Monday, July 2, 2012

Limited Follow-Through After Friday's Euro-fed Bazooka Gains

Like night follows day, Monday's trading followed on the heels of Friday's great Eurozone "we fixed it, again" ramp-job; the pseudo-rally on vapors of Germany "backing down" from imposing terms and conditions on bailout money was an enormous sham, a dickering of the markets which, without doubt will be eaten alive by the short-sellers, profit-takers and high frequency traders in due time.

The retrenchment did not begin at the first possible moment, with the start of trading for the week at Monday morning's opening bell, but, with the 10:00 am EDT release of the latest ISM Index showing a massive decline, from 53.3 in May to 49.7 in June, signifying slight, but actual, contraction, stocks quickly tumbled to what turned out to be the lows of the day.

With extremely light volume, all of the major indices kept to within a very narrow range, with the NYSE Composite and NASDAQ turning positive for much of the session, eventually being joined by the S&P 500 late in the day.

Of course, the markets being what they are, no bad news - such as the ISM report - is taken without swift contrary action via the HFTs, plus this week is shortened by the odd Wednesday holiday, the 4th of July being Independence Day, and the big nugget out there comes Friday, with June's non-farm payroll report, expected to show US job gains of 90,000.

By the end of the day, the only major index not showing a gain was the Dow, though its losses were marginal. Volume was excepted to be low, and it was probably less than expected. All in all, the day was very uneventful trading-wise, though those with a keen eye for data surely did not miss the fact that the ISM numbe was under 50 - signaling contraction - for the first time in three years, and that is, in itself, notable.

However, in what can be called the most perverse trade of the day, the ISM news was so bad that the most cynical traders see it as impetus for more easing by the Federal Reserve, and we all know what that means: No, not free houses for everybody, free money for BANKERS! and, if that's not just the best news of the day, what is?

On a note unrelated to to the day's trading action and other miscellaneous items of high finance, Henry Blodget at The Daily Ticker has a neat summary of what the Obamacare tax is going to cost Americans.

Dow 12,871.39, -8.70 (0.07%)
NASDAQ 2,951.23, +16.18 (0.55%)
S&P 500 1,365.51, +3.35 (0.25%)
NYSE Composite 7,825.02, +23.18 (0.30%)
NASDAQ Volume 1,708,509,750
NYSE Volume 3,267,654,000
Combined NYSE & NASDAQ Advance - Decline: 3768-1838
Combined NYSE & NASDAQ New highs - New lows: 414-32
WTI crude oil: 83.75, -1.21
Gold: 1,597.70, -6.50
Silver: 27.50, -0.11

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