Phantasmix Stock Market Blog

“First Look” directional planner — reprinted with permission from Beat the Dart

September 23, 2009, 7:00 am

The Standard & Poor’s 500 index futures up 2.50 to 1069.80. Asian markets fell slightly overnight, while major European indexes inched higher in late morning trading. Traders are awaiting word from the U.S. central bank, which wraps up a two-day policy meeting later Wednesday, hoping for more clues about the strength of the economy’s recovery. As for FREE MONEY POLICIES don’t worry — Bernanke’s printing press working non-stop.

A weakening U.S. dollar supports higher stock and oil prices. Because crude is priced in dollars, investors outside the U.S. buy it up when the dollar drops. Olivier Jakob of Petromatrix in Switzerland said that while the Dollar Index — which values the dollar against a basket of foreign currencies — was now at same level as in September 2008, back then the Nymex contract was worth $109 a barrel.

Maintain resistance at 1105.40 and support at 995.20. Don’t fight the tape and go with the flow — maintain positive bias.

“First Look” directional planner — reprinted with permission from Beat the Dart

The Standard & Poor’s 500 index futures down 6.10 to 883.20, as the recession deepened with global trade off sharply — exporters like Germany, the euro zone’s biggest economy, badly hit. In the first quarter, Germany’s economy shrank 3.8 percent as demand for its high value goods, such as cars and machinery, collapsed. The first honest report without the ‘green shoot” noise.

Indeed, weak U.S. retail sales data, which was reported earlier this week showed American consumers — one of the engines of world growth — are not ready to spend again. The key problems – deleveraging, higher unemployment, reduced buying power and contracting fixed asset values.

Oil prices below $59 a barrel in Asia as signs of a weak U.S. economy led investors to mull whether this month’s crude rally was justified. Benchmark crude for June delivery was up 11 cents at $58.73; the contract climbed 60 cents overnight.

In currencies, the dollar weakened to 94.87 yen from 96.08.

Maintain resistance of S&P 500 index at 934.79, and support at 832.39. Trade stocks on both sides, take profits, reduce laggards, and increase cash position.

Reprinted with permission. Full commentary at Beat the Dart

The Federal Reserve said that the government is prepared to rescue any of the 19 banks that underwent “stress tests” and were deemed vulnerable if the recession sharply worsened. Since the 19 banks hold one-half of the loans in the U.S. banking system, they won’t be allowed to fail — even if they fared poorly on the stress tests.

“Too big to fail,” is the agenda. Indeed, taxpayer money remains at risk on behalf of banks that have received billions in government bailouts and guarantees. While the Fed released little new or concrete information, it was assumed that if the recession get worse, the Fed would have “an open check book” to pump more money into them without Congressional review, and further offered that a bank needing more capital to cushion against loan losses under its “adverse” economic scenario… should [be] considered insolvent.

To date, the government has committed more than $11 trillion in loans, investments and other measures to prop up troubled institutions and stabilize the banking system, and may need to triple that amount before the recession is over. Where the money is going to come from, is another story.