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Brian's Tuesday recap: Global growth worries, Goldman done shorting gold, and The Hoax

Brian Shepard

Posted y'day: A big buyer in SPX May 1600 C - paper paid 2.90 for 13,500. Trading > 6.50 today! ... AAPL earnings ... and, of course, The Hoax ...

Collective Intelligence!
Is one good batch of earnings enough? The concern remains economic expansion, growth and all things [AAPL] at least for the near term. So far, it would be a stretch to foresee the current economic pace continuing, without a pickup in the coming data ... Today’s global flash PMI’s disappoint, adding to the speculation of an ECB rate cut. HSBC's chief China economist, Qu Honqbin, said “new export orders contracted, suggesting external demand for China's exporters remains weak.” The eurozone sovereign bond yields pulled back (read central bank backstops) reduces their borrowing costs and a decent morning for the corporate earnings reports. All add up to a sharply higher U.S. opening - proving buyers are still out there as the 10-year yield was at its lows for the year. The central bankers are the risk-on crowd’s best friend.

Europe’s flash PMI fell to 46.5 from 46.8. Nevertheless it remains below the all-important 50 demarcation line between growth and contraction. Germany’s sharp drop in business activity fell heavily upon the euro. It shows that investors are concerned about a continuing softening in the continent’s economy. The PMI rose but remains below the 50 level of the index, which shows further contraction. As for France, some economists say the worst of their slide may be soon over. The PMI showed a substantial uptick. It rose from 41.3 to 44.1. Nevertheless it is still well below 50. They will take what they can, however we admonish that one data point does not a trend make. The tax policies of France give one pause to think that there will be a robust return to economic growth - posted by Stanton Analytics.

Top Notch Trading (07:21CT): Nasdaq low of last night of 2785.00 was part of its opening range in saturday's regular session. 2785.00-2786.00 big turning point for that future. NQ- looking for first resistance test @ 2821.75 / ES- first resistance at 1564.60, but charts like the 1568.00 price. 30 year bond has pivotal price @ 148.27. 30 year bond- failure of pivotal price looks for first support at 148.12. Updated at (09:10:12): early update shows retracement targets of 1559.20 for s&p / 2813.50 in the nasdaq. However, current trend signals are very bullish. s&p targets 1581.00, while nasdaq looks for a solid test at 2838.00.

Posted here yesterday: Where there is smoke there is fire ... A big buyer in SPX May 1600 C - paper paid 2.90 for 13,500. Trading > 6.50 today! Also, [AAPL] may have returned more than 5-8M units of defective iPhones to Hon Hai in March. Commercial Times reported that 5-8mn units of defective iPhones were returned by AAPL on Mar 15, 2013 and that it may cost RMB 1-1.6B to reforge. It is said iPhone production resumed on Apr 15, with daily output at 1-2k units and only 95% yield.

Harmonics from Kathy at http://structuraltrading.com/: DAX in retracement mode of green bullish Deep Crab, a hold above 7616.9 has next tgt 7670.5, premkt chart: http://screencast.com/t/5HISLR6BRLc
SPY http://screencast.com/t/vy19KpfGthS2
AAPL http://screencast.com/t/4eW7MxIZvAlD
NQ http://screencast.com/t/4gmmhRU5O
ES http://screencast.com/t/WjpVAZbXqpX
CL http://screencast.com/t/6JRIOiccj

WHOHA!!! Jon Corzine Sued By MF Global Bankruptcy Trustee http://bit.ly/15FfttG

And Goldman closes its gold short recommendation. Following their absolutely stellar advice to short gold on April 10, Goldman Sachs [GS] announced on Tuesday it is now time to take profit on that position: We have closed our recommendation to short COMEX Gold, as prices moved above the stop at $1,400/toz. We have exited the trade significantly below our original target of $1,450/toz, for a potential gain of 10.4%. The move since initiation was surprisingly rapid, likely exacerbated by the break of well-flagged technical support levels. Our bias is to expect further declines in gold prices on the combination of continued ETF outflows as conviction in holding gold continues to wane as well as our economists’ forecast for a reacceleration in US growth later this year – Izabella Kaminska, Financial Times.

Monday’s S&P 500 trade started with 395k ESM and 2.2k SPM traded on Globex, trading range was 1564.00 – 1548.80. Monday’s regular trading hours (RTH’s), pit session trading range was 1560.50 – 1542.80 before settling at 1555.90 up 8.30 handles. Aside from this morning's batch of good corporate earnings reports, earnings have checked in mixed, along with a number of lower guidance reports. Also, the economic data has softened including today’s PMI data. In the U.S. Markit PMI manufacturing checked in at 52, lowest since October versus exp. of 54 and previous month 54.6. At (08:22CT) John Monaco posted the opening NYSE imbalance was 80% to the BUY SIDE.

The regular trading hours opening range was 1565.30 – 1564.50, marking the low before climbing throughout the morning. (08:49:53): MS bot 400, last 100 paid 1569 - locals short and bearly got out on the minor fade back to 1568 area. At (08:54CT)Tony LaPorta pointed out that the correlations were breaking down again. Stocks significantly higher - treasuries higher - dollar higher. The game we play is not hard enough but when the correlations break down you need to take a step back and not get caught up in it all. At 9:00 new home sales checked in unch and the Richmond Fed -6 checked in at versus exp of 3 and that did little to derail the bulls. The financials were leading with [XLF] and [BKX] up >1.4% as well as [IBM] [GOOG] and [AAPL]…. At (10:17CT) The SPM was trading on the highs, 1572 area as the DAX was popping into the European close. At 10:30 the grind started, a series of new highs 1573.30 followed by 1573.80, 1574.20 and 1574.50. at 12:00 1573 area was trading in light volume.

The Hoax: iceChat (12:09CT) Explosions in the White House and Barack Obama is injured - AP. **Note: It is not too late to teach an old dog new tricks...Things can be learned regarding the hijacked AP Twitter account. First and foremost the White House will never immediately report on the condition of the president or for that matter any high ranking member of the government. Also known as the TDC - tax dodging club. Secondly, look to see how traders reacted to the news. What did they sell and or what did they buy? Most important is to preserve your capital - you don't want to be the last on on the bus, jumping in late! If anything, it is always better to wait to play the reaction to the event - than play the event itself.

The hoax spiked the SPM down to 1560 iceChat (12:11CT) Very vague at this point. mts2 (12:13CT) Word that AP twitter account hacked. Caution! iceChat (12:13:48): Dip buyer(s) to say the least. The markets easily regained the previous area(s) of trade, minutes later following the hijack confirmation. The 1573 area was trading when the closing imbalance showed the NYSE with 60% to the sell side. On the cash close the SPM future traded 1574 area before settling at 1573.60, up 17.7 handles on the futures close.

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

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