As Bullish as we‘ve been now for months, it never hurts to be rational and keep pace with your own strategy even if the markets get giddy as following the CCI#. Entering the week we were saying the focus will be on the TSY auctions/ FED purchases and warned entering the trading day in regards to TSY’s,…”…It seems the market will use anything as a catalyst these days, keep this in mind, it could work the other way later in the week on something seemingly not so crucial at first glance.”. Well, it certainly came to fruition as out of the blue the market worked the other way ..ramping down on a rare market catalyst!… Despite a successful/ solid 5 yr auction by all accounts, the bond market spoke out shifting pain into mortgages by putting the ball in the FED court challenging them and their ability to sustain low mtg rates.. (purchasing MBS…What will they do and what will be the reaction?). The consequences, debates will be in full force now, we as traders do need to worry about the implications of higher borrowing costs tomorrow than they were yesterday with this spike in TSY yields. A simple question arises from today‘s events, how will those CCI giddy households feel tomorrow, next week about an economic recovery?
Banks- Brokers,
A steep decline in TSY/ higher mtg rates weighted on the group late and will continue to do so putting the idea of a higher mkt an unlikely event without their participation. Let’s not beat around the bush here, we all know where the cash came from in WFC BAC , don’t we? What will the next Q’s look like if this primary benefit to the banks stops?.
Commods’,
As we’ve been saying, we’re not going to do anything other than maybe intraday trading unless the $CRX breaks out. Once again a potential upward tick to the 630 level was thwarted. A slight positive for steel names from MT, but a neg from MON for ferts/ seeds stocks was the news flow.
Techs’,
Unfortunately this glimmer of a potential leading indicator got caught with broad market tape in the afternoon. The thesis we put out midday may still hold and so we’ll be watching this sec’ for trades. We got another positive reading as CREE a June Q end EPS preannounce/ guided higher and there were ‘ tracking better’ comments from more companies at a Barclays conference. Elsewhere, CVLT, CEO had very positive comments and considering a similar co (DDUP) just got a bid from NTAP is reason enough to tradelist it.
Simply, we are still mired in a low trading volume environment and overdone gyrations in the broad market tape continue to be a given , we remain in the larger trading range. The end of the world was coming last week as supposedly anything in USD was being sold following SP/UK news and than it was all sunny again, and than seemingly forgotten come CCI#. Heading into tomorrow, we basically have a bearish- hold- bullish view on the above 3 sec’s. To us, that’s a pretty foggy market leaving one to be very selective. We lost an upside risk for the time being this afternoon. The upside risk was not a news catalyst this time as we‘ve had for weeks now frightening the shorts, it was "920-930 levels" , every inch closer put pressure on the shorts. They have some relief and now we’ll see if they start to press shorts on any upticks, unfortunately they may not get the volume ammunition from their peers needed end of week. *Jobless claims 830am