February 22, 2012 -- Updated September 24, 2011 04:44 HKT
Anatomy of The Weeks Sell Off
Anatomy of The Weeks Sell Off
Red’s Bull Trader Alert: The primary trigger for the rebound Friday came from EU policymakers suggesting additional steps will be taken to support Europe’s financial system.
Ewald Nowotny, European Central Bank Governing Council member, said it might be advisable for the ECB to add more liquidity into the banking system.
One analyst had this to say: Financial markets are sick and tired of the authorities in Europe and in the US twiddling their thumbs and not doing substantive things to solve this crisis of the global economy, and that is what its all about
Watching the VIX: The CBOE Volatility index (VIX) edged up 0.6%, its 5th straight advance.
US Stocks: Wall Street finished higher after a hard 4 day sell off, which drove down the S&P 500 6.6% on the week.
TXI, HPQ
On the Week: the DJIA fell 6.4%, its worst weekly performance since October 2008, the S&P 500 finished off 6.6%, and the NAS lost almost 5.3%.
| DJIA | 10,771.50 | 37.65 | 0.35% | 16:30 |
|
S&P 500
|
1,136.43 | 6.87 | 0.61% | 16:31 |
|
NAS
|
2,483.23 | 27.56 | 1.12% | 16:48 |
Texas Instruments (NYSE:TXI) gained 3.8% to 27.22/shr after Caris boosted its rating on the stock.
Hewlett-Packard Co. (NYSE:HPQ) was down 2.1% to 22.32 a day after Meg Whitman, the former head of EBay Inc, was named to run the Company as CEO. The move was met with criticism of the Bompany’s board, which has been accused of recent missteps.
Recap: Following only the 2nd weekly advance in 2 months, the risk trade was abruptly turned off at the beginning of this week.
Traders were disappointed by the lack of progress in Greece on the establishment of a suitable austerity plan that would secure it financial assistance from the Troika.
Reflecting the deterioration of financial conditions in the EuroZone’s periphery, Italy’s debt downgraded by analysts at Moody’s.
Sentiment soured on the mid-week announcement by the FOMC that it will purchase US$400-B of Treasuries with maturities of 6 to 30 yrs, while selling an equal amount of Treasuries with a remaining maturities of 3 yrs or less, by the end of June 2012.
The plan, labeled “Operation Twist” by traders, had been expected on Wall Street, but it seemed less than accommodative in light of the Fed’s statement that downside risk to economic growth remain high.
Stocks responded to the US Fed’s statement by diving to a loss of almost 3%. Stocks then fell more than 3% Thursday as selling pressure was pushed by aggressive selling abroad.
Although the pain eased some Friday, the stock market still suffered a weekly loss of 6.5%. That marks the 7 weekly slide in 9.
The resumption of the stock market’s downtrend drove masses of traders into Treasuries. As a result, the yield on the benchmark 10-yr T- Note dropped to a record low of less than 1.70%. It moved back above 1.80% Friday.
The USD also benefited from a flight to safety. Relative to a basket of major foreign currencies, the “Greenback” rose to a 7-month high, but came off a bit Friday.
Gold failed to attract safety seekers, as the precious Yellow metal was caught up in the sell-off that slammed other commodities.
Gold prices finished pit trade Friday at 1645 oz for a 5.6% loss, for the week Gold fell about 9%.
Overall, commodities fell almost 7%, according to the CRB Commodity Index
Volume and Breadth: trade was active with about 8.9-B/shrs traded on the NYSE, AMEX and NAS, above the daily average of 7.94-B/shrs. Advancing stocks outnumbered declining ones on the NYSE by 1,886 to 1,104, and on the NAS, advancers beat decliners 1,728 to 815.
US Major Market Indexes Technical Analysis
| Date | Symbol | Price | Technical Analysis | Support | Resistance |
| 23 Sept 2011 | QQQ | 54.15 | Neutral (-0.05) | 53.64 | 54.63 |
| 23 Sept 2011 | DIA | 107.13 | Neutral (-0.13) | ? | 107.17 |
| 23 Sept 2011 | SPY | 113.44 | Neutral (-0.13) | 112.45 | 114.33 |
Americas
| INDEX | VALUE | CHANGE | % CHANGE | TIME |
|---|---|---|---|---|
| DJIA | 10,771.50 | 37.65 | 0.35% | 16:30 |
| S&P 500 | 1,136.43 | 6.87 | 0.61% | 16:31 |
| NAS | 2,483.23 | 27.56 | 1.12% | 16:48 |
| S&P/TSX | 11,462.90 | -99.64 | -0.86% | 16:48 |
| MEXICO IPC | 32,588.40 | 207.37 | 0.64% | 16:08 |
| BRAZIL BOVESPA | 53,230.40 | -49.92 | -0.09% | 16:25 |
Europe, Africa and Middle East
| INDEX | VALUE | CHANGE | % CHANGE | TIME |
|---|---|---|---|---|
| Euro Stoxx 50 Pr | 2,026.03 | 30.28 | 1.52% | 11:50 |
| FTSE 100 | 5,066.81 | 25.20 | 0.50% | 11:35 |
| CAC 40 | 2,810.11 | 28.43 | 1.02% | 12:13 |
| DAX | 5,196.56 | 32.35 | 0.63% | 12:30 |
| IBEX 35 | 7,996.90 | 166.10 | 2.12% | 11:35 |
| FTSE MIB | 13,664.90 | 183.32 | 1.36% | 11:30 |
| AEX | 264.72 | 1.28 | 0.49% | 12:10 |
| OMX STOCKHOLM 30 | 862.35 | 0.17 | 0.02% | 11:30 |
| SWISS MARKET | 5,298.83 | 10.35 | 0.20% | 11:30 |
Asia-Pacific
| INDEX | VALUE | CHANGE | % CHANGE | TIME |
|---|---|---|---|---|
| NIKKEI 225 | 8,560.26 | -180.90 | -2.07% | 09/22 |
| HANG SENG INDEX | 17,668.80 | -243.12 | -1.36% | 04:01 |
| S&P/ASX 200 INDEX | 3,903.20 | -61.70 | -1.56% | 03:07 |
Commodities
| VALUE | CHANGE | % CHANGE | TIME | |
|---|---|---|---|---|
| Nymex Crude Future | 80.14 | -0.37 | -0.46 | 16:38 |
| Nymex Henry Hub Future | 3.70 | -0.01 | -0.19 | 16:38 |
| Gold 100 oz Future (USD/t oz.) | 1,652.50 | -89.20 | -5.12 | 16:38 |
| UBS Bloomberg CMCI | 1,501.41 | -32.73 | -2.13 | 16:19 |
Currencies
| CURRENCY | VALUE | CHANGE | % CHANGE | DATE/TIME |
|---|---|---|---|---|
| EUR-USD | 1.3509 | 0.0044 | 0.3281% | 16:49 |
| USD-JPY | 76.6800 | 0.4365 | 0.5725% | 16:49 |
| GBP-USD | 1.5477 | 0.0134 | 0.8727% | 16:48 |
| USD-CAD | 1.0288 | 0.0003 | 0.0304% | 16:49 |
Paul A. Ebeling, Jnr
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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