Don't Fight the Central Banks
By James "Rev Shark" DePorre
Jul 05, 2012
Permit me to issue and control the money of a nation, and I care not who makes its laws.
-- Mayer Anselm Rothschild
The theme this morning is that the worldwide economy is so bad that governments around the world need to act to prop things up. China lowered key interest rates for the second time in a month, the Bank of England rolled out a $78 billion bond-buying program, and the European Central Bank cut interest rates by one-third.
None of these moves are unexpected, but the lesson of central-bank stimulus has been that it is a poor idea to fight it. Once the central banks crank up the printing presses, the market has had a tendency to levitate with barely a pause along the way.
The situation this morning is a bit trickier, because virtually everyone recognizes that we are already technically extended and badly in need of some consolidation. And since this stimulus news is widely anticipated, does that set us up for some sell-the-news action?
When the central banks are easing, the best strategy is to look for quick support and to be an active dip-buyer. The flood of cheap money that such moves create has to go somewhere, and the path of least resistance tends to be into the stock market.
Time and again, overbought markets become even more overbought when central banks are easing, so while it makes sense to look for some sort of consolidation because of the technical conditions, it is a mistake to be too bearish. These moves this morning are likely to create some strong underlying support.
We are coming in a little as I write, as the sell-the-news reflex is just too strong to fight, but I'm looking for a fairly shallow pullback and consolidation rather than a reversal and a resumption of the downtrend.
We are at a very tricky juncture after the spike prior to the holiday, and now there are headlines about Greece hitting, and we are going to kick off earnings season shortly as well. We will continue to be highly macro-driven, and that makes individual stock-picking extremely challenging.
My approach to this market has been to respect the volatility of the macro situation and to try to knock out some quicker trades in areas that are less influenced by the major headlines. That has worked quite well with small biotechnology stocks lately, and there have been some other select trades, but after the move before the holiday, we have fewer and fewer good chart setups. I'd like to see some pullbacks to make for better charts, but the market has often been very uncooperative in doing that when central-bank easing is taking place.
We are set up for a good battle between an extended market and central-bank stimulus. The history is that the banks will prevail, and I'm not planning on making any big bets against them at this point.
ECB President Draghi Press Conference- Asked if decision Unanimous- says the decision on 'all grounds' was unanimous. Did not discuss other non-standard measures; says need to have them be effective and does not believe that is the case in the highly fragmeneted areas... have not seen signs of outflows from LTRO which is important;
June ISM Services 52.1 vs 53.0 Briefing.com consensus; May 53.7
ISM teenuste number alla ootuste. See on viimase 2.5 aasta madalaim number.
ISM teenuste number alla ootuste. See on viimase 2.5 aasta madalaim number.
USA teenindussektori ISM indeks langes juunis 52,1 punktini vs oodatud 53,0 punkti. Tegu on madalaima tasemega alates 2010. aasta jaanuarist.
June ISM Services 52.1 vs 53.0 Briefing.com consensus; May 53.7
June ISM Services 52.1 vs 53.0 Briefing.com consensus; May 53.7
STX hoiatas. Aprillis antud Q4 guido revenue at least $5B ning GM at least 34,5% muutus revenue $4,5B ning GM 33,6%.
Analüütikud on viimasel ajal channel chekkide pealt allapoole tulemas ning siit võib ka Q1 kehvema panna. Tulemused 30. juulis. Aasta pärast maksab arvatavasti jälle alla $20, aga täna ei oska vist midagi ette võtta, sest stocki osas ollakse küll karused, kuid omajagu teflonstock viimasel ajal. Ehk põhjus selles, et Greenlight Capital teeb seal oma avg-i paremaks :)
Analüütikud on viimasel ajal channel chekkide pealt allapoole tulemas ning siit võib ka Q1 kehvema panna. Tulemused 30. juulis. Aasta pärast maksab arvatavasti jälle alla $20, aga täna ei oska vist midagi ette võtta, sest stocki osas ollakse küll karused, kuid omajagu teflonstock viimasel ajal. Ehk põhjus selles, et Greenlight Capital teeb seal oma avg-i paremaks :)
INFA - Informatica reports preliminary Q2 EPS 27c-28c, consensus 37c
Reports preliminary Q2 revenue $188M-$190M, consensus $217.15M.
No nii, see asi ei tohiks inline tulemustki teha, saaks tappa, aga selline... Kallis stock, omajagu positiivse consensusega. Huvitavam situatsioon kui STX. Siit loodaks mõnda dg-d.
Reports preliminary Q2 revenue $188M-$190M, consensus $217.15M.
No nii, see asi ei tohiks inline tulemustki teha, saaks tappa, aga selline... Kallis stock, omajagu positiivse consensusega. Huvitavam situatsioon kui STX. Siit loodaks mõnda dg-d.