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 2 novembre 2011

Market Comment - November 2

(Marco Bonelli) I didn't know that the circus season already started!

... so, the Greek Prime Minister proposes a referendum; the stock markets collapse (also for other reasons but that doesn't matter); a few members of the Greek ruling coalition threaten to walk out; credible sources confirm that the referendum is "almost dead" - once again perfectly timed between the European close and the US close; the stock markets rally, but then a Greek government official states that the referendum is still on and the Prime Minister has enough votes to win a confidence vote on Friday; the US stock-market closes around the lows of the day! Oh, and not to forget, the latest developments have to be discussed at a new "Merkosy"-Summit that was immediately organized for today. So it looks like the clowns stay on the stage for another few rounds; unfortunately the fun factor is long gone...

Talking circus, another stage will open up soon here in the United States as the Super-Committee has to agree on a $1.5-trillion budget deficit reduction plan by November 24.

With that, the markets will probably continue to be dominated by headlines and rumors from various stages, that will keep volatility at elevated levels, keep high-frequency traders more or less happy and investors frustrated. Let's see if the FOMC statement and Ben Bernanke's fun-loaded press conference at 2.15pm EST will deliver some laughs for the market or if it will be sort of a non-event with no substantial new developments, which is probably the most likely outcome!

Just a quick recap of yesterday's trading as it's quite a classic: Following the initial sell-off after the opening, the major indexes (Dow Jones, SPX and Nasdaq Composite) bounced right off their September highs, a level equal to the 100day MAs. A key support for the Nasdaq Composite was/is also the 2600 level, which was tested four times yesterday and held. The NDX is still in its own world, right off the highs (similar levels reached in February, April, May and July this year), so the technical support here was the 200day MA, which also held at the end of the day. However, the early rebound didn't last long and the mentioned September highs and 100day MA were broken, a development, the Russell 2000, S&P Midcap and Value Line Index already experienced on Monday. With that, all major averages fell back into the wide trading range which was defined by the September highs and the October lows! In addition to the stock markets, the VIX bounced off the 25 level and the Dollar Index DXY held the 75 support level - overall, a great combination for the 6-7% pull-back we have seen so far.

Whether the market stays in that trading range or resumes the monster rally from October will most likely be determined by fundamental data and trends (and these don't look very promising!), despite all short-term interruptions from the clown-camp. The ISM Manufacturing Index for October was surprisingly weak. As we know, this data is based on opinion and sentiment and usually gets compiled in the first two weeks of the months. At that time in October the world looked a lot brighter and the stock market already recovered more than 10%, that's why it is a surprise that the purchasing managers who participated in the survey didn't express more optimism, so maybe the fundamental environment is really weak! The October ADP Employment Change at 110k new private sector jobs still mirrors slow economic growth and a weak labor market. The next big milestone will be the official BLS Labor Report from the government. The payroll number for October will most likely determine if the Dow Jones will trade closer to 11000 or if it will retake the 12000!

Let's watch a subdued rebound attempt and then lean back and wait for anything new from the FOMC stage!

Trade well.

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

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