Friday, December 20, 2013

Friday, December 20, 2013 Zeb’s VUE


General Information and Analysis

Global News:


Forex Probe Uncovers Collusion Attempts http://online.wsj.com/news/articles/SB10001424052702304866904579267901064067572

Global Investigation Has Reportedly Found London-Based Traders Worked Together in Trying to Manipulate Currencies.  The global probe has reportedly discovered electronic chat-room messages in which traders from several large banks swapped information about client orders.  The banks involved are the normal suspects: UBS, Barclays, JPMorgan, and Citigroup.

US


Comment for 12/20/2013
Measure
Indicator
Ranking
Weekly RSI (14)
WeeklyRSI
71.3
Neutral
Long Term MVA (200 day MVA)
200 MVA
9.19%
Bull
5 Day Slope of 55 day MVA
Slope55MA
0.73%
Bull
Intermediate Trend (Using ADX)
ADX(14)
17.6
Neutral
Short Term Trend (Daily RSI 3)
RSI(3)
70.64
Neutral
Relative Volatility (ATR% vs StdDev over last 90 days
ATR(90)
0.86%
Normal
VIX - MACD 10/30 (slope down)
MACD
0.002
Bullish
 
 
 
 
The market is Still bullish with normal volatility over the last 90 days.
 
 
 



The table above is a rating for intermediate and long term trend in the S&P500.  RSI (relative strength indicator from Wilder) and ADX (Average Directional Index from Wilder) provide an easy to understand way to rate strength and direction of a trend.    I used the S&P 500 as the indicator for the USA stock market.  For day traders: You may find it useful to trade in the direction of the intermediate to long term trend.  However, looking at any daily chart over lots of years, the trading direction for the day is pretty much random. 

  • Stocks – Yesterday saw the markets give back some of their euphoric gains from the Fed. Announcement.  The DOW, however, gained slightly. 

  • Fed holdings sailed through $4 trillion.  The balance sheet was reported this week as $4.01 trillion.  This action occurs while the Fed plans to scale back its bond-buying program to $75 billion per month.  In September 2012, the Fed held $2.82 T in assets (now $4.01).  Their balance sheet has quadrupled since 2008.  How long can this go one?  Think about that fact of $10 billion dollar reduction – still leaves $75 billion per month.  Suppose that continues throughout 2014.  That would be another $900 billion added to $4.01.  WOWWWWWEEE!!!

  1. Is it possible to put this in context? (The numbers are so huge they are not meaningful to the normal human I think.) 
  2. US Public Debt Outstanding $17,263,332,916,699.41 as of 12/20/2013 2:24 PM GMT
  3. Foreign debt holdings (China, Japan and others) $1.3 trillion and stable…  That means the Feds Balance sheet is nearly 4 times the size of all outstanding Foreign debt (except currency).  Social Security (USA) $2.6 Trillion…  Federal Retirement (USA) - $1 trillion.  All the rest is Domestic (Corporations, States, Mutual Funds, and so-on).    
  4. Why this does not scare the willies out of the politicos and the head of the Feds and Secretary of Treasury is beyond my comprehension. 

EuroZone

  • Standard & Poor's cut its long-term rating on the EU to AA+ from AAA, with a stable outlook, S&P said "The downgrade reflects our view of the overall weaker creditworthiness of the EU's 28 member states."
  • Consumer Confidence in Germany unexpectedly rose +.03 to 7.6.  This exceeded expectations, and is the highest level in over 6 years.
  • German PPI fell -.1% and -.8% Y.Y.  This is indicating that inflation in Germany and the very likely the whole Eurozone is not experiencing inflation. 

UK

  •   The November public borrowing was 14.8 billion pounds. This is exceed expectations (negatively), and it is the highest amount in 2.5 years. 

 Australia


  • Caterpillar (CAT) is expected to gain sales on Aussie Project.  The Import Bank approved an approximate $770M in government-backed financing for Roy Hill ore mining project in Australia. 

  • Cliffs Natural Resources (CLF) reports they will be hurt by this loan, as the loan from the Import Bank, in the opinion of CLF, favors US mining equipment manufactures.  Cliffs, however, is a USA based mining and natural resources company.  They hold a 45% economic interest in coking and thermal coal mine in Queensland, Australia (among a plethora of other mines world-wide).

China


  • The Chinese Stock market (Shanghai) is getting clobbered.  The suspect is that cash has tightened in China with increasing fears of another cash crunch in short-term money markets.  The seven-day repurchase rate soared to a six month high of 7.6% according to GlobalTimes (Chinese English newspaper). 
  • Bank of China made an emergency cash injection into the financial system yesterday.  Still, the Shanghai Composite closed -2% down.

Japan

 
  • Bank of Japan (BOJ) concluded its two day policy meeting.  As expected, BOJ pledged to maintain its stimulus program and expand its monetary base by approximately 70 Trillion YEN ($670 billion) until inflation reaches the 2% target.
  • McDonalds (MCD) is suffering in Japan.  MCD plans to close 74 outlets due to large losses.  November marks the 5th straight month of falling revenue.

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