the Fed and easy money.  

As you can observe by today's Jobless Claims, March was not very good, and April is looking slightly worse than March.  With hundreds of thousands of people still claiming unemployment, jobs must improve.  

I wonder, however, if we do not have a chicken and egg scenario.  If home building can start across the nation, there will be a big increase in the number of jobs available.  But until jobs increase and pay increases, builders will be reluctant to go on a building spree, limiting employment.  

Here is how this (at this point in time only) playing out.  We can observe some softness in the amount of housing projects that are in the pipeline. The building permits reading fell to an annualized 902,000 in March, below the Briefing.com estimate of 955,000 and the 939,000 building permits in February. Watch this metric, as it may suggest that there is some slowing on the horizon for the housing market.

As usual, the data is confusing, as the Case-Shiller Index (which looks at the past and trends) show higher buying activity, but this apparently was mostly driven by institutions, not family buying.  

Opening VUE

Good Morning Everyone...
I've spent several days in a row pruning the Raspberries and helping with Onion planting.  It is a wonderful break from the norm, but I'm very sore.  I'm also reminded that I can no longer work physically at the same level I did even 5 years ago. 

Opening VUE

1. The stock market and the Gold market were in a reaction (to the upside) mode yesterday.  Observing the markets over the years, this is a normal occurance after a large "volume" day with a large price move (not choppy).  In general, value investors are looking to buy after Monday's drop, and the pressures (such as margin calls) have subsided a bit.  Every sector settled in the black yesterday.
2. I would caution, however, that whatever happens today (up or down) does not indicate the stock market or the gold market has stabilized yet.  Follow my advice on looking at the Gold and Stockmarket's P&F chart for Buy and Sell position. When they turn positive again, look for a strong upmove.  On a seasonal basis, Gold will enter a buying signal in May.  
3. The S&P rebound buying interest this morning is lacking.  The DOW and the S&P will open down.  Watch the opening to observe if the market's will close the gap created by overnight trading in Asia and Europe. If it does not do that within 15 minutes of opening, the probability is high the market will drop with Monday's low being support.
4. Sentiment over night has shifted to the negative in Europe.  Most of what is causing the angst is rumor as follows:
1. The sovereign debt of France could soon be downgraded.  It is even rumored Germany could be downgraded.
2. An Financial Times article highlights a view from a Chinese official that local government debt (in China) has spiraled out of control.  The article suggests the official  believes that things could end up worse than the fallout from the USA subprime mortgage fiasco.  
3. Renewed selling in Copper is being perceived as a potential signal that the global economy is not expanding, but contracting. Copper declined 3.3% in the futures market.
4. Earning reports are indicated there is relatively weak demand for goods (commodities and manufacturing) across the world.
5. Bank of America is one of the few in the financial sector who have not met expectations for 1st quarter earnings.  
6. Basically, though, most top-line growth is weak for most companies (Goldman Sachs and other investment banks are the exceptions).
7. When we look under the covers at the reports, the bottom line is being improved - not by sales - by cost cuts, share buybacks, lower tax rates and so-on.  That does not bode well for growth.

Boston

What was the point of this horrific attack on innocents?  Did you feel as I did when I first heard this, that hopefully few people were hurt?  Well, I know now that whoever did this was more interested in maiming people than killing.  That is considerably different than the bombing attacks in Pakistan yesterday.  

Oh the sorrow we feel for the people who were hurt and lives destroyed.  

I vowed after yesterday to not look at the photos of the carnage. I felt that if it was not my job to look at those pictures, that I would not look. The photos were not helping me, and I don't believe they are helping the people (hurt and not hurt) in Boston.

I will keep despair in check, but it does not change my feeling that it is getting more and more dangerous to leave my house. 

Did you hug your teenager today?  I don't have any teenagers, but I would hug everyone I could.  I would kiss my wife and hug my family.  None the less, I want love to remind me to love: not death and descuction to remind me to love.   

These unspeakable horrors do not happen just here in the USA.  In the last few years, Spain, UK, Ireland and so-on in Europe have had similar events with at least as much pain and suffering as the people in Boston.  Pakistan, Afghanistan, India and even China have experienced the agony of such events.

Help those who need help today.
GOLD

Gold is going down, and price  is what it is. Remember, no matter what the reasons, gold and all precious metals are down, and down in a devastating way.

The market prices reflect what people believe, and the behavior right now is to liquidate gold.  Do not try to pick a bottom.  Don't look for cheap stocks in gold miners.  Just conserve your cash.

What about people who are holding gold bullion in the form of bars or coins.  If this is your safety net, consider this drop in price in the physical commodities and opportunity to add.  Don't liquidate, because you have the physical asset.  If (and I do not know anything you do not know) this is the start of a major deflationary cycle, then the physical asset will always be there.

What about those people who were holding gold for long term appreciation,.  I hope you were following my blog or newsletters.  You would not be invested in gold stocks or other gold (agains except for gold you hold for emergencies).  If you own gold, liquidate and go to cash.  A deflationary period (again if that happens) will result in cash being worth more than now (you will be able to purchase more for the same $$$ (or Euro, or Canadian).  

What about those who believe in the end of the USA?  I'm not one of those, and so I don't know.  What would seem reasonable is to liquidate any paper assets (gold stocks, gold etfs) and buy gold coins. 

During this drop in precious metals, the coin vendors and the mints cannot keep up with the demand.  Does that mean there are more "end-of-the-world" people than one might surmise?

Tuesday's sorrows - the day after

Opening VUE

Our hearts go out to all the people hurt during the terrorist attack at the Boston Marathon.  My wife and I hurt for those with young that were killed.  But the loss of limbs among many of the people will be a source of suffering for them for many years. As leaders of the Red Cross in our area, we know of human sufferings during floods, tornadoes and fires.  We can only imagine physical and emotional suffering these people will have. 

Some of the worlds best people were hurt and for what purpose?

Life will continue, and we as a nation will turn our attention again to the problems of day to day living.  These events serve only to show that we live in a very dangerous and chaotic world.  The citizens of the USA (and those that visit big events) will not be protected by gun laws.  The bad guys (including street gangs and drug cartels) can always get explosives and guns.  

As you all know, yesterday was a huge down day on Wall Street and it was even a bigger loser in Gold and Silver.  The drops were happening well before the explosions.

Other than that, I would prefer that the USA would bow its head and take a break to remember that our families, our loved ones and our fellow citizens are important to us.  If you are religious, say a prayer, and include in that prayer, that our government will preserve liberty even in the face of these horrible events.

Monday Musing 04/15/2013

Good Taxable Morning To All of You in the USA.  

Tax day -- render unto Caesar what is is Caesar's. 

New at 11:17 AM PDT

QUOTATION OF THE DAY

"Smaller companies face greater headwinds. Is it G.E. or Caterpillar who will be hurt? Of course not. It's Joe's Deli."

IAN SHEPHERDSON, chief economist at Pantheon Macroeconomic Advisors, on the effects of the government's austerity measures.  (From the NY Times) 

Monday Opening VUE - 4/12/2013

1. New York Manufacturing is down, and it is down across the board.  You will not hear much positive "spin: on this today.   
2. More impactful is the economic reports from China overnight.  The economy missed expectations on GDP and industrial production for March. 
3. There are many quarterly reports coming out this week for important companies in the US (and Europe). THe National Association of Home builders report is due out at 10:00 AM EDT.
4. This is April Options Expiration Week.  During this week (especially toward the end) the price ranges expand.  Sometimes there is fireworks as April Options expire.   
5. Before the opening the stock market's fair value is way below 60. (This is listed as -8.50). This is a good indication that the market will be down substantially as it opens.  Where it goes from there may depend a good deal on the Home Builders Report.  
6. Gold is way down this morning, and even more concerning is the drop in commodity prices across the board.  Copper is down over 3% as of this moment (6:30 AM). Look for the materials sector of the stock market to be the largest loser today.
7. More to come as the markets get into full swing,.

Big Picture

The stock market opened down, and continues in that direction at 6:49 AM PDT.  The S&P 500 surged during the first quarter.  I suppose that means that investors (funds) had positive expectations for the Global Economy.  No matter how many warning signs (very negative warning signs) from Europe, they were discounted.  

I've maintained to my newsletter readers that it was about all the fiat currency floating around.  That money had to go somewhere, and there were less and less non-risky assets to park it that could take that kind of money.  The places that they could put the money was in the large cap USA/Europe stocks,  sovereign bonds, and so-on.  As the stock markets went up, the retail investor stepped in - particularly in March. Oh my, if they would just have read this blog.  Of course, I looked wrong for a good portion, but the main piece of advice was to take out insurance.   If you don't know how to trade options to cover your risk in the stock market, then you need to study and study and study.  

MIXED MESSAGES:

The S&P (and the DOW)  were giving mixed signals.  All during the first quarter for short-term and intermediate term traders, this was a risk-on market (meaning take more risk than buying USA bonds to return better yields.)  DOW Theory (something debunked by the best Universities), suggests that market action did not fit with the "MARKETING" message from the investment houses.

1. Counter cyclical sectors like health care and consumer staples scored the biggest gains
2. We heard over and over money was flowing out of notes and bonds, but that was a misrepresentation at best.  
3. Inventories (all businesses) were rising across the board.

On the other side, however:

1. Transportation was a leading market index, and as DOW Theory would have it, if we are in a true economic recovery, Transportations should lead the way.
2. Unemployment claims trend is the lowest in the past 4 years -- note claims is not the subject to the same manipulation as the BLS (BS data) about unemployed.
3. Stock market volatility collapsed (signalling no fear)...
4. Cyclical consumer discretionary, financial, energy and industrial sectors all outperformed the general market.

It is then easy to observe that the market's signals were MIXED.

Production Metal However:

However, the most mixed up part of reading the ECONOMIC Tea Leaves are the PRODUCTION METALS - Copper, Nickle, Tin, Aluminum, Zinc an Lead.  

If there was a global economic recovery, we should be able to observe Copper leading the way.  Underperfomance is an underlying issues with rising inventories.  We can look into the London Metal Exchange (LME) for the prices of metals globally priced in US $.  http://www.lme.com/en-gb/metals/non-ferrous/copper/ (The copper prices, invetnory and charts).  Why copper has several ETFs, things like Lead and Zinc's liquidity is limited. What is informative is the futures markets in these products.  Using data from LME we can create a perf chart which:

source LME

For the last six months inventories have risen.  The chart above, indicates that Copper inventories have risen the most.  What about prices, comparing one commodity (in this sector) with another?

Source LME

(You can chart this yourself if you get the CME futures contracts or access to LME's data.)

These factors are going to cause concern among investors over the "big picture" of the Global economy.  Base metals have not recovered as expected following the Chinese New Year celebration. (more to follow)

Nominal GDP

The US government (and China) along with most of the developed economies report GDP without adjusting for inflation.  Nominal GDP is reported adjusted for inflation.  (You get to study this stuff if you take economics, which no USA students seem to want to take.)  Here is what cliff notes has to say :  "Nominal GDP is GDP evaluated at current market prices. Therefore, nominal GDP will include all of the changes in market prices that have occurred during the current year due to inflation or deflation. Inflation is defined as a rise in the overall price level, and deflation is defined as a fall in the overall price level."  Of course that sounds like goobbledy goop.  How do you evaluate GDP at current market prices?  And therein lies a whole discussion on government reporting.

www.shawdowstats.com provides information on Nominal GDP.
http://www.shadowstats.com/imgs/sgs-gdp.gif?hl=ad&t=

Source Shawdowstats

In January, the government printed a negative GDP (just normal).  Analysts everywhere discounted any possibility of recession.  THe blamed defense spending and inventory drawdowns, but as I've just shown, inventory drawdowns in base metals was a myth.  If one observes the nominal GDP for the fourth quarter, the year-over-year real GDP growth dropped to 1.6%.

Such a year-over-year drop is rarely (if ever) seen outside a recession. And readers, this comes after trillions of $$$ in money printing by all central banks world wide.

Here is something for your trivia questions at dinner over a good glass of (whatever you are enjoying).  Since the 1980's what occurs when nominal GDP growth is below 3.7%?  100% of the time there is a recession, and if the USA government ever gets around to admitting it, the recession probably started in 2012.

I would only conclude from all of this that the USA economy is only able to keep its nose above water with huge stupendous injections of money into the economy through the Federal Reserve, and as long as QEternity continues, the USA economy will remain at "stall speed".  Here is what Citigroup (ugg) has to say:

The evidence presented in this essay points to a “stall speed” for U.S. real GDP growth. Specifically, when U.S. growth has cut below 1½ percent on a rolling four-quarter basis, it has tended to fall by nearly 3 percentage points over the following four quarters, and the economy has typically entered recession.  

http://www.aei-ideas.org/2012/09/study-u-s-economy-hovering-just-above-stall-speed-vulnerable-to-new-recession/

There is a useful article published in 2011 by the Federal Reserve defining the usefulness of "stall" speed: Forecasting Recessions Using Stall Speeds  Jeremy J. Nalewaik  4/14/2011.  http://www.federalreserve.gov/pubs/feds/2011/201124/201124pap.pdf

Of course Truman had this to say about that:

"Give me a one-handed economist! All my economists say, On the one hand on the other."  Truman, Harry S

But then Mr. Truman did not have access to the now famous law for disclaimers in investing:  "Past history does not predict success in the future."

There are too many moving parts that are in conflicting positions with historic data.  Weaker-than-expected data from the US and now CHina have ignited concerns that economic growth in the coming months will not meet the high-high expectations of the 1st quarter's investors.

Commodities with emphasis on base metals along with continued weakness in economic indicators, looks like trouble on the horizon.

Friday Vue - 4/12/2013

Friday VUE - 4/12/2013

1. Yesterday turned out to be a trend day to the upside, after a very large move to the upside the day before.  I can't help but think of that old country song:  Yesterday is dead and gone, and tomorrow's out of sight, let the devil be alone, lord help me make it through the night -- OK that is not how Kris Kristofferson wrote it, but that is how one must approach the market I think.  Hey if you want to be upbeat listen to Madonna's Celebrate -- that will get your blood pumping.  
2. Overnight, the markets overseas are down.  At the moment, the futures markets are going to open down, which will at least at first cause the DOW to drop.  Then who knows in such crazy exuberance (and huge amounts of liquid cash) floating around.  
3. Cyprus is in the news again.  So what?
4. Producer Price Index was announced today.  It is pretty weak while missing expectations.  Market expectations were for a .2% decline.  Food and Energy were pretty constant year-over-year at 1.7%.  Basically, this was/is a mixed bag.  Consumer Sentiment is due at 9:55...  
5. US Dollar is way up, as the overnight market turns toward risk-off trading.  
6. Gold is way way down.  I hope you have followed my blog on when to know if/when Gold has turned around.  In the meantime, if you do not have your store of physical bullion for safekeeping, now is the "golden" opportunity while the Feds can control the gold market.  When they fail (and they will), it may be too late to buy bullion, but a great time to buy gold/silver miners for intermediate term investment.
7. Remember, there is a slew of economic data to be reported today.  Go to http://bloomberg.econoday.com/byweek.asp and you can find all the reports on the calendar.  

Comment on Commodities: 

Gold is a commodity along with soybeans, wheat, rye, corn, meats and so-on.  The one thing to remember about commodities is they are seasonal, and you can track that seasonality.  Gold's seasonality is tied very closely to India.  When the consumer in India buys, Gold goes up (normally). However, as pointed out, the Federal Reserve through the too-big-too-fail banks have been shorting the market to drive the price down.  In the longer term, Gold is cyclical based on the cyclic nature of the economy. 

The IMF just published a report highlighting the importance of understanding commidity price fluctuations for commodity producing nations (South Africa, Australia, Canada, New Zealand, Brazil and so-on) and consuming countries - USA, Japan, China and so-on.  Commodity prices play an immediate and impactful role in economic growth, inflation and fiscal policies on both sides of consumer and producer country.  They went on to explain the Supercycle, which was amazing since almost every economic professor I've taken training from debunks "cycles", but then turns around and studies them constantly. 

At this point commodities are in the midst of bull super cycle.  At the moment, the central banks from consumer countries have been successful at printing unimaginable sums of money while keeping the price of commodities low.  

When you hear all the big banks and hedge funds talking against gold, remember, they are almost always (maybe always) trying to take advantage of the retail trader.  They could (and do) have ulterior motives -- they could be super-short and need the price of the asset to go down so they can cover the shorts.  

Be sure to use your head if you are intending to invest in gold or silver for investment.   On-the-other-hand, now is the time to accumulate a portion of your wealth to gold and silver coins when (not if) the USA government decides to become Cyprus on steroids.

USA:

I'm still thinking about the USA.  The economic reports were mixed this morning.  Some analysts will claim it is good - some will say "the sky is falling".  

Retail Sales were awful -  weakness was broad based.  Don't worry... @ 7:25 PDT the market is chopping since the opening.  It tried to go up, but then was brought down for whatever the reasons (could be the economic reports at 7:00 PDT).  Anyway, at this point, the full stock market is about where it opened.

CHINA:

• People's Bank of China (PBOC) is pushing the renminbi / Yaun higher vs the USA dollar.  Isn't that what the Obama-nation wants?  The Yaun hit a 19 year high overnight against the $, even though most currencies were down against the dollar.  
• The renminbi / yuan has had six straight weeks of appreciation.  
• Of course, this means that foriegn investment is flowing into China by the boatload.  Ultimately (assuming China wants the Yaun to be currency all trade is traded in - instead of the US $), the PBOC must keep appreciating the Yuan in order to keep investor's interest there. 
• China has leaked through one form of official and un-official channels their desire to have a floating currency backed by some percentage of gold.  Readers: That is a strategy to become the #1 economic super power in the world.  
• As long as all this optimism for China holds, Australia and New Zealand currency will benefit.  Please note my points on commodities and producer countries.  

   

Thursday VUE - 4/11/2013

Good Morning World --

cloudy windy and cold today.   I've got to get up the energy to go out and clean out the daffodils and crocus beds.  Everyone should have some daffodils to brighten up cold and windy days, and enrich your days when the sun beams on their faces.  (We would have tulips, but tulips are a deer magnet.)

Opening Vue:

1. President Obama has presented his budget.  The NY times has a very interesting and informative graphic "The scale of the President's Budget".  http://www.nytimes.com/interactive/2013/04/10/us/politics/obama-budget-comparison.html?nl=todaysheadlines&emc=edit_th_20130411&_r=0
2. Then the Wall Street Journal  -- William Poole, "A primer for Understanding Obama's Budget".  http://online.wsj.com/article/SB10001424127887323646604578405132295403060.html?mod=WSJ_Opinion_LEADTop  William Poole says "It will doubtless project a reduction in the federal budget deficit—a projection that journalists, commentators and policy makers should ignore. To do otherwise is to be complicit in fraud. Strong statement? Not really.   For 50 years or so the federal government has deliberately and to an increasing extent misstated probable future budget deficits. Democrats and Republicans are guilty. The White House is guilty. And so is Congress. Private firms that deliberately misrepresent their financial statements in this fashion would be guilty of a crime."
3. Now that I'm retired and I will add I spent a year assisting my Republican Congressperson to get re-elected, I can say I will not support the Democrats, and the Republicans would like to take away those things the Baby Boomers have paid into the government for years.  Except for what they spend on, the Democrats and the Republicans have misrepresented the corruption that exists, the commitment to cronies that exist, and the misrepresentation of spending and revenue that is rampant from the Office of CBO, White house, BLS (Burea of Labor Statistics), and so-on.  
4. And then Tuesday and Wednesday, the Federal Reserve (ah accidently) released the FOMC meeting minutes early to just a few of their closest friends in Congress (not all of Congress by the way -- just a few of their closest friends and lobbyists.)  Then, on Wednesday morning they decided to release the minutes, but not to the news agencies -- only to the big banks.  The general public did not get this news until at least 1 hour after it was released, but the big banks had it 19 hours before the markets opened in the US.  The most interesting (or disturbing)  part was the release in the morning after the NYSE was open for 30 minutes, and then not providing the FOMC minutes to places like econoday, briefing.com, and other Internet news until an hour later.  That should have been grounds for much more rhetoric than you will find.  All the focus is on releasing to the lobbyists early, but they compounded it dramatically -- http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/10/oops-fed-minutes-inadvertently-released-early-show-a-divided-fomc/  DON'T CARE.... Nobody in the Retail Public seems to care.
5. Yesterday was such a strong up day, look for today to be choppy.   

Wednesday Vue -- 04/10/2013

Good Morning World,

Opening Vue:

• News is really discounted as shown by yesterday's news and the DOW reaching new record heights. Alcoa kicked off earnings season -- news? - not so good.  The S&P500 had alternated between gains and losses 14 days in a row.  Yesterday ended that. I told you that several of the investment funds were expecting a "good" earnings season.  The stock market prices reflect expectations for the future: Not the reality of today.  Again, that is worth the price you pay for reading this blog.
• For example, the Wholesale Trade report was good as it showed inventories were being reduced.  The DOW was up with very small corrections after that report.  It is all about the future...  
• DOW continues to gain ground.  It has not had a 3 day losing season in 2013.  That is unusual enough, but the global economy has observed several very rough spots (including the USA).  And yet, price is what it is. -- Still my advice holds.  Take out insurance on any longs in the stock market you have.  Except for very long term investments, it is still a good idea to reduce the risk as much as possible -- take profits. 
• Yesterday's NYSE was paced by financial, consumer discretionary, consumer staples, transports and utilities.  This was actually a mixed reaction as everything participated - cyclicals and counter-cyclicals. 
• VOLUME WAS EXTREMELY LIGHT!!!  BEWARE!!!!  The gods must be crazy, and the winds could shift at any moment to the downside.  If you are a retail trader: Remember, it is you that the BIG SHARKS make their living off.  
• VIX (index $VIX) closed at 12.84 yesterday.  $VIX won't open until 9:30 AM EDT, but VXX - ETF from iPath -- is down.  If you don't know, VXX and $VIX move in lockstep for the most part, and both move opposite to the S&P 500. Often $VIX will lead the S&P by a very short time period - or in other words, if $VIX starts up, the stock market will start down immediately, or follow with in 1-2 minutes.  However, as usual with any relationships in the markets, anything is possible.  Basically, $VIX is indicating there is not much fear of any downward movement in the stock market.  
• There is one number that is calculated by the S&P floor traders that is useful if you are trying to determine what the probability of the stock market being up or down today.  This is the PIVOT number.  http://stockcharts.com/school/doku.php?st=pivot&id=chart_school:technical_indicators:pivot_points The main one is the Pivot point.  The Pivot Point is an average of the high-low-close from yesterday.  If the market is trading above this number after trading overnight, look for the market to pause if it pulls back to this point. When overnight trading is above this number, there is a way better than 50% chance the market will close up for the day.  This of course drives academics who study these things crazy, unless they apply behavioral economic theory to their studies.  Why?  Because according to the random walk theory, this kind of support (or resistance if the market is below the Pivot) should be no more than 50% chance of forecasting where the market will be.
• Stay tuned, and I will give you an update on Trader Commitment across the equities as I have time this morning.  
• At the moment, it looks like the DOW will open up, and Level II information is saying the same for NASDAQ.  Not so definitive on S&P 500.