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

mercoledì 7 settembre 2011

Market Comment - September 7

(Marco Bonelli) I wonder if comments like "the market wants to go higher" or "the service sector showed some unexpected strength according to the ISM non-manufacturing index" are value-added observations or more sad evidence or how confused and desperate market participants are these days.

Let's say, the US market didn't see a reason to copy the panic-selling that happened in Europe on Monday and staged a relatively poor rally from the opening lows that was neither backed by a healthy breadth nor by strong upside volume.

And let's just forget about any "excitement" about the ISM non-manufacturing index that was up due to higher expectations in regard of prices paid, new export orders (???) and new import orders (by the way, the index's 53.3 reading equals the level from June and exceeds the level from April, way before the multi-layered crisis unfolded, so it looks like I'm missing a few parts here) and let's also forget about a favorable court-ruling in Germany that didn't question any financial help to Greece as all falls into the category "looking for reasons to explain certain moved". Therefore, also trying to read anything into the YHOO news or the "re-evaluation" headlines regarding Groupon's and Zynga's IPOs is worthless and more noise than anything else..

To avoid getting caught in the minute-by-minute and hour-by-hour moves, let's take a step back and check out the technicals for the major but also sector indexes: Looking at the charts, the bottom-building process or trading range has various shapes: some look like wide, up-sloping channels, some look like expanding triangles with a horizontal or sometimes even falling base-line. In the first three trading days of September and the worst start for the month in decades, some price levels dropped to the middle of the range, some dropped to the bottom. The sectors that already dropped to the bottom of their related range were a few technology sub-sectors, some financials and a few cyclical sub-sectors, including transportation. The rest trades in the middle of the consolidation range, although some consumer and also healthcare related sectors showed the best relative strength and least volatility in the current process.

Are we any smarter now? Of course not, the bottom-line message simply is, that as long as the major indexes and also industry sectors trade within the mentioned ranges, there is not too much action required as the intraday activity will be dominated by short-term momentum players, that also used support levels in the Dow Jones (10935) and the SPX (1137 and also 1150) yesterday to cover short positions and cautiously participate in the intraday rebound.

As there aren't any meaningful economic data out until the end of next week, let's see if the topics "QE3" (with five more speeches from Fed officials this week and today's Beige Book release) or "Q3 earnings" (ALTR lowered guidance yesterday, TXN will have its mid-quarter update on Thursday / beside that a relatively low number of 138 companies lowered guidance so far in August, while earnings estimates just dropped 1.17% in the past four weeks) get discussed in more detail within the next few days.

This morning, energy, financials, industrials and technology are once again the leaders that flip-flop between worst and best performer. If the weak market breadth from yesterday continues, this rally won't have many legs but what does it matter, as we are range-bound and the intraday action gets dictated by the hourly charts...

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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