WALL STREET JOURNAL (WSJ)
Today’s headline in the
print version of the WSJ: “Threat Spreads Across Europe”:
“Borrowing costs for Italy
and Spain continued to surge on Tuesday, escalating calls for bigger steps from
euro-zone leaders amid a new warning that the crisis is dragging down even the
world's resilient emerging economies.”
“Spain's 10-year borrowing
costs touched 6.80% before settling at a euro-era closing high of 6.72%, the
second straight jump in the two trading days since European officials announced
a bank bailout of as much as €100 billion ($126 billion) that was intended to
calm markets. That fueled fears that the government itself could need its own
rescue from the rest of Europe… Italy's borrowing costs also climbed, with its
10-year yield hitting 6.26%, the highest level of the year… In a further
ominous sign, bond yields were higher all across the currency union—even in
havens such as Germany, the Netherlands and Finland.”
This news is quite
bad. It really makes one wonder why the
markets were up yesterday. I can only
guess that many see the US as a haven from contagion.
THE TELEGRAPH
“Bank for International
Settlements (BIS) warned that International lending is contracting at the
fastest pace since the onset of the financial crisis in 2008 as Europe's banks
scramble to meet tougher rules.”
US GOVERNMENT DEBT – Just
a reminder…
Greece, Italy, Ireland,
Portugal and Japan are the only countries in the world with higher government Debt
to GDP ratios than the US. Note to
Keynesians: Japan has a deficit of 200% of GDP.
Their stock market made its high 22-yrs ago; it is now less than ¼ of
where it was at the top. Their deficit
spending has not helped their economy.
Their economy is still a mess; and now they’re broke. Should we follow their lead and try to spend
our way out of this mess?
MARKET
The S&P 500 finished DOWN
0.7% to 1315. VIX rose 10% to 24.27 today, Wednesday. That’s a big rise in VIX, again, and it
doesn’t look good for the near term.
NTSM
The NTSM remained HOLD Wednesday. The VIX indicator switched to negative
today. The latest sentiment data I have
is as of the close yesterday. It
actually got more bullish, up to 39% bulls.
That’s on the low end of neutral.
I still think the S&P
500 is going to retest the 1278 area again.
What happens at 1278 will give us some insight regarding the future of
the market.
MY INVESTED POSITION
I reduced my stock
holdings to 30% (0% in stock in the 401k) at S&P 1358 after the SELL signal
on 9 May 2012. (See the page “How to Use the NTSM System” – the link is on the
right side of this page). I cut my stock
position to 15% on 17 May in order to maintain a 10% gain in a
trading/longer-term position I had in the QQQ.
