Mark's Basic Stock Market Analysis Video 5/18/14

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S&P 500 and the Economy. Financials wounded. short sale ban

The U.S. Senate passed a $700 billion financial-market rescue package loaded with inducements for the House of Representatives to approve the measure following its rejection of an earlier version. The bill's proponents cited the record 778-point drop in the Dow Jones Industrial Average after the House's 228-205 defeat of the legislation Sept. 29 as evidence of the urgency to stabilize the banking system. They suggested that the market reaction may spur some House Republicans to change their minds when the bill comes to a vote, likely tomorrow afternoon.

The dollar rose against the euro, approaching a one-year high, after the Senate approval, bolstering expectations the U.S. will act faster than Europe to address the seizure in credit markets. The dollar advanced to $1.3883 per euro at 12:46 p.m. in London, from $1.4009 late yesterday in New York. Asian stocks and U.S. futures fell on concern the package won't be enough to avert a recession, with futures on the Standard & Poor's 500 Index falling 1.1 percent and the MSCI Asia Pacific Index lost 1.3 percent.

Emini futures trading coach

Economic News Bernanke, oil and treasury

Treasuries declined after Federal Reserve Chairman Ben S. Bernanke suggested that the central bank is relying on slowing growth and a strengthening dollar to contain inflation. The decline pushed yields on two-year notes up the most in a month. Government debt had slumped earlier after the Korea Development Bank said it's ``considering'' an investment in Lehman Brothers Holdings Inc., easing concern about the fallout from credit market losses.

Bernanke called dollar stability and price declines in oil and other commodities ``encouraging.'' Still, the inflation outlook remains ``highly uncertain'' and the Fed ``is committed to achieving medium-term price stability and will act as necessary to obtain that objective,'' he said at the Fed Bank of Kansas City's annual symposium in Jackson Hole, Wyoming.

Treasury notes also declined as gains in European and U.S. stocks tempered demand for the safest of assets. The Standard & Poor's 500 Index rose 0.9 percent, while the Dow Jones Stoxx 600 Index rose 1.6 percent. Futures contracts on the Chicago Board of Trade show odds of 56 percent the Fed will raise its 2 percent target for overnight bank lending in January. A month ago, traders predicted a rate increase in December. Banks and securities companies have reported more than $500 billion of writedowns and credit-related losses linked to the collapse of the subprime mortgage market since the start of 2007.

Economy Fannie Mae and Euro took a dive

Ten-year notes and 30-year bonds were little changed on the week after the government sold a combined $27 billion of the securities in quarterly auctions. U.S. mortgage lenders Fannie Mae and Freddie Mac posted bigger-than-expected losses this week, adding to speculation that the Treasury will have to sell more debt if it decides to provide the companies with capital. Traders now see a 33 percent chance that U.S. policy makers will raise interest rates by year-end, compared with a 65 percent likelihood a week ago. Oil touched a three-month low of $117 today, easing concern that inflation will accelerate.

In Europe, speculation also eased that the European Central Bank, whose sole mandate is to control inflation, will raise interest rates as the economy slows. The ECB held its benchmark rate at 4.25 percent yesterday. Its president, Jean-Claude Trichet, said expansion will be ``particularly weak'' in the second and third quarters. U.S. stocks rose, helping the Standard & Poor's 500 Index post the first back-to-back weekly gain since May, as retailers and airlines rallied on speculation lower commodity prices will boost earnings.

Home Depot Inc., Macy's Inc. and Gap Inc. climbed as the dollar's biggest advance against the euro in four years pushed crude oil to a three-month low. General Motors Corp. rallied, while United Airlines parent UAL Corp. jumped almost 10 percent. Fannie Mae dropped after joining Freddie Mac in posting a bigger- than-estimated loss and slashing its dividend.

SP 500 daily could crack support soon

We are making attempt at the support. This move has a bit more strength behind it compared to March's push down.

Normally, I would not expect it to push through before a 3 day weekend. But the news is not good and sentiment says short. Sentiment is behind and they are just starting to short the market so there is some room to go down. How much, we shall see.

Lots of different warning signs popping up. If anything happens with Iran I expect to see our currency take a beating and gold to go through the roof.

The next target on oil is $160, once we break the psychological $150 it is poised to take off.

Careful out there.

European Central Bank raises rates ahead of Fed

Treasury 10-year notes rose after the National Association of Purchasing Management-Milwaukee manufacturing index dropped to its lowest since October 2001 and stocks of several financial firms fell.

Citigroup Inc., Merrill Lynch & Co. and Lehman Brothers Holdings Inc. were among the firms that declined. The purchasing association's monthly index of regional manufacturing fell to 39, its fourth straight month below 50. A reading lower than 50 means the number of manufacturers that said business deteriorated was greater than the number saying it improved.
Treasuries earlier fell, extending the biggest quarterly decline since 2004, as inflation in the euro region rose to the highest in 16 years and oil advanced above $143 a barrel.
The retreat pushed 10-year yields up from a three-week low after a European Union report showed the rate of euro-region inflation climbed to 4 percent, bolstering the case for the European Central Bank to raise rates. Why are they ahead of us?

Crude oil for August delivery rose as much as $3.46, or 2.5 percent, to $143.67 a barrel in electronic trading on the New York Mercantile Exchange. It reached $142.99 a barrel on June 27 after the Fed left interest rates unchanged at 2 percent. The market continues to struggle with what to do with the rise in oil.