Indices gain ground following a reversal in the Treasury market

Discussion in 'Trading' started by TradeTheNews, Jan 31, 2007.

  1. TradeTheNews

    TradeTheNews ET Sponsor

    US Mid-Morning Recap
    by TradeTheNews Staff

    - US bond yields were moving higher early in the session following a headline Q4 GDP reading that was well ahead of estimates. Early equity weakness accompanied lower bond prices. The Treasuries quarterly refunding announcement of $38B was a little below expectations and touched of some buying. Yields continued to push lower helped by the subsequent release of a soft Chicago PMI number and a December construction spending reading below expectations. The 30-year is up 9/32 at 4.957% after the yield had topped 5% early in the session. 10-year +4/32 at 4.851%

    - The major Indices made their way into positive territory following the reversal in the bond market. The Dow has been getting help from Boeing, which has added $4 to its stock price post earnings. MMM is down another 1.5% as negative momentum continues from yesterday’s disappointing earnings announcement. MO is up 0.5% after confirming its KFT –1% spin-off and reporting. Technology has been lagging throughout the session led by semiconductors. SNDK is off more than 7% after reporting Q4 and guiding below consensus. The SOX Index is down more than 1%. JNPR –7% is too weighing on the NASDAQ after reporting.

    - Crude has rallied above $57 following weekly inventory data that showed relatively strong demand for distillates. The OIH is more than $2 off of earlier lows now trading up more than 1%. April Gold futures are now the front month contract and they have rallied more than $10 from their worst levels of the session. April gold is trading just below a level seen as solid resistance at $658. A solid push above the $660 mark would put gold at levels not seen since September. Gold moved higher in tandem with weakness in the US Dollar. The EUR/USD is back at 1.30 while the USD/JPY is below 121.
  2. This is a dangerous market.

    Rising oil, decelerating profits (with negative surprises on the rise), Chicago PMI contracting, raw commodity costs elevated, housing still spoiling, but decent GDP and consumer sentiment numbers -

    Very odd market. If it wasn't at a 5 year or all-time high, I might be more enthused.
  3. TLT currently 87.01
    200 day ma 86.96
  4. Look at the wilshire 5000 chart going back three years. At no point on the chart does it stop moving. Its either in constant motion up or down.

    However, since December, the market looks flat on the chart. So it appears the market is in distribution and it has not done this in the last 3 years.

    The turning point is in a little over 2 hours I feel. Bernanke will set the pace. I dont know how some people can feel so brave as to trade through Fed meeting day where it appears there is a key turning point.