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INTRA-DAY NEWSLETTER ~ Feb 19 2014 Note: Charts and analysis follows today's headlines;
Greece Gives Europe A Counter-Ultimatum: Accept Or Reject Our Offer
Submitted by Tyler Durden on 02/19/2015
UPDATE: *GREEK GOVT WON'T ACCEPT ULTIMATUMS, WON'T GIVE ANY: OFFICIAL
After days of repeated ultimata from The Eurogroup, as Germany (bad cop) and the rest (good cop) make optimistic sounds, this morning's rejection of Greece's latest plan (following Greek comparisons of Germany to Nazi surrender demands) has prompted something new:\
*EU HAS 2 CHOICES, APPROVE OR REJECT GREEK REQUEST; EUROGROUP MEETING TO SHOW WHO WANTS A SOLUTION: GREEK OFFICIAL
Markets are stumbling on this news as Germany and the rest come to terms with not just the billions in debt on ECB and various bank balance sheets but the 49 billion other reasons to avoid Grexit that have mounted in TARGET2 liabilities.
Janet Yellen Spent More Time Meeting With Foreign Officials than Members of the White House
Submitted by Tyler Durden on 02/19/2015
Back in January, the FOMC surprised many when in its statement is noted that in addition to financial it was also keeping tabs on "international developments" making many wonder just whose central bank the Fed is. Why Yellen's obsession with all things international? The answer may lie in Yellen's 2014 calendar, which the WSJ has parsed and found that of her 950 meetings from February to December (one wonders just when does the Fed chair actually do work outside of meeting rooms of course), the Fed chair spent more time conversing with foreign officials (68 meetings) than with members of the White House (51 meetings).
Philly Fed Down 3rd Month In A Row, "Hope" Plunges Most Since Lehman
Submitted by Tyler Durden on 02/19/2015
Following January's crash in Philly Fed from 21-year highs to 12-month lows, expectations among the Keynesian-gazers was for a mean-reverting bounce... it didn't. Falling for the 3rd month in a row, Philly Fed printed a worse-than-expected 5.2 (against 8.43 exp), it’s lowest in a year. New Orders tumbled to its lowest in a year but most critically, "hope" - the six-month forward outlook index - tumbled from 50.9 to 29.7 - the biggest MoM drop since Lehman.
Caterpillar Suffers Worst Month Since Lehman, 26 Consecutive Months Of Declining Retail Sales
Submitted by Tyler Durden on 02/19/2015
Once upon a time, Caterpillar was the world's industrial bellwether and a Dow Jones Industrial staple. Lately, in addition to suddenly developing a very close relationship with Federal authorities who "are investigating the movement of cash among Caterpillar Inc. ’s U.S. and overseas subsidiaries", CAT has become a completely ignored and forgotten poster name of the "old-economy" (the on in which cash flow still mattered). However, there are those who still believe that the second coming "eyeballs" as the only valuation term category is destined to end in tears, and as such care about how companies like CAT do. Sadly, we have some more bad news: Caterpillar just reported that in January, it suffered its worst retail sales month since Lehman, with global sales plunging 14% from last January.
Ukraine Fighting Shifts To Mariupol Whose Capture Would Grant Russian Land Corridor To Crimea
Submitted by Tyler Durden on 02/19/2015
Yesterday, when we reported that the last Ukraine outpost in the rebel-controlled eastern territory, the town of Debaltseve, has fallen into separatist hands, we concluded that "perhaps the only question is whether fighting continues around Mariupol which would enable Russia to have a land corridor all the way to Crimea." Moments ago we got the answer when Reuters reported that "pro-Russian separatists have launched mortar attacks on government-held positions near the coastal town of Mariupol in southeast Ukraine and are building up their forces there, local military reached by telephone said on Thursday."
Walmart Slides After Cutting Sales Growth Guidance, Blames Strong Dollar
Submitted by Tyler Durden on 02/19/2015
The chorus of companies complaining against the Fed's strong dollar policy just saw one more addition, when moments ago WalMart- which reported better than expected numbers but disappointing guidance - said that "like many other global companies, we faced significant headwinds from currency exchange rate fluctuations."
(Our thanks to www.zerohedge.com for the above article headlines for today).
Summary As you can see by the news headlines, there’s a lot going on and quite frankly, most are deflationary in nature. So while we favor a short term low in gold, and a bounce to the beginning of March, it is by no means a slam dunk. If QE’s and printing money and bailouts were good for gold, we would not have a 40 month downtrend on our hands. And if it is manipulation by the control boyz, it doesn't change the fact that gold is in a downtrend. So we favor a bounce mainly due to cycles and support lines, not because we are gold bullish yet. That time will come, but metals have more to prove first.
Let’s do the cycles first today.
We touched the lower trend lines in gold where the uptrend meets the downtrend but note that the range of those trend lines still allow the potential for a probe towards 1172 at the very bottom. In its most basic form gold either re-enters the downtrend channel or holds the uptrend one. One or the other is going to occur. Its a bull/bear line if you will.
Originally we had favored higher prices to Feb 19th (plus or minus 72 hours). Instead we’re making a low as a cycle inversion occurred at the last blue cycle and that has flipped the rotation to red cycle lows instead of blue and so we’re getting a low where we thought a high would occur. Going forward, odds favor we bounce from here towards 1230-1255 into the 1st week of March. Those odds are about 85%. There are no 100% odds in markets, life, or anything else. It would require a DUAL CYCLE INVERSION in order to favor another two weeks lower and that has about a 15% chance. Have we ever seen dual cycle inversions? I’ve seen three since 2011 as they occur much more in bear markets (red cycle lows). I saw one during the bull market of 2001 – 2011. The short term red cycle window closes after the Friday close. Any new lows next week after Monday will favor two more weeks lower and a test of at least 1167-1172. Otherwise, we should see a bounce from this area. In summary, all trends remain down in gold at the moment. We look for some short term upside on this cycle with high odds, but certainly not absolutes.
 
This is gold this week (below). After hitting 1197 yesterday, price moved back up to our weekly reversal point of 1222 and was rejected back down to 1207 today. Basically, to neutralize the downtrend we must close above the moving averages and the upper trend line. Since 1222 is a weekly reversal number for us, that is what we need to see….a close above 1222 on the short term. A Friday close below 1222 will leave the downside open. Support is 1202-1205 and 1188-1193. Resistance is 1222-1225. In summary, the downtrend is still in play at the moment and we need to vault above the upper trend line a close there in order to favor higher prices into March.
Silver
Silver is at its last support point before 1560. Resistance is 1680-1725. Silver will most likely follow gold so its in the same boat.
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