Today the Asian markets closed mixed, with major markets such as China, Hong Kong, Japan and South Korea closed for holiday. Taiwanese market TWSE up +0.07% to 8,202.54; Singapore STI down -0.42% to 3,083.13; Australia (the S&P/ASX 200) up +0.18% to 4,633.65; and India market, the S&P/CNX 500 down -0.36% to 4,891.55. Traders kept their positions light, awaiting a summit meeting between President Obama and Japanese Prime Minister Naoto Kan in New York on Thrusday. Obviously this meeting would determine how much Japan government would take action to currency intervention.
At 8:30 AM EST, the US Department of Labor reported U.S. weekly jobless claims, up +12,000 to 465,000 (week ended 9/18). This is bearish as Wall Street economists’ expectation was 450,000 and today data showed an increase for the first time since 5 weeks. Four week-moving average reported to fall -3,250 to 463,325. According to a private research group, the Conference Board, August index of leading economic indicatiors rose +0.3% versus an up of +0.1% in July. Analysts expected a rise of +0.2% thus August data was modestly positive. A more bullish data came from the National Association of Realtors; August Existing home sales rose +7.6%. This is “a relief” since July existing home sales were down by -27.2%. Housing analysts commented Thrusday that the worst was behind us but inventories are still very high. This supply will overpower the market and we will stay in a flat-line in regard to home sales for years to come. Other positive factors for home sales are that affordability is the best in 40 years. Conditions for morgage are improved, as July showed money easing.
Other important development in today trading session is that Warren Buffet said Thrusday he believes the U.S is still in recession. Even though he sees zero chances of a double-dip recession, “we are still in recession and this would last for a while,” said Buffett. It is important to remember that the National Bureau of Economic Research (NBER) reported Monday that the 18-month recession has ended in June 2009 of last year. The Great Buffett clearly disagreed with the NBER’s statement; his reason is to use “his common sense”. Howard Eisen, managing director and co-founder of Fletcher Bennett, believed that everyone is waited at the sideline and not investing in the U.S. equities market. Brian Stutland, president at Stutland Equities, however made a very positive comment Thrusday in regard to the market. He believed lower earnings are already baked into the recent sell-off. “Technically, however, we need to see the S&P 500 to break above 1150 to get institutional participation,” said Stutland.
The market was selling off into the closing bell. The S&P 500 closed near the low of the day, down -0.83% to 1,124.83; the DOW down -0.72% to 10,662.42; and Nasdaq down -0.32% to 2,337.08. The Financial Select Sector SPDR Index is below 200d-MA ($14.78), down -1.93% to $14.23 as many Wall Street analysts slashed estimates for major banks this week. Deutsche Bank analyst lowered estimates for both Goldman Sachs and Morgan Stanley. In addition to that, Ireland reported a weaker than expected Q2-GDP, fell hard to -1.8% y/y versus economists’ expectation of -0.4%. This bearish data from Europe stirred fear on global recovery and risks for the financial sector. Goldman Sachs Group Inc. (GS) down -2.13% to 144.91, JP Morgan Chase & Co. (JPM) down -2.10% to $39.10, Bank of America Cor. (BAC) down -1.86% to $13.17, Citigroup Inc. (C) down -2.06% to $3.80, and Morgan Stanley (MS) down -0.80% to $24.74.
Critical supports for the S&P 500 now are the 200d-MA at 1116.77 range, the psychological level 1,100, the 20d-MA 1,102.47, and the 50d-MA at 1097.59. Resistance now are the June high 1130, 1140, the September high at 1148.59 level, and MAY high at 1170.
Best regards to all, and good luck in your trading.