Monday, August 29, 2011

Busy But Light Volume Week Ahead

Traditionally this is a relatively light volume week as people head out for the last grasp of summer ahead of Labor Day, but we do have a lot of important reports coming out.   While there is some housing data out today and tomorrow, the fireworks are Thursday and Friday as we have Chinese manufacturing data (official vs prelim) overnight Wednesday, then U.S. ISM Manufacturing Thursday.  The monthly jobs report is out Friday - expectations are all the way down to 67,000 which is very poor.  But a low bar to clear.  Interestingly the ISM Manufacturing expectation is for contraction at 48.5? That's down from 50.9 in July.  Speaking of low bars.

In terms of the stock market we are up to our normal gap up Mondays - prevalent through 2009 and 2010.  What is interesting now is the psychology as Bernanke has opened the door to more easing in the Sept Fed meeting.  With 3 dissents at the last meeting it would seem a strange about face if it happens but in the end it's a 1 man show as Greenspan displayed.  We saw last week the first time in a long time bad news was being embraced - i.e. good news is good news but bad news means more interventions.  The market rallied long and hard on that theory in 2009 and 2010, so we want to see if bad news is ignored and good news is embraced.  If so, we are back to the David Tepper market of 2010 once QE2 was hinted at, in Jackson Hole, Wy.  [Sep 24, 2010: [Video] Appaloosa David Tepper - Ben Bernanke Will Make Everything Go Up in the Can't Lose Environment]   That said, we have to expect low volume this week and based on what economists expect the economic figures this week are really quite putrid, so even halfway decent data will create 'better than expected' rallies.

Looks like we will gap up and to the 20 day moving average on the S&P 500, and from there low 1200s from 2 weeks ago is the next area to run past.  Then the 50 day moving average which is in the upper 1230s but falling fast.

Europe again is bemusing.  One week its the center of the world causing havoc, the next week no one thinks about it.  Looks like to start the week Europe does not exist (major markets there are rallying after being thumped all month)

Gold is back to rallying despite the big increase in margin requirements - people continue to flee fiat currencies as central bankers, namely bearded ones, love their helicopters.

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