Recap 5-31-13: Thoughts & Charts

Commentary:

Some massive (an apparently hidden) sell orders into the close drove stocks to their worst 1 day change since 4/17. There’s not a ton of fundamental data driving prices, and yesterday’s knife catching exercise was clearly an epic fail, so I’m going to just blab a bit about short term price action.

US 10y yields: I think we are near the high end of a new range. Positioning is probably light or short, based on CFTC data and broker research. There isn’t a ton of conviction – consensus seems to be for flatteners instead of outright longs. We are also a couple days away from a Demark local extrema. Note that 2.3% should be reasonably strong resistance.

SPX: the sell off at the end of the day, week and month changed the chart pattern from initially looking like a mild consolidation period to something that is more suggestive of a correction. There is some support at 1625 and 1600 after that.

NKY: Volatility and Volume has come down quite a bit. We are near a Demark buy signal. We are also sitting just above the congestion area that formed following the 4/4 BoJ meeting. I think it could find a bottom near current levels and bounce next week.

Here is a chart of EU Unemployment, also known as a crap show. Note that consensus expectations are that it will end the year unchanged from here! Meanwhile, Euribor is still pricing in a full hike by 4Q 2014.

Finally, re: the homebuilding boom, here is a chart of Lumber prices, now back to last summer’s levels:

Since I still think we are likely to get a bounce / reversal next week, I think AUDUSD is a candidate to watch. IMO, most of the recent move has been driven by speculators.

Notable:

  • Chicago PMI jumped to 58.7 in May vs 50 exp and 49 prev. This is the highest print since last March
  • US Personal Spending declined -0.2% in Apr vs 0% exp and +0.2% prev
  • US Core PCE Deflator was stable at 1.1% YoY as exp
  • Canada GDP rose 2.5% SAAR in 1Q vs 2.3% exp and 0.6% prev
  • Japan CPI was stable to -0.4% YoY as exp vs -0.5% prev
  • Major Japanese corporations plan to hike mid-year bonuses by 7.37% this summer, the largest increase since 1990.
  • BOJ data showed a big drop in domestic bank JGB holdings in April, down 6.3% from 166.6 trillion in March to 156.1 in April.
  • Australia Private Sector Credit growth was stable in Apr at 3.1% vs 3.0% exp and 3.2% prev
  • EU Unemployment ticked higher to 12.2% in Apr as exp vs 12.1% prev.

Upcoming Data:

  • Mon: Japan Capital Spending, Australia New Home Sales, Retail Sales, China Non-mfg PMI, HSBC Mfg PMI, EU PMI, US ISM, Australia Current Account
  • Tue: RBA, UK Construction PMI, Australia 1Q GDP
  • Wed: EU PMI, GDP, Retail Sales, US Mortgage Applications, ADP, ISM Non-Mfg, Canada Building Permits, Australia Trade Balance
  • Thu: French Unemployment, BoE, ECB, US Jobless Claims,
  • Fri: US Employment, Canada Employment,
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