Il Primo Ministro greco Lucas Papademos riceve l'approvazione del governo su tagli al bilancio che corrispondono al 7% del Pil nei prossimi tre anni e su una ristrutturazione finalizzata a ridurre di €100 mld gli oltre €200 mld di debito detenuto dai creditori privati, atteso il voto del parlamento • Standard & Poor's declassa il merito creditizio di 34 banche italiane tra cui UniCredit a BBB+ da A, Intesa Sanpaolo a BBB+ da A e Banca Monte dei Paschi di Siena a BBB da BBB+, S&P anticipa "una redditività decisamente debole per le banche italiane nei prossimi anni" • La produzione industriale italiana aumenta a dicembre +1,4% da novembre +0,3%, oltre le stime degli economisti +0,5%, anche se i dati del quarto trimestre -2,1% suggeriscono che la terza economia della zona euro è entrata nella seconda recessione dal 2009 • I Btp decennali salgono per la quinta settimana consecutiva, il periodo di recupero più lungo in oltre cinque anni, la prossima settimana il Tesoro vende €4 mld di buoni al 6% con scadenza 2014 • L'euro cala dal massimo di due mesi contro il dollaro, il mercato azionario europeo cala dal massimo di sei settimane e l'azionario Usa registra la prima settimana di perdite del 2012 dopo che i ministri delle finanze europee non hanno concesso il pacchetto di aiuto necessario a prevenire il collasso economico della Grecia

lunedì 22 agosto 2011

Market Comment - August 22

(Marco Bonelli) Sometimes the quote: "No news is good news" is still accurate.

As all major indexes trade close or at their lows from early August, thoughts (or better hopes) for a double-bottom are in many investor's minds - in general but also in anticipation of Ben Bernanke's "Jackson Hole" speech on Friday this week.


The market already experiences the first attempt of short-covering on Friday. Although it seemed like the short-covering kicked in earlier than many expected but a closer look justified the buying on Friday morning. Although the Dow, SPX and Nasdaq didn't hit the August lows yet (only the Value Line Index and Russell 2000 came close to the closing lows from Aug 8), many industry sectors (cyclicals - the DJ Transportation the most prominent / financials / technology) and the related indexes already tested the lows from the earlier week on Thursday.

Helped by IBM and HPQ, that contributed 92.1 points to the Dow's 172.93 points decline, the index, as well as the SPX came closer to the lows from August 8; the Nasdaq Composite and NDX closed within a few points to their related levels.

So while the market will desperately wait for some economic numbers (July's Durable Good orders to be reported on Wednesday are probably the most exciting one) and The Fed Chairman later this week, let's see how Rebound 2.0 works out.
If the market entered a bottom-building process earlier this month, this will definitely be another important part of it. However the emphasis should be on "process" and not on "bottom" as it will likely take some time until all uncertainties are "in the prices" - opposite to many calls currently out there.

Here are a few more details regarding the broader chart picture: Although the Nasdaq indexes closed right at their August lows, most technology sub-indexes already broke these lows. The same applies to most financial (banks, brokers, life-insurance) and some cyclical (auto-parts, building materials, chemicals and transportation) sub-indexes. The sectors that look the most interesting are the classic consumer-staples and healthcare and interestingly also energy. It will be interesting to follow energy. This morning, all but crude oil prices are down but after the psychological reaction to the favorable events in Libya settle, investors will keep an eye on the developing 2011 hurricane season. Nevertheless, falling energy prices will be beneficial to consumer spending and all energy consuming businesses.

So the rebound will probably lift the many of the sector indexes that already broke their lows back above it, will lift the Dow Jones back above the psychological 11000 level and will keep hopes for a double bottom alive. Let's see if investor's sentiment will turn positive as fast as it did during Rebound 1.0. but most of all, let's enjoy a quite day with better prices - chances are, it won't last long until it gets noisy again.

Trade well.


(Marco Bonelli is the Managing Director - International for CL King & Associate in New York. The opinions expressed are his own)

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