Looking like a gap down this morning.  Read the SPY section for some more insight. 

 

Around the world today we have the Asia markets taking a little rally pit stop today.  Despite some better than expected manufacturing numbers out of Japan, the Nikkei was unable to close green missing down just 0.07%.  China’s Shanghai was down 0.54% and Hong Kong’s Hang Seng had a decent fall down just shy of two percent at –1.95%.  Dips are now forming and in play.

 

In Europe, Moody’s is not in a good mood, at least not when it comes to Spain and warned that it might have to downgrade Spain which has the markets down.   The DAX is down 0.77% as of 7am EST and the FTSE 100 out of London is down 0.36%.  The UK missed its employment numbers with an uptick in unemployment from 7.7% to 7.9%.

 

When it comes to interest rates, the Swedes continue to step up their interest rates from 0.25% at the beginning of the year, and  have decided via 4 quarter point raises  through the year, that 1.25% is now the sweet spot.

 

In the USA at 7am EST the MBA Mortgage Applications numbers are in.  Last report was down 0.9% and this month is down 2.3% as interest rates rise.  The CPI numbers are scheduled for 8:30am with expectations of 0.2% matching last months reading for the main number and 0.1% up from 0% from the previous month for the core.

 

Also at 8:30am the NY Empire mfg. index is released.  Last month was a negative 11 with expectations that this month will turn positive with a +3 reading.  This could be a gap filler or expander today premarket.  Remember the Empire index is a delta index, that is a change from month to month, anything positive indicates improvement from the previous month, negative more pessimism from the previous month.

 

TIC Net Long-Term Transactions are out at 9:00am, this is a currency mover and is the trade imbalance so to speak of USA purchased long-term foreign securities vs. foreign bought US securities.  Expectations are for a reading of 83.3B vs. last month at 81B.  Higher than expected numbers show a thirst for USA assets and is bullish for the USA dollar.

 

Capacity Utilization Rate and Industrial Production are both out at 9:15am  The Capacity Utilization is expected to move up to 75% from last month’s 74.8% with an increase of Industrial Production month over month from 0% to 0.3%.

 

Those are all the pre-market news.  NAHB housing market index is released at 10am with an expectation of an increase from 16 last month to 17 this month.  Crude and Gasoline inventories are out at 10:30am  with a drawdown in Crude expected, down 2.7Mbb with an inventory build of gasoline up 2Mbb.

 

That is how the news is aligned for the day.

 

Quote of the day:
Nothing succeeds like the appearance of success. – Christopher Lasch

 

Current Allocations:

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Breadth:

 

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Breadth took a beating on Tuesday as the markets double tapped their highs and sold off after the Fed announcement.  A new 5 day cycle begins today for the advantage of the bulls so any run back up to the highs should reset the breadth back into neutral.

 

$SPX chart:

 

Yesterday we talked about an attempt at the highs, but the lack of enthusiasm is just not enough energy to break out.  The DOW continues to outperform but the leading indexes need a rest to collect momentum for the next assault.

 

We called for 124.02 as the first test area which is getting tested at premarket now.  Should that break watch for further correction down to 123.32.

 

Premarket there is tons of news which should be the driver for positioning for the open. 

 

Should we open lower than 124.29 (yesterday’s low) that makes a bodiless gap and those usually probe lower before heading up.

 

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