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Thursday, July 5, 2012

Wrong timing of easing by Central bankers of China, Europe and England

Non Farm Payroll of 90k is expected
In the span of less than an hour on Thursday, China’s central bank and the European Central Bank cut interest rates and the Bank of England stepped up its economic stimulus program. The BoE as expected decided that printing another 50b pounds will help their economy. The ECB cut rates by 25 bps to .75% also as expected. They also cut its deposit rate to zero from 25 bps, giving zero incentive now to European banks to park money with them. China cut its lending rate by 31 bps and its deposit rate by 25 bps and gave banks leeway to offer loans at rates up to 30% below the benchmark level. The economic data are coming out bad but its not bad enough to add stimulus in the economy. If the doctor gives medicine for the flu ahead of time, it could be bad for the patient. Global central bankers have already overdose this market with free money. I think this was a wrong timing of easing, as market is expected to get worse in coming month especially August - October period. 

Today, Dow Jones Industrial Average (DJIA) closed down 47 point, S&P500 is down 6.5 point and Nasdaq up 0.04 point. In last four trading days, (DJIA) is up 441 point, S&P500 is up 52 point and Nasdaq is up 154 point. For the month, Dow Jones Industrial Average DJIA is up 800 point, S&P500 is up 92 point and Nasdaq is up 216 point. 
Jobless claim has been rising since march but there is a new trend that's going on with the report of jobless claim. Its reported less at the time of reporting and then its revised higher next week then the data is compared with the revised number. This minimises the impact of negative data and headline number looks good. New jobless claim showed 12k lower then expected, instead of 14k. 

Now the focus will shift on tomorrow's non farm payroll. Expected is 90k, while previous month was 65k. Market will rally if its 90k or above but there could be sell off, if it falls below 85k. 

Trading Strategy for Jul 6th: 
Market is expected open lower tomorrow as market closed in bearish zone.

For Bullish sentiment to continue: Dow needs to break 12922, while S&P500 needs to break 1374. 
For Bearish sentiment to continue:  Dow needs to break 12869, while S&P500 needs to break 1364.

After Hours Gainer:

SymbolCompany NameLastChangeChange %Volume
CFBKCentral Federal Corp.1.91+0.52+37.40%200
SSHSunshine Heart Inc.3.55+0.54+17.92%275
SAPXSeven Arts Entertainme ...0.04+0.00+11.42%1,000
ECTYEcotality Inc.0.55+0.04+7.84%600
RITTRIT Technologies Ltd.3.09+0.20+6.92%600
ZLCSZalicus Inc.1.26+0.07+5.88%118,750
XRTXXyratex Ltd.12.36+0.64+5.46%116,872
DNRDenbury Resources Inc.15.75+0.67+4.44%8,380
AMAGAMAG Pharmaceuticals Inc.15.41+0.59+4.00%11,601

After Hours Loser:

SymbolCompany NameLastChangeChange %Volume
NEWLNewLead Holdings Ltd.1.20-0.25-17.24%100
VSTMVerastem Inc.10.09-1.08-9.67%100
PRMWPrimo Water Corp.1.24-0.11-8.15%25,200
VVTVValueVision Media Inc. ...2.13-0.17-7.39%18,100
ASYSAmtech Systems Inc.3.96-0.31-7.26%10,100
ALSKAlaska Communications ...2.20-0.16-6.78%17,600
HBOSHeritage Financial Gro ...12.34-0.83-6.30%100
STXSeagate Technology Inc.23.65-1.43-5.70%166,622
FMNBFarmers National Banc ...6.05-0.36-5.62%100
BONEBacterin International ...1.28-0.07-5.19%200


Stocks for Option Trading: CAT, XOM, SPY, QQQ, IBM, PCLN, AAPl, WLT, PCX, GOOG, MT.
Upcoming FDA approval  : SLXP on July 5th and VVUS on July 17th.

DD PR A E. I. du Pont de Nemours and Co$0.8756-Jul25-Jul10-Jul25-Apr
DD PR B E. I. du Pont de Nemours and Co$1.1256-Jul25-Jul10-Jul25-Apr
GIS General Mills Inc$0.3306-Jul1-Aug10-Jul26-Jun
AT&T Inc$0.4406-Jul1-Aug10-Jul29-Jun
SBC.BA AT&T Inc$0.1476-Jul1-Aug10-Jul3-Jul
VZ Verizon Communications Inc$0.5006-Jul1-Aug10-Jul7-Jun

Economic calendar:

8:30 amProducer price indexJune0.1%-1.0%
8:30 amCore PPIJune0.3%0.2%
9:55 amUMich consumer sentimentJuly74.073.2

Today's Event (EST): 

8 a.m.Brazil inflation IPCAJun0.36%

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