A bullish-looking Greek prophecy inspires stateside investors to “gyro-rating” gains Thursday. As of 11:35 ET the SP-500 (SPY) is up 0.85% as back-and-forth trading takes a turn for the better within key congestion on Day 9 of the market’s rally attempt.
Day 5 of tit-for-tat and mostly punishing conditions for hard-nosed bulls and bears is up to its game of business as usual Thursday. Yet, while prices remain bound in congestion, obviously wary investor sentiment ($VIX) and an inability of bears to follow-through is increasingly providing technical evidence of less gloomy June conditions ahead.
In the spotlight, it doesn’t take an Oracle to realize, short-covering aside, a massive price spike in major Greek (GREK) indices and stocks (NBG) in excess of 10% is going to have US investors do more than just sit up and take technical notice.
The strong country bid comes in front of this weekend’s anxiously-awaited elections, which if anti-austerity party Syriza wins, could lead to Greece leaving the Eurozone. That said, unofficial or “secret polls” being held during the quiet period leading into the re-vote are indicating a victory by pro-austerity party, New Democracy.
On the officially-sanctioned stateside economic front, weekly claims continue to point at further good times ahead or gloomier days in the forecast, depending on which investors have been polled. By the numbers, filings for first-time jobless benefits climbed from an upwardly-revised 380,000 to 386,000 and well-above estimates of 375,000.
The likely upshot of Wednesday’s week jobs-related data is it builds the case for bulls needing a fix of quant easing as a means to an end come next week’s June FOMC policy meeting.
Separately, total consumer prices for May look to mostly confirm Wednesday’s evidence of easing and in-check inflation which might otherwise handcuff Fed officials from taking action and instead opting to remain “ready to act.” By the numbers, the CPI fell by 0.3% compared to estimates of a drop of 0.2%. Core prices did however rise by 0.2% versus a forecasted 0.1% increase.
In those intertwined markets of influence, it’s a rather dull affair with modest pressure in both the 20-Yr (TLT) and dollar (UUP) assisting bulls noshing on equities. Gold (GLD) is failing to find a bid and trading flat as the positive influence of currency translation and increased likelihood of monetary action are being held in check by Thursday’s subdued inflation data and bulls more interested in currently, less-risky equities.
Somewhat more interesting, that softer commodity known affectionately as the iShares Bull ETF (AAPL) is also failing to participate in Thursday’s broad market rally. Shares of Apple are trading mostly flat and technically contained to a third session of tightening action below its 50SMA.
In the other hand and assisting bulls, the VIX ($VIX) is off a sympathetic and rather supportive -1.50% near 24%. Historically “concerned” absolute levels in the sentiment gauge are appreciatively wedged between 200SMA resistance and short-term, mean-reverting 10SMA support.
On the corporate confessional side, shares of erstwhile growth handset manufacturer Nokia (NOK) are down 15% at $2.35 and looking nearly “Finnished” as shares hit levels last seen prior to the dot.com boom after management issued its latest warning. In sympathy, shares of components supplier Qualcomm (QCOM) are off 3.50%.
Ugly highlights from the Finnish-based Nokia and world’s former No. 1 mobile phone outfit include job cuts of 10,000, management ousters and fresh warnings of continued losses looking forward as high-end competition from the likes of Apple and cheaper devices running Google’s (GOOG) Android, take their toll on the company’s once-dearly held products.
And global money center outfit Credit Suisse (CS) is off 9.50% at 18 and below its pre-2008 financial crisis low of 18.61. Today’s fallout comes after the Swiss National Bank dropped the strong suggestion of the banker needing a “marked increase” in its capital coffers in order to better prepare for a potential worsening debt crisis within its financial stability report.
Also a beneficiary of today’s unwanted recommendation, but not exactly trading in sympathy, fellow Swiss financier UBS (UBS) is up 0.60%. The apparent "buy the news" reaction is finding investors wallets as the report stated UBS' capital boost could be achieved by merely suspending its dividend or issuing a secondary in conjunction with cutting assets. "MOO-yah?"
Finally and in those sometimes accurate heat-seeking option markets, bulls and bears are busier-than-normal in Qualcomm with more than 44,000 contracts trading with calls finding favor by a 1.75-to-1.0 margin and decent action into its January options. Of notice, October 60 and 65 calls are seeing heavy volume of 3,000 and 5,100 respectively. However, volume still well-below existing open interest is making a clear call on those calls, the equivalent of having bar strength of 1 or 2 on a scale of 4 or 5 in our opinion.
Technically, today’s Nokia-inspired pressure has broken 200SMA support. That’s not a first for QCOM stock though, as it continues to trade within a key month-long consolidation attempting to reverse its correction from early April. Support for the consolidation is provided by its 38% Fibonacci retracement off the March 2009 bottom, a weekly channel support line and the fact as a supplier to the mobile handheld device market, Qualcomm doesn’t have all of its “Apple’s” in one basket.
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