US stocks jumped more than one percent Thursday as reports in the media suggested central banks from major economies across the world stand ready to take coordinated steps to stabilize markets if Greece elections over the weekend cause market turbulence.
The market was a rumor mill all day long, but the abovewas the mother of wishful thinking as the markets tried to find any reason, since economic data were simply not viable, to push the indexes higher.
For some spot on and clear analysis of this hyped up trading day, this is what ZeroHedge had to say:
Update 1: and here comes the revision:
- G20 SOURCES SAY CENTRAL BANKS PREPARING FOR COORDINATED ACTION AFTER THE GREEK ELECTIONS IF NEEDED
So… if Syriza wins, and Greece leave the Eurozone, there will be a response? Unpossible.
Update 2:
- EUROZONE MINISTERS TO HOLD CONFERENCE ON SUNDAY TO DISCUSS OUTCOME OF GREEK ELECTIONS
LOL, in other words:
- STUFF MAY OR MAY NOT HAPPEN DEPENDING ON WHAT MAY HAPPEN.
What a joke
* * *
And the mother of all rumors strikes:
- G20 SOURCES SAY CENTRAL BANKS PREPARING FOR COORDINATED ACTION AFTER THE GREEK ELECTIONS
- One small problem. Central banks NEVER indicate in advance what they will do. This is merely a desperation attempt to ramp markets into the close, and sucker even more retail into stocks ahead of Sunday. Now we wait for the denial because otherwise some pathetic G-20 leak just made central banks everywhere irrelevant and obsolete: remember what happened to Jamie Dimon when in March he front-ran the Fed…
As a result, Treasuries tanked even as the US sold 30-year bonds at record low yields.
On the economic side, the initial jobless claims rose 6,000 to 386,000 last week, a Labor Department report said. Consumer prices tanked 0.3 percent in May, the sharpest decline in about three years. Both the developments indicate a slowing down of the economy that may encourage the Federal Reserve to initiate QE3. That what Wall Street is hoping for.
The Dow Jones Industrial Average (DJIA) rallied 155.53 points and the S&P 500 Index (SPX) rose 14.22 points 1329.10 with energy and telecommunications advancing the most among the index’s 10 business group.
Treasuries pared some of Wednesday’s gains wit h the yield on the benchmark 10-year notes rising five basis points to 1.64 percent. The yield on 30-year bonds climbed three basis points to 2.74 percent in late afternoon trading, New York time.
ETFs in the news:
The United States Natural Gas Fund (UNG) remained the day’s top performer, vaulting 14.95 percent for the day. The Energy Information Administration report showed US natural gas inventories grew by 67 billion cubic feet last week, lower than the expected 71-75 BCF.
Natgas futures have crashed 83 percent from their July 2008 highs due to oversupply. However, thermal power plants have started switching to NG from coal to take advantage of lower prices. Also trucks are converting to natgas to reduce operating costs.
Analysts believe NG has bottomed out and a bull run would start in the fall. Other NG futures linked products also made progress with the United States 12 Month Natural Gas Fund (UNL) surging 6.85 percent for the day. Watch the charts for a breakout to the upside, if in fact momentum is strong enough to drive prices higher.
The VIX Short-Term Futures ETF (VIXY) emerged as one of the biggest losers, shedding 6.27 percent for the day. The CBOE Volatility Index (VIX) tumbled 10.67 percent as US stocks added more than one percent Thursday.
However, at 21.68, the volatility index indicates heightened uncertainty level despite reports of central bankers allegedly getting ready to take coordinated action to ease liquidity channels across the world.
For the latest Trend Tracking Index (TTI) updates, please tune into the latest StatSheet, which I will post within the hour.
Disclosure: No holdings
Contact Ulli