Yield curve and stocks correlation

Kiril Yordanov – Trading the Yield Curve

Jaw-dropping intra-day market movement

NYSE was down 1000 points! before recovering 500 points to now -347.80. So was it a trader error?

US tank!

As of now, Dow has went down 2% and NASDAQ 2.77%! This is what happen when the stock juz go one direction without correction.

If memory did not fail me, I think 20dma and 20wma is broken, it’s good shorting opportunity using trendlines.

Time to look for shorting opportunities! Market might be very violent. Better to keep a tight stop loss. Look for downtrending counter with lower high. Preferably with MACD line before 0.

No sell in may and go away?

NEW YORK (MarketWatch) — U.S. stocks surged Monday, with retailers rallying after a report showed consumer spending at a record level and as investors took heart from the latest merger activity, including UAL Corp.’s $3.15 billion deal with Continental Airlines Inc.

The Dow Jones Industrial Average  (INDU 11,152, +143.44, +1.30%) ended up 143.22 points, or 1.3%, at 11,151.83, its biggest one-day gain since mid-February and nearly recouping Friday’s 159-point slide.

All but one component traded higher, led by shares of Caterpillar, Inc.  (CAT 69.78, -0.16, -0.23%) , which gained 2.7%.

Alcoa Inc.  (AA 13.13, -0.02, -0.15%) was the sole decliner among the blue chips, with shares of the aluminum producer down 2.1%. more

May actually open higher for Dow. One shouldn’t be too surprise given that the stock market is so unpredictable. With the earnings so good this quarter, its hard to emulate next quarter. We shall see if it happens

Daily: Bear wins

Today STI seems to be moving further down and STI 3000 mark will be a hard resistance to break. Looking at 2930 for minor support. The overall market looks weak. Will be looking into a correction before entering into market. Hopefully it will rest at major support again.

Property market is one of the weakest sector ever since China is hell bent on curbing speculation. But the developers ain’t heeding the advice. Will it be another Obama-Bank situation?

One real surprise is that Noble did not break the $3 mark, which if it happen will face a deep correction. $3 is also the price which the outgoing CEO is being paid for all his stock and options.

Will be looking at the performance of Dow tonight. If it continue to a landslide, the US market will be a very ugly scene to be in since it has been too far away from HOME (20d MA).

Will be looking into down trending counter to short to hedge against the downward movement.

Anyway with this article, seems like things doesn’t look good

May 3 (Bloomberg) — Investor Marc Faber said China’s economy will slow and possibly “crash” within a year as declines in stock and commodity prices signal the nation’s property bubble is set to burst.

The Shanghai Composite Index has failed to regain its 2009 high while industrial commodities and shares of Australian resource exporters are acting “heavy,” Faber said. The opening of the World Expo in Shanghai last week is “not a particularly good omen,” he said, citing a property bust and depression that followed the 1873 World Exhibition in Vienna.

“The market is telling you that something is not quite right,” Faber, the publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview in Hong Kong today. “The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”

An index tracking Chinese stocks traded in Hong Kong dropped 1.8 percent today, the most in two weeks, after the central bank raised reserve requirements for the third time this year. The Shanghai Composite has slumped 12 percent this year, Asia’s worst performer, as policy makers seek to rein in a lending boom that’s spurred record gains in property prices. China’s markets are shut for a holiday today.

more…

Looking ahead: Singapore

STI

Trend: Sideway hold or downtrend (uptrend line broken), 2930 to hold for uptrend else trend reversal with lower low being made. Mini-downtrend line holding the upward movement. Have to move upwards above 3040 for uptrend to resume.

Indicators: MFI, RSI and Stochastic all turning down. MACD crossover and turning down. CCI turning up.

Candlestick: Last candlestick is a doji with high volume.

Conclusion. Bull and bear are in a tussle right now with the bear getting the upper hand.

Banking Sector

Daily chart: Rebounding from resistance turn support. Very similar to STI but the last candlestick is a white spinning top. It might be forming a bullish flag. RSI MFI seems to hold.

Weekly chart: market seems to be overbought at the moment with possible formation of double top.

Commodities sector

Daily chart: downtrend or possible sideway and last candlestick looks really bad. with all indicators heading southward.

Weekly: 20w MA seems to hold. 3 black candle for last 3 weeks.

Marine sector

Daily: strong uptrend with all indicators doesn’t look good. Put a trailing stop below 20d MA.

Weekly: 5w MA holding the sector but it is the first dark cloud cover after 9 weekly white candle and it its very far from home (20w MA). Look to cash out at least half for stocks in this sector. Stochastic is also giving same signal.

Properties sector

Daily: back to support level. It seems to be beaten down real bad. 5 EMA is holding the downward movement with all indicators turning up from oversold region.

Weekly: doesn’t really look good for now. Better to wait for 1 weekly white candle before going into this sector.

U.S. stock futures firmer as Europe calms; data in focus

MADRID (MarketWatch) — U.S. stock futures edged higher Thursday amid a wave of earnings and Hewlett-Packard’s deal to buy Palm as the focus moved away from Europe’s sovereign debt worries.

S&P 500 futures rose 5.7 points to 1,195.80 and Nasdaq 100 futures rose 9 points to 2,015.75. Futures on the Dow Jones Industrial Average rose 34 points.

U.S. stocks moderately rebounded on Wednesday after stronger earnings and the Fed reiterated economic conditions warrant leaving rates low for what’s likely to be an extended period. That helped take the sting out of the third sovereign debt downgrade in Europe in two days as the Dow Jones Industrial Average rose 0.5%.

“Looking ahead to today, weekly jobless claims in the U.S. should be the data focus and markets are looking for an 11,000 decline in initial claims,” said Jim Reid, strategist with Deutsche Bank, in a note to investors. Jobless claims are expected at 8:30 a.m. Eastern time.

There were a number of earnings reports, particularly in the agrichemicals and household products sector.

With Euro report negating the good news of US market, it will be interesting to see how the market will play out.

Alcoa Slips!

WSJ:

NEW YORK (Dow Jones)–U.S. stocks opened slightly lower Tuesday as a disappointing first-quarter report from Alcoa and a wider-than-expected trade deficit dampened sentiment, pushing the Dow Jones Industrial Average back below the 11000 level.

The Dow Jones Industrial Average was down 20 points, or 0.2%, at 10986 in early trading. Alcoa was the measure’s worst performer with a drop of 2.8%. The aluminum giant reported a narrower quarterly loss and held out hopes for improvement in the year ahead, striking a positive note as the first major company out of the gate to report first-quarter earnings. But its earnings excluding items merely met analysts’ estimates while revenue came in weaker than expected. UBS cut its investment rating on the stock to neutral from buy following the report.

Intel is the next heavyweight to report, with the world’s largest chip maker slated to post its first-quarter numbers after the close of trade Tuesday. Ahead of the report, Intel edged up 0.2%, making it the Dow’s best performer.

The Nasdaq Composite slipped 0.1%. The Standard & Poor’s 500 index declined 0.2%, with the materials and energy sectors leading its decline.

Tuesday’s small drop in stocks comes after the Dow on Monday closed above 11000, something it hadn’t achieved since the financial system began teetering nearly 19 months ago. By inching past the milestone, the Dow continued what amounts to a stealth rally in a market characterized by below-average trading volume and small daily moves.

The market is now looking to see if the S&P 500 can climb above the key 1200 mark. It closed Monday at 1196.48, its highest close since Sept. 26, 2008. However, the measure appeared unlikely to reach that level Tuesday, as investors were disappointed by Alcoa’s report and data that showed the U.S. trade deficit rose more than expected in February.

The wider U.S. trade deficit came as soaring imports of consumer goods and industrial supplies outweighed the impact of oil imports falling to their lowest level in 11 years. The deficit rose 7.4% to $39.70 billion in February, higher than the $39 billion shortfall Wall Street was expecting.

High chance tomorrow Ausgroup will drop also. What a bad timing!

Dow Above 11000

WSJ

Stocks rose, prompting the Dow Jones Industrial Average to close above 11000 for the first time since September 2008, with Caterpillar, Alcoa and Chevron in the lead.

The Dow climbed 8.62 points, or 0.08%, to 11005.97, its highest close since Sept. 26, 2008. Caterpillar was the measure’s best performer, up $1.46, or 2.2%, to 66.73, after Baird upgraded its investment rating on the industrial giant’s stock to “outperform” from “neutral.” The firm cited higher machinery production rates and an expected increase in global mining capital spending.

Alcoa rose 18 cents, or 1.3%, to 14.57, as investors’ hopes rose for the aluminum giant’s first-quarter report. Chevron was also strong, up 93 cents, or 1.2%, to 80.43.

The Nasdaq Composite climbed 3.82, or 0.16%, to 2457.87, its highest close since June 19, 2008. The Standard & Poor’s 500 index added 2.11, or 0.18%, to 1196.48, its highest close since Sept. 26, 2008.

The gains were small as investors were cautious about making big bets ahead of the start of earnings season.

“The market’s very tenuous and cautious,” said Roy Williams, chief executive of Prestige Wealth Management Group. “The market had a lot of momentum in the end of March, but now it’s really trying to find its way and just hanging out to see what the major companies report for their earnings and what’s going to happen from a jobs standpoint.”

He noted that, when fourth-quarter earnings were reported in January, stocks sold off despite earnings and revenue topping analysts’ estimates, as upside “surprises” had already been priced in. “It’s a case of buy the rumor, sell the news,” Williams said, noting that he expects the trend to repeat.

“I think we’ll have a small selloff here and, after earnings season concludes, I think we’ll rally again, in June. So we’re optimistic, but we’re cautious,” he added

A new psychology level for Dow, will this be a fake breakout instead? I got the feeling the market is way to hot. It’d be bad for indices to move higher without any consolidation. So will STI follow brother dow up to 3000 level?

Companies like caterpillar is being watched by investor as they provide clues to what will happen later in the economy.

First sign of weakness

WASHINGTON (MarketWatch) — The Business Cycle Dating Committee of the National Bureau of Economic Research met last Thursday and decided it would be “premature” to declare the end of the recession, according to an NBER statement released on Monday. “Many indicators are quite preliminary at this time and will be revised in coming months,” the statement said. The NBER is the non-profit arbiter of recession dating. The recent recession began in December 2007. Many Wall Street economists informally believe that it ended in the middle of 2009, making it the longest recession since the Great Depression.

Many stock form doji ahead of quarter 2 report. Other than Yangzijiang and Cosco and a few other special stock, broad market movement is seeing signs of profit taking. Can it be people is trying to pre-empt something?

Ezra had good news yet still dropped by 10 cents. When you have good news and yet the stock can drop so much, it is a sign of danger ahead. Ezra is trading in a channel, if it breaks, shortist will come in for a run. Keep a tight stop as lots of divergence is already showing is many sector.