Technical Condition Shares With Europe For Control of Markets!
Tuesday, November 29, 2011. 9.25 a.m. On Saturday, after yet another ugly week, I showed you how markets, globally and in the U.S., were very oversold short-term, and at potential trendline support, likely to bring at least a short-term rally off the oversold condition. And with the catalyst of better news from Europe and that [...]

Tuesday, November 29, 2011. 9.25 a.m.

On Saturday, after yet another ugly week, I showed you how markets, globally and in the U.S., were very oversold short-term, and at potential trendline support, likely to bring at least a short-term rally off the oversold condition.

And with the catalyst of better news from Europe and that technical condition, markets rallied back strongly yesterday.

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But one day does not a rally make. And with the news this morning that the bond auction in Italy did not go all that well, markets in Europe are struggling this morning to hold onto yesterday’s big gains.

But then it’s quite normal for a one day spike-up of a huge 5%, as Germany and France saw yesterday, to run into some profit-taking the next day.

Meanwhile, the potential for last summer’s rising trading band to have merely widened out into a wider band of greater volatility, providing even better opportunities to trade the up and down moves, is real.

Judge Rejected an SEC Settlement Deal With a Financial Firm?

Can you believe it?

A federal Judge rejected a $285 million settlement deal the SEC negotiated with Citigroup because the SEC was allowing Citigroup to avoid admitting wrong-doing, by including its standard phrasing that CitiGroup “neither admits nor denies the allegations”.

That has to be a first.

The Securities & Exchange Commission was established by Congress in 1934 after the 1929 market crash. Its purpose was to clean up and then oversee the securities industry, to protect investors from the fraudulent activities of brokerage firms and banks that had been prevalent leading up to the crash, and which had continued afterward.

As I wrote in my 1999 book Riding the Bear –How To Prosper in the Coming Bear Market, “Can you imagine the public’s shock when President Roosevelt announced the name of the person he was appointing as the first chairman of the SEC? Joseph P. Kennedy.”

Kennedy had been one of the most prominent of the market manipulators who had openly misled the public for years for their own huge profits. He was even able to brag about it since it was not illegal.

The appointment brought shock waves in the media. Wall Street columnist John T. Flynn wrote, “I say it isn’t true. It’s impossible. It could not happen.”

But it did.

Kennedy’s actions amazed many. He called in the nervous heads of brokerage firms and investment banks and, to their great surprise, informed them that the SEC would not undertake investigations of their past operations.

And that’s been the pattern ever since. After each market collapse, investigations revealed the slimy activities of the financial industry, and the major firms were sued by the government, but with their cases always settled. In spite of huge payments, sometimes in the billions, the firms were allowed to say they were settling to avoid the legal costs, while “neither admitting nor denying the allegations”.

This time federal Judge Jed Rakoff said no, enough, that by not forcing the bank to admit wrong-doing fails to provide the court with a framework to determine if the agreement is appropriate.

In his ruling he said, “The SEC’s long-standing policy – hallowed by history, but not by reason – of allowing defendants to enter into consent agreements without admitting or denying the underlying allegations, deprives the court of even the most minimal assurance that the injunctive relief it is being asked to impose has any basis in fact.”

To read my weekend newspaper column ‘Here’s Something Investors Can Be Thankful For!’ click here!

Subscribers to Street Smart Report: The next issue of the newsletter will out tomorrow in the subscriber area of the Street Smart Report website.

Yesterday in the U.S. Market.

A big triple-digit rally for a change. On somewhat higher volume than lately, with 0.96 billion shares traded on the NYSE.

The Dow closed up 291 points, or 2.6%. The S&P 500 closed up 2.9%. The NYSE Composite closed up 3.2%. The Nasdaq closed up 3.5%. The Nasdaq 100 closed up 3.4%. The Russell 2000 closed up 4.8%. The DJ Transportation Avg. closed up 3.5%. The DJ Utilities Avg closed up 1.5%.

Gold surged up $33 an ounce to $1,713.

Oil closed up $1.14 a barrel at $97.91.

The U.S. dollar etf UUP closed down 0.4%.

The U.S. Treasury bond etf TLT closed down 0.1%.

Yesterday in European Markets.

Markets in Europe closed sharply higher yesterday. London closed up 2.9%. The German DAX closed up a huge 4.6%. France closed up an even larger 5.5%.

Asian Markets Closed Up Sunday Night And Again Last Night.

The Asia Dow closed up 2.2% Sunday night and up 1.8% last night.

Among individual markets last night:

Australia closed up 1.0%. China closed up 1.4%. Hong Kong closed up 1.2%. India closed down 1.0%. Indonesia closed up 1.1%. Japan closed up 2.3%. Malaysia closed up 1.0%. New Zealand closed up 0.7%. South Korea closed up 2.3%. Singapore closed down 0.2%. Taiwan closed up 1.3%. Thailand closed up 0.4%.

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Markets This Morning.

European markets were up sharply yesterday and were up again this morning. But have not been able to hold onto the gains after the news of Italian bond rates rising to new highs in this morning’s auctions. The London FTSE is now down 0.3%. Germany’s DAX is up only 0.1%. France’s CAC is up 0.1%.

Oil is up $0.33 a barrel at $98.54.

Gold is up $1 an ounce at $1,711 an ounce, and up $34 an ounce for the week.

This morning in the U.S. Market:

This will be a very big week for potential market-moving economic reports, including New Home Sales, the Home Prices Index, the ISM Mfg Index, ADP Jobs Report, and on Friday The Big One!, the Labor Department’s employment report for November. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Yesterday’s only report was that New Home Sales rose 1.3% in October over September, but only because September sales were revised down. However, year over year new-home sales in October were 8.9% above their October, 2010 level. 

This morning’s report so far was the Case-Shiller Home Price Index, which was that U.S. home prices declined 0.6% in September.

Still to come is Consumer Confidence at 10 p.m.

The important reports begin tomorrow morning with the ADP Jobs report for November, Industrial Productivity, the Chicago PMI, and Pending Home sales, with the Fed’s beige book being released in the afternoon.

Meanwhile, it still remains mostly about Europe, Europe, Europe.

Our Pre-Open Indicators:

Our pre-open indicators are off earlier highs, now pointing to the Dow being up only 20 points or so in the early going, not meaningful as to direction by the close in this volatile market.

To read my weekend newspaper column ‘Here’s Something Investors Can Be Thankful For!’ click here!

Subscribers to Street Smart Report: The next issue of the newsletter will out tomorrow in the subscriber area of the Street Smart Report website.

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I’ll be back Thursday morning with the regular Thursday morning post, at 9:25 a.m. (This blog appears every Tuesday, Thursday, and Saturday morning!).

**** End of Today’s post*****

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