Brian's Tuesday recap: Down day breaks the progression

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Italy Bank Bad-Loan Ratio Rose to 6.9% in May vs 5.6% Yr Ago and  BANK LOANS TO PRIVATE SECTOR FELL 3.3% YOY IN JUNE. Albie said a friend just came back from Italy, visiting family, things are bad unemployment very high among youth, real estate way down, no one buying, loans very hard to get, tourist money only real cash coming in, Albanian emigrants leaving, big sign of poor economy. The Italy stuff more for the back burner as william_blount pointed out - look if China GDP, French downgrade dont mean bo diddley then Italy is a cipher for now. Also, there is chatter that French and German insurance companies are starting to buy Italian and Spanish real estate while European car sales checked in at a 17-year low and the German ZEW, sentiment index, checked in 10% below expectations.

ATHENS — Thousands of Greeks walked off the job Tuesday in a 24-hour general strike called by unions opposing a new round of austerity measures that the government has vowed to enact at the urging of the country’s foreign creditors. The sorest point is a much-delayed overhaul of the Civil Service involving thousands of layoffs and wage cuts, which is set for a vote in Parliament on Wednesday night. The package must be passed if Athens is to secure the first installment of $9 billion in rescue loans approved last week by eurozone finance ministers.

[GS] beat earnings estimates and they also put out a note regarding the ECB keeping rates low for the foreseeable future means into 2015.  PERIPHERALS ARE QUIET...MERRILL PUT OUT A REPORT THAT THE PORTUGUESE ARE CONSIDERING RESTRUCTURING THEIR DEBT  (conventional wisdom). Some chatter that major moves are coming - possibly this week. Coincidently, gary_t pointed out something is going on up in the stars - Arch Crawford; 7/17/13 (turn date), jupiter grand trine with saturn and neptune/ Crawford perspectives.


THE US MARKETS ARE FOCUSED ON BERNANKE. ONE OF THE STRATEGISTS AT A PRIMARY DEALER MADE A POINT THAT STEIN AND BERNANKE HAVE A GAME PLAN TO TRY TO KEEP THE BOND MARKETS FROM LEVERAGING UP BAD ASSETS..OTHERWISE, THEIR GAME PLAN IS LETTING AIR OUT OF THESE MARKETS, WHICH IS WHY THE BERNANKE'S TESTIMONY HAS BEEN VERY CONFUSING... HE GOES ON TO SAY THAT THE STREET IS WAY TOO BEARISH ON RATES AND THAT WILL CHANGE THIS WEEK... GOOD LUCK... THE TREASURY DEPARTMENT ASKED PRIMARY DEALERS AT THE LATEST MEETING WHY TIPS HAVE BEEN SO VOLATILE. THEY ARE THINKING THAT THEY MIGHT REDUCE TIPS ISSUANCE DRAMATICALLY AS THEY MAY HAVE SATURATED THE DEMAND...


Today started with a light 157k ESU and 600 SPU traded on Globex, trading range was 1678.70 – 1674.50. Monday’s regular trading hours (RTH’s), pit session trading range was 1679.40 – 1672.70 before settling at 16, up 7.2  handles. Late yesterday there was a buyer of 100k wkly SPY 166p expires this Friday. Roger_S (08:27) Still looking for a mid-a.m. high, though, WB? william_blount (08:32) yes RS--11:40ish central time ios s1L. Also, John_Monaco (08:27) 70% SELL SIDE ON THE NY OPEN.

Today’s RTH’s gapped 1.5 handles higher to open at 1679.20 - 1678.50 marking the high before deteriorating to 1666.50 at 12:16 and 12:30 double bottom as some traders appeared to take some profits in front of Bernanke's 2 day testimony starting tomorrow. Sam_Easley (08:40) good morning. back from vacation with wife 3 teenage daughters and their friends. note to self. don't do a wheelie on your kids bikes at my age. it doesn't end well. lol 1679.50 looms large for es - 1679 50 is short till its not. william_blount (09:39) JUST overlapping Friday highs 74's = part and parcel of trying to keep 1673 converted -- if we break it then we are in a 4th wave down -- fair odds would certainly disrupt the pop-drop-grind pattern that has ruled the roost 6 of past 8 sessions. However, as long as 1653 is not SEALED FOR HARD RESISTANCE THIS MKT IS NOT GOING ANYWHERE but UP. 1652.50 = 21.4% fib retrace of recent 3 week rally 21.4% fib retrace of 126.5 handle rally = 27 handles.

william_blount here is the drill and the MATCH for the near term in front of BEN -- BULLS WANT a lesser 4 down, BEARS want this to be a very large B wave and the BLOCKER HAS BEEN the CONTINUATION SPOO high at 1679.6 from MAY 22 -- -this fits hand in glove with the EASLEY POST earlier -- both camps 'want a down' and there is a MARKER IN PLACE. Roger_Volz (10:29) EMD mid caps weak sister with outside down day developing; 5 dayer 124.40 to firm pattern. Jimmy_Ticks offered - if you're a bear you want Germany to drop the soap - who wants to ask Merkel for a bailout pre-election (mid-Sept). Sam_Easley (10:40) I wouldn't get fooled by this nano 4 up nq its followed by a lower 5 down and right on time for my good friend mr blounts clock. Bingo! as the [BKX] was down 1% before finding its footing. The SPU clawed its way back to retest 1672 area before the closing imbalance showed a modest $275mill to the buy side. On the cash close 1671.20 area traded before settling at 1671.20, down 6.3 handles on the day - ending the weeklong run up after the Nasdaq hits a 13 year high! [YHOO] EPS beat, revenue miss, buying back shares, search revenue down - guidance/outlook disappoints. [CSX]  posts 4% higher profit on earnings of 52 cents per share.

Brian Shepard is a 20-year exchange member of the CME Group.
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