Commentary: Sunshine before the storm?
The very sanguine start to this week may change
on key mid-to-late week reports and events
© 2014 ROHR International, Inc. All International rights reserved.
COMMENTARY: Tuesday, July 29, 2014
There is quite a lot to be said for the constructive influence on equities of the typical early quarter upbeat corporate earnings announcements. Yet that is all part of the Sarbanes-Oxley era game. Corporate executives have become very accomplished at under projecting and then outperforming. Going back years ago, at first the weaker guidance was defensive, based on the draconian sanctions for over-estimating potential performance (a very regular occurrence during the Dot.Com Boom.)
However, as soon as jail terms became part of the punishment for such activities, the execs were all very happy to be very conservative. And then it happened: they decided they liked downplaying the outlook, and being able to take credit for what then became an earnings ‘beat’. They finally woke up to the advantages of “under promise and over deliver.”
And along with still present (if waning) central bank accommodation, the equities find that a reason to continue higher after the sort of brief reactions we have seen ever since the September S&P 500 future gapped above the 1,900 area in late May. However, after two months up near them, the inability of the recent churn to breach the extended weekly topping line and oscillator resistance that moved up to the 1,990-93 area this week is vexing. As we noted recently, this is by nature the condition for either the next major up acceleration, or conversely a more major correction than seen since April. And there hasn’t been a full blown correction since back in the fall of 2011.
So what could possibly crystallize that important interim decision on the equities leaving the churn to exhibit the next significant interim swing? Is the quiet activity early this week the sunshine before the storm?
Authorized Gold and Platinum Subscribers Click ‘Read more…’ (below) to access the balance of the Commentary and Conclusion. Silver and Sterling Subscribers Click ‘Read more…’ (below) to access the balance of the Commentary discussion.
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2014/07/30: TrendView VIDEO: Global View (early)
2014/07/30: TrendView VIDEO: Global View (early)
© 2014 ROHR International, Inc. All International rights reserved.
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TrendView VIDEO ANALYSIS & OUTLOOK: Wednesday, July 30, 2014 (early)
In spite of the Ukraine-Russia problems and geopolitical disruption elsewhere, the equities managed to push up for most of last week and were even able to rebound on Monday. It illustrates the degree to which equity market participants have possibly still not taken the potential risks inherent in multiple unstable geopolitical developments quite as seriously as they should. That came home to roost yesterday in the form of the US announcement of greater sanctions on Russia. These were more extensive than expected from what had been a very lax approach previous, and carries the risk of a backlash of economic pressure on the still weak European economy. Ergo the equities late session selloff.
And in any event the classical question, “Are the equities back in a ‘bad news is good news’ psychology?” was already not faring well in the wake of serial soft European economic data. The bottom line is that developed economy central banks other than the ECB are getting out of the QE business. So the accelerated ‘bad news is good news’ psychology which has been apparent ever since Ben Bernanke instituted QE3 is waning. Note how the much weaker-than-expected earnings announcement from Amazon last week weighed on the equities. Once earnings season is over the markets are likely to be more directly ‘data driven’ once again as well.
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Video Timeline: It begins with macro (i.e. fundamental influences) discussion of some of the factors noted above and the continued weak data out of both Asia and Europe and now even the somewhat less than impressive US Case-Shiller Home Price indications. Of course, all of that will be the lesser early week influences by the time many of you view this in the wake of this morning’s pending first look at US Q2 GDP, and that is followed by this afternoon’s FOMC statement (only… this is not a press conference meeting.)
It moves to SEPTEMBER S&P 500 FUTURE short-term view at 02:15 and intermediate term at 05:00, then the OTHER EQUITIES from 06:40, with GOVVIES analysis beginning at 09:50 and SHORT MONEY FORWARDS at 13:50. FOREIGN EXCHANGE begins with the US DOLLAR INDEX at 17:00, jumping over to EUROPE at 19:00 and ASIA at 22:20, followed the CROSS RATES at 24:40 (with an expanded EUR/GBP weekly chart to review the critical nature of .8000-.7950 support Tolerance at .7923), and a return to SEPTEMBER S&P 500 FUTURE at 27:50 for a final view and additional perspective. We suggest using the timeline cursor to access the analysis most relevant for you.
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Authorized Gold and Platinum Subscribers click ‘Read more…’ (below) to access the balance of the opening discussion and TrendView Video Analysis and General Update. Silver and Sterling Subscribers click ‘Read more…’ (below) to access the balance of the opening discussion.
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