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Monday, May 14, 2012

ECB Printing Money, & Greece on the edge of official default

It could have been a perfect day for rally after China rate cut but the failure of meeting between four parties called upon by Greece President to form new government and rejection of Merkel's Austerity by public poll in Germany lead to broad sell off. Tonight there is lot of economic data coming out especially GDP's of France, Italy, Germany and whole Euro zone and ECB is printing money which should cause stock market rally through their fine tuning operation. Last Tuesday, eventhough ECB printed money, but Greece and France election results caused sell off instead of rally. 

Also, Greece needs to make 436 million in payment and it would default, if they are not making payment. There is no government in Greece, so the decision to make the payment is little messy. If Greece doesnt make payment it would get 7 days extension to make payment but this would be embarrasing for European countries if Greece is not able to make payment. Meanwhile, VIX has jumped to 21.87 at the close but it is still in Contango, it requires another 10% jump to change into backwardation.

Based on the chart, Dow, S&P500 are still in bearish zone and ideally it should sell off or atleast open lower but a huge leg up from futures could change it into Bullish. Tomorrow ECB is printing money, this will have big impact on futures and tomorrow market is expected to open higher. But there are too many things which could easily change direction of this market. If Germany, France, Italy, and Euro zone GDP shows recession, and Greece default on their payment this market could drop over 300 point tomorrow. But its other way round also, if the GDP is better then expected, Greece makes payment with ECB printing money, this market could be set for huge rally after 8 day of sell off.

dow 3 month chart shows bearish
For Dow to go upside, it needs to break 12725,  and 2776 and for downside Dow needs to break 12677. For 2008 like stock market crash, Dow needs to break 12200.

spx chart shows bearish
For S&P500 to go upside, it needs to break 1335,  and 1328 and for downside Dow needs to break 1335 followed by 1328 . For 2008 like stock market crash, S&P500  needs to break 1275.

There are lots of economic data coming out 
01:30EURFrench CPI (MoM)0.3%0.8%
01:30EURFrench GDP (QoQ) -0.1%0.2%
02:00EURGerman GDP (YoY) 0.8%1.5%
02:00EURGerman GDP (QoQ) 0.1%-0.2%
02:45EURFrench Non-Farm Payrolls (QoQ) -0.2%-0.1%
03:00HUFHungarian GDP (YoY) -0.4%1.4%
04:00EURItalian GDP (YoY) -1.1%-0.4%
04:00EURItalian GDP (QoQ) -0.6%-0.7%
04:30GBPTrade Balance-8.4B-8.8B
05:00EURZEW Economic Sentiment11.713.1
05:00GBPCB Leading Index (MoM)1.0%
05:00EURGerman ZEW Economic Sentiment19.023.4
05:00EURGDP (QoQ) -0.2%-0.3%
08:30USDNY Empire State Manufacturing Index8.56.6
08:30USDCPI (YoY)2.3%2.7%
08:30USDCore CPI (YoY)2.3%2.3%
08:30USDRetail Sales (MoM)0.2%0.8%
08:30USDCore CPI (MoM)0.2%0.2%
08:30USDCPI (MoM)0.1%0.3%
08:30USDCore Retail Sales (MoM)0.2%0.8%
08:55USDRedbook (MoM)-1.30%
09:00USDOverall Net Capital Flow107.70B
09:00USDTIC Net Long-Term Transactions19.4B10.1B
09:00USDUS Foreign Buying, T-bonds15.40B
10:00USDBusiness Inventories (MoM)0.4%0.6%
10:00USDNAHB Housing Market Index2625
Earnings before market open:  AONE, DKS, EGT, ASUR, HD, JCP, MIL, PLUG, SAKS, VAL, TJX, SNSS

Earning after market close:  CERP, NLST, OPXT, SINA, VRML, THQI, LWAY, ULTR, INN.

After hours big gainerGRPN, PLAB, ZNGA, OPNT, A, RENN

After hours big loser:  MM, IOC, FTR, HPP, POZN, CISG, 

For day trading watchout BIDU, AAPL, PCLN, MA, V, FAS, FAZ, TZA, TNA, TVIX, XIV, SVXY, UVXY, VXX, SPY, DIA, GLD, AGQ, INFY (remember volatility is not a long term investment option use it for strictly day trading) VIX is still in contango so any rally in it would lead to sell off at close. So becareful with UVXY, TVIX, VXX.

It's safe to invest in the stock tomorrow. Goodluck.

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