Five Situations Investors Should Be Aware of Today!
Tuesday, January 22, 9:25 a.m. Japan’s central bank announced unlimited QE efforts last night, similar to the U.S. Fed’s announcement in December of ‘QE for as long as it takes’. The Bank of Japan will purchase 2 trillion yen in Japanese treasury bonds and 10 trillion in T’bills monthly going forward. The Japanese market reacted [...]

Tuesday, January 22, 9:25 a.m.

Japan’s central bank announced unlimited QE efforts last night, similar to the U.S. Fed’s announcement in December of ‘QE for as long as it takes’. The Bank of Japan will purchase 2 trillion yen in Japanese treasury bonds and 10 trillion in T’bills monthly going forward. The Japanese market reacted about as the U.S. market reacted to the Fed’s announcement. A big ho-hum yawn. The Nikkei closed down 0.35% last night.

India, one of the world’s largest users and hoarders of gold, announced it has raised its import tax on gold from 4% to 6% in another attempt to discourage demand for gold which it blames for 80% of its current account deficit.

In Europe, the ZEW economic expectations index, which measures investor sentiment in Germany, jumped a big 24.6 points to 31.5 in January, the second big monthly gain. It jumped out of negative territory to 24.6 in December.

The Chicago Fed’s National Activity Index (CFNAI) declined to +0.02 in December, down from +0.27 in November. But the more important 3-month m.a. improved from minus 0.13 in November to minus 0.11 in December, moving a little further away from the minus 0.7 that the Fed considers to be showing the economy is in recession.

Global markets are still somewhat overbought short-term above 50-day moving averages.

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A few casual observations.

Is the Ben Bernanke economists are now worried might not accept another term as Federal Reserve chairman the same Ben Bernanke that was so vilified with every move the Fed made in attempts to help pull the economy out of the 2008 meltdown?

The economy continues to improve and Congress is on the verge of delaying the decision over raising the debt ceiling for a couple of months. Will those two situations not minimize to some degree the concerns over the effect that spending cuts would have on a tepid economic recovery, and give Washington its best shot in three years at reaching a budget agreement?

Are most investors really still in denial regarding technical analysis? Apparently. Here are a few comments from J.C. Parets, president of Eagle Bay Capital":

“I’m always so amazed at how quickly a form of market analysis gets dismissed by certain members of the investing community. . .  It’s amazing how misinformed some people are about what technical analysis is and what it isn’t. . . . Let’s go over one more time what technical analysis actually is. As I mentioned before, it is NOT looking at one indicator and making all trading decision based off it. It is NOT looking for cup and handles and head and shoulders patterns. It is NOT voodoo with circles and lines. It IS the study of the behavior of the market and its participants. I am a technician. At our shop, we look at all asset classes, not just stocks, but commodities, currencies and fixed income markets. There is information that I promise you will not be found in a balance sheet, income statement or company conference call. We look at market sentiment, and not just retail investors, but institutions, sell side analysts, commercial hedgers and financial advisors. There are trends in seasonality that if you ignore, you’re only hurting yourself. And all this before we’ve even looked at the most basic form of securities analysis: supply and demand. . . . I know this argument will never end. We’re all human and stuck in our ways. I for one, will never have any respect for the Florida Gators or the New York Jets. I just won’t. Never have, never will. I guess those journalists, fundamental analysts, and academics that have criticized the act of analyzing price to manage risk are going to continue to do so. There’s nothing anyone can do about that. . . . But please, for goodness’ sake, do yourselves a favor and at least get it right when you criticize it. Do your homework about what it is that you’re even talking about before you start arguing against it.”

To read my newspaper column from last weekend click here:  Corporate Hoarding Of Cash May Soon Become A Big Positive!

Subscribers to Street Smart Report: The new issue of the newsletter will be available tomorrow in your secure area of the Street Smart Report website.

Yesterday in the U.S. Market.

The U.S. market was closed for the Martin Luther King Jr. holiday.

Yesterday in European Markets.

European markets were positive yesterday, many toying with multi-year highs. The Europe Dow closed up 0.5%. Among individual countries, the London FTSE closed up 0.4%. The German DAX closed up 0.6%. France’s CAC closed up 0.6%. Greece closed up 0.2%. Ireland closed up 0.1%. Italy closed up 0.4%. Spain closed up 0.7%. Russia closed up 0.5%.

Asian Markets closed mixed Sunday night and again last night.

The Asia Dow closed down 0.2% Sunday night and up 0.6% last night.

Among individual markets last night:

Australia closed up 0.1%. China closed down 0.6%. Hong Kong closed up 0.3%. India closed down 0.6%. Indonesia closed down 0.5%. Japan closed down 0.4%. Malaysia closed down 0.4%. New Zealand closed up 0.1%. South Korea closed up 0.5%. Singapore closed down 0.1%. Taiwan closed up 0.4%. Thailand closed down 0.4%.

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Markets This Morning:

European markets are mostly down fractionally this morning. The Europe Dow is down 0.2%. The London FTSE is down 0.1%. The German DAX is down 0.7%. France’s CAC is down 0.5%. Spain is down 0.4%. Greece is up 1.7%. Italy is up 0.3%. Russia down 1.0%.

Oil is up $.14 a barrel at $95.70.

Gold is unchanged at $1,688.

This Morning in the U.S. Market:

In addition to being a holiday-shortened week in the U.S. this week will be a quite light week for potential market-moving economic reports, but they will include the Chicago Fed’s National Business Activity Index that has been an accurate measure of recessions, Leading Economic Indicators, Existing Home Sales, etc. To see the full list click here, and look at the left side of the page it takes you to.

There were no reports on the holiday yesterday.

This morning’s reports are that the Chicago Fed’s National Business Activity Index declined to +0.02 in December, down from +0.27 in November. But the more important 3-month m.a. improved from minus 0.13 in November to minus 0.11 in December, moving a little further away from the minus 0.7 that the Fed considers to be showing the economy is in recession..

Still to come are Existing Home Sales, and the Richmond Fed’s Mfg Index, both of which will be released at 10 a.m.

The pre-open indicators remain flat as they have been all morning.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being down 15 points or so in the early going this morning.

To read my newspaper column from last weekend click here: Corporate Hoarding Of Cash May Soon Become A Big Positive!

Subscribers to Street Smart Report: The new issue of the newsletter will be available tomorrow in your secure area of the Street Smart Report website.

I’ll be back with the next regular blog post on Thursday morning at 9:25 a.m.

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