Market Wrap – A Vote of No Confidence
By Robert Perrego, at 4:26 pm on June 30th, 2009Pre-market today we had a variety of economic releases including the ICSC Goldman Store Sales, Redbook, S&P Case-Shiller HPI and the Chicago PMI released at 9:45.
The Chain-Store sales jumped to up 1.6% in the week ended June 27th but it was still a tough month overall. The previous week saw 0% improvement so the 1.6% was a decent showing. Year over year (YoY) was up from -0.9% to 0.6%. The Redbook, which includes discounters and department stores with chain stores, came in shrinking 4.3% which is not good news at all. Previously we saw -4.2% and at -4.3% the best you can say is that it is barely getting worse.
Home prices are still falling according to Case-Shiller. Surprise! The good news is they are not falling as fast, and as the market has been optimistically making good news out of ‘less bad’ bad news lately, this report was greeted well. The Case-Shiller 20-Market Index of average home prices fell 0.6%, but this is after a run of regular -2% moves. The YoY drop improved to minus 18.1% (isn’t that great) which is 0.6% better than the previous two releases.
Slightly after the open we got the Chicago PMI number which came in pretty much as expected at 39.9 with everyone expecting a 40 – but remember anything below 50 means business is contracting – and then…
The 10 a.m. Consumer Confidence number came in weak and rolled a market that was up slightly (Dow +15) to Dow -100 points within 35 minutes. Yesterdays 90 point rally on light volume gave ground much as many moves without volume do – quickly.
The intra-day chart looked like a waterfall as less confident consumers in June threw water on any continuation of yesterdays rally. The May reading came in at 54.9 which was up from April’s gloomy 40.8 and expectations were for a June reading in the 52 to 57 area. June officially came in at 49.3.
Now I keep hearing everyone declaring an end to the recession and all this talk about positive GDP growth in the latter end of 2009 is nice but I am not buying it. Consumers are paying down debt and stuffing money under their mattresses and studies are showing that credit is just not there for both businesses and consumers. Pay off a credit card and the bank says ‘thanks for the payment, your card has now been cancelled.’ No jobs, no confidence, no credit – no economy.
The talking heads at CNBC started using the term ‘Head and Shoulders’ all day today. One parrot says ’squawk’ (box) and then the next parrot squawks and talks about it and she tells two friends, and he tells two friends, and on and on.
The S&P 500 is forming a Head and Shoulders downside reversal measuring pattern, but it has yet to complete. Should the S&P 500 close below 887, the pattern is targeting 832. Much has been said about 900 being an important support level for the market so it is possible that if they start dumping stock if the market closes below 900, it would be the beginning of an assault on 887. 887 gets broken and… you get the point.
The Dow rallied at the end of the day to cut its losses to 82.38 points (-0.96%, 8447.00) while the S&P lost 7.91 (-0.85%, 919.32) with the Nasdaq 100 losing 6.58 (-0.44%, 1477.25).
Gold lost ground (-$10.50, $926.80) as the dollar rallied and oil dropped back towards $70 a barrell (-$1.60, $70.07).
The industrials led the charge down the hill losing 1.34% with finance right behind at -1.10%. Communications and consumer cyclicals completed the group coming in down 1.03% and 1.02%. These are the same sectors that have been leading the advance of the past 5 days and now, at a sign of trouble and no confidence, they were selling their winners today and locking in gains for the last day of the trading quarter.
All day all you heard from the talking heads was what a great quarter Q2 2009 was. Yes, we made a nice percentage gain, but as far as actual dollars made I doubt it compares as well.
Q2 2009. In the books!
