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 22 febbraio 2012

Market Comment - February 22

(Marco Bonelli) How much should investors pay attention to the Dow Jones Transportation Index?

The index lost 4.1% since its new rally high earlier this month. It broke the 5-month uptrend from the October lows on February 10 and adopted a two-steps-down/ one-step-up strategy, yesterday was another big step to the downside that even dipped below its 50day MA (at 5141.55) for a moment. In addition, a small head-and-shoulder pattern developed over the past six weeks with the neckline running at 5160. If broken, it could translate into a quick 5% correction. The question is, if the index's weakness is - in investor's eyes - simply a reaction to the most recent rise in fuel costs or if it is the reflection of deeper fundamental developments. The 36.3% advance between October and February clearly acknowledged the economic recovery scenario, so could it be that the "fuel costs" argument is a metaphor for an economic scenario that is less favorable than widely anticipated at the moment?


Beside that, the Dow Jones' brief dip above 13000 was greatly celebrated and most comments pointed towards a continuation of the rally (SPX 1400, Nasdaq Composite 3000, followed by Dow Jones 14000), citing abating concerns globally (really?), one of the most attractive valuations in history (really?) and fundamentals that are generally in good shape, concluding that "the market deserves a higher multiple". In this context the question whether investors should bet on the US consumer also came up.

Being caught in this optimistic cloud, some investors seemed surprised by weaker than expected PMI Manufacturing and Service data in Europe and China's "Flash" Manufacturing PMI that indicated "contraction" for the fourth consecutive month, although the reading improved from January.

Beside that, there is a lot of noise and moving pieces like earnings (yes, the Q1 reporting season is still ongoing, overall ok, not great but hopefuls like WMT, DELL and TOL reported negative surprises) like crude oil (trading close to the downtrend from 2008 (at 105.50) and the uptrend from 2009 (at 106.75)), like the Euro/ Dollar conversion (the DXY holding above the uptrend from 2008 (at 78.75)) - a lot of it is more distracting than beneficial in figuring out how the big picture looks like.

For today, Existing Home Sales for February might determine the direction, although the bias already leans to the downside and profit-taking in high-flyers like semiconductors, homebuilding, biotechnology, airlines and some specialty consumer (the latter three actually joined the rally recently in a fast-forward mode) may resume while the overall market experiences deteriorating breadth.

Although I expect lower prices over the next few months, it's unlikely that yesterday's attempt to break 13000 in the Dow Jones was the last move of this kind; nevertheless, reducing positions now and into strength might turn out to be the right strategy going into March and the second quarter.

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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