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(Reuters) - Euro zone leaders may not be able to meet international demands to ramp up their own funds for bailing out the bloc's debtors
http://uk.reuters.com/article/2012/02/25/uk-eurozone-bailout-imf-idUKTRE81O08A20120225
EUR/USD and other major currency pairs are trading higher ahead of this weekend's G20 Summit. The possibility of positive developments has driven some traders who are short euros to cover their positions. G20 summits are notorious for providing weekend headline risk even if no major decisions are made.
http://www.fx360.com/?et_cid=21074201&et_rid=wallstreet1928@gmail.com
This afternoon, the major stock indexes are trading slightly lower on the trading day. Earlier today, the Dow Jones Industrial Average pierced the psychological 13,000 level. Since that high was made around the noon hour the markets have been slowly declining lower. Despite today’s shallow point decline in the major stock indexes there are still some technical sell offs worth noting.
The iShares Dow Jones Transportation ETF (NYSEARCA:IYT) is trading lower by 1.75 percent. That decline in the highly followed transportation index translates into a decline of 92.00 points in the Dow Jones Transportation Average.
The iShares Dow Jones Transportation ETF (NYSEARCA:IYT) is trading lower by 1.75 percent. That decline in the highly followed transportation index translates into a decline of 92.00 points in the Dow Jones Transportation Average.
Almost every seasoned trader follows the semiconductors stocks very closely. This afternoon, the leading semiconductor equipment makers are dropping sharply lower. KLA-Tencor Corp (NASDAQ:KLAC) is trading lower by $2.00 to $48.16 a share. Lam Research Corp (NASDAQ:LRCX) is another leading semiconductor equipment maker that is dropping by $1.63 to $40.35 a share. It is important to note that these stocks were market leaders in early February.
High oil and energy prices are also a major problem for these markets. How can the average person afford $4.00 gasoline. All traders know that it was high oil and energy prices that broke the stock market and the economy in 2008.
The leading Chinese ADR's are all trading lower today despite the Chinese easing their bank reserve requirements. Leading Chinese ADR's such as Baidu Inc (NASDAQ:BIDU), Sohu.com Inc (NASDAQ:SOHU), and Sina Corp (NASDAQ:SINA) have been under selling pressure for most of the day. If the Chinese economy begins to decline again this stock market rally; that started in December 2011, could be in jeopardy.
Another factor that is telling us this market could be facing headwinds soon is simply that the markets are trading lower into the close. Since December 19, 2011, the major stock indexes have usually rallied after the lunch hour. This late day decline is a small change in character from what we have been accustomed to seeing.
A long term (log) perspective on $AAPL
The markets are hovering slightly lower on the day with the SPDR S&P 500 ETF (NYSEARCA:SPY) trading at $135.06, -0.30 (-0.22%) and the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ) trading at $62.99, -0.06 (-0.10%). As the markets remain near their recent highs, signals of a top are all around. Here are the reasons.
1. The media is euphoric, coaxing the retail investor into the market. Throughout history, when the retail investor jumps in, the top is at hand.
1. The media is euphoric, coaxing the retail investor into the market. Throughout history, when the retail investor jumps in, the top is at hand.
2. The markets have been moving higher on lighter and lighter volume. This tells us that institutions are no longer buying and it is only retail money pushing the markets up. If institutions are not buying, be very careful.
3. Insider selling heavily outweighs insider buying. Insider sells to buys are over 5-1. If the CEO's are selling, there are definite problems ahead. Insiders in theory should know the most about their companies. Selling is never good.
4. Apple Inc. (NASDAQ:AAPL) crossed the psychological $500 level. This was a target which has now been achieved. As the little investor rushes to invest, the large players sell. Classic top name reaching a psychological milestone is a warning to all.
5. The Facebook IPO has hyped the markets and got the little investor to once again invest. In 2007, The Blackstone Group L.P. (NYSE:BX) was the Facebook of its time and its hyped IPO nailed the top now. As every little investor wants to own Facebook, history is repeating itself.
6. Wall Street is now programmed to believe everything will be fine around the world. Do you notice how credit downgrades have almost no impact anymore on the markets? Do you notice how bad news barely drops the market for an hour? The markets have been conditioned to think the world has been saved. This puts Wall Street on the edge of a cliff. Any shocking news that cannot be brushed off will cause an epic sell off. Reality is that Europe is still an ugly mess and not even close to better. Once realized, the markets will correct.
7. Barrons cover sported DOW 15,000. The last time a cover showcased something like this was in 1999-2000, just before the Dot.com bubble burst. In addition, other magazines sported people hugging their houses in 2007, nailing the top on real estate. Be warned.
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Related: SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) and PowerShares DB US Dollar Index Bullish (NYSEARCA:UUP).
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
