Another weekend is upon us, and so is another weekend open thread, where you can discuss any topic you like.
To get the ball rolling, I offer a rather silly topic: my favorite cartoon theme song. And here is my winner:
Mind you, I am not talking about favorite cartoon. Super Chicken was an ok cartoon, but the theme song was better than the show, in my humble opinion.
Enjoy your weekend folks, and I’ll see you back here Monday for another fun-filled week of market hijinx.
There is nothing in the technicals to prevent a sentiment move today, so expect the U.S. Employment Report to determine the market’s direction early.
The S&P 500 levels to watch today:
UPSIDE: 1881 (March 6th’s high and the all-time high), and 1888 (top of the Bollinger Bands).
LAST CLOSE: 1877.
DOWNSIDE: 1876 (2 data points), 1874 (March 6th’s low), 1871 (March 5th’s low), 1867 (February’s high), 1857 (March 3rd’s high), 1849-1850 (March 4th’s low and January’s high and December’s high), 1837 (20 day moving average), 1834 (March 3rd’s low), 1825 (50 day moving average), 1800 (100 day moving average), 1785 (bottom of the Bollinger Bands), 1775 (October’s high), 1770 (January’s low), 1767 (December’s low), 1759 (150 day moving average), 1745 (November’s low), 1737 (February’s low), and 1731 (200 day moving average).
EUM: -0.38 to $27.19 ( -1.38% , -1.27% overall)– bought at $27.54
ONVO: -0.25 to $9.90 ( -2.46% , -2.46% overall)– bought at $10.15 today
SIRI: 0.01 to $3.56 ( 0.28% , -3.00% overall)– bought at $3.67
I am back in biotech, as I have initiated a small position in Organovo Holdings, Inc. (ONVO) at $10.15. Actually, ONVO combines biotech with 3D printing. From their website:
At Organovo, we design functional human tissues. Our bioprinting technology enables the creation of 3D tissues that more accurately reproduce native tissues.
Our focus is on developing a range of tissue and disease models for medical research and therapeutic applications.
Consider the implications of that last statement. Imagine being able to produce actual human tissues for medical testing purposes. For example, imagine being able to create actual human liver cells for medical research testing, without having to remove them from a donor.
Now let’s consider the other possibility of biotech 3D printing: What if your heart is failing? They can take stem cells from you, and make you a new one. No donors, no risk of rejection, just a genetically perfect heart for you.
The long-term potential of this technology is pretty big. However, this company is still in “development stage”, so I am keeping the exposure small for now. I may add to it later.
One other note: I added this stock in my IRA, even though it is a long-term hold, mainly because of the risk involved. This is a speculative play.
The big technical event yesterday was the McClellan Summation Index passing into overbought territory, hitting 1011 (1000 is overbought). Because of the long-term nature of the MSI, this doesn’t mean we will immediately enter a bear market. Actually, I would be far more concerned if it were to hit 1200, and it could. That has been a more reliable indicator of a correction or bear market.
The daily MACD is still trending bullish, and we could see this trend continue. The party can continue, but be aware there are dark clouds on the horizon.
The S&P 500 levels to watch today:
UPSIDE: 1876 (2 data points and the all-time high), and 1891 (top of the Bollinger Bands).
LAST CLOSE: 1873.
DOWNSIDE: 1871 (March 5th’s low), 1867 (February’s high), 1857 (March 3rd’s high), 1849-1850 (March 4th’s low and January’s high and December’s high), 1834 (March 3rd’s low), 1831 (20 day moving average), 1824 (50 day moving average), 1796 (100 day moving average), 1775 (October’s high), 1770 (January’s low and the bottom of the Bollinger Bands), 1767 (December’s low), 1757 (150 day moving average), 1745 (November’s low), 1737 (February’s low), and 1730 (200 day moving average).
Bloomberg: Yellen Says Economy Falling Short of Congress-Mandated Goals
Federal Reserve Chair Janet Yellen said the Fed has more to do to reach its goals for inflation and unemployment, and to repair damage from the financial crisis.
“Too many Americans still can’t find a job or are forced to work part time,” Yellen said at her ceremonial swearing-in event today in Washington. While the central bank’s mandates of full employment and stable prices are clear, “it is equally clear that the economy continues to operate considerably short of these objectives,” she said.
The Fed, in its Beige Book review of regional conditions, said today the economy in most districts grew last month even as harsh winter weather impeded hiring, disrupted supply chains, and kept customers away from stores and auto dealerships. Yellen and her policy-making colleagues are trying to determine whether recent economic weakness stems from weather or fundamental obstacles to growth.
The Federal Open Market Committee will meet on March 18-19, its first meeting led by Yellen since she succeeded Ben S. Bernanke last month. A “significant” change in outlook for the economy might prompt the Fed to consider a change in its strategy of slowing monthly bond buying, Yellen said Feb. 27.
I am tempted to turn bullish on this piece of news. The problem with it is this: What if the economy isn’t bad or good? Then the Fed will continue tapering QE until it’s gone.
In the meantime, avoid emerging markets:
Bloomberg: China Bear Stearns Moment Seen by BofA in Solar Default
The growing risk of default by Shanghai Chaori Solar Energy Science & Technology Co. may become China’s “Bear Stearns moment,” prompting investors to reassess credit risks as they did after the U.S. securities firm was rescued in 2008, according to Bank of America Corp.
“We doubt that the financial system in China will experience a liquidity crunch immediately because of this default but we think the chain reaction will probably start,” Hong Kong-based strategists David Cui, Tracy Tian and Katherine Tai wrote in a note yesterday. During the U.S. financial crisis, it took a year “to reach the Lehman stage” when investors began to panic and shadow banking froze, the strategists added.
The maker of solar cells said March 4 it may not be able to make an 89.8 million yuan ($14.7 million) interest payment in full by the deadline tomorrow…
Chaori’s potential failure to pay investors would mark the first bond default in Asia’s largest economy, highlighting the strain in China’s $4.2 trillion bond market after a trust product issued by China Credit Trust Co. was bailed out in January. There haven’t been any defaults in China’s publicly traded domestic debt market since the central bank started regulating it in 1997, according to Moody’s Investors Service.
I don’t know if I would go so far as to call a $14.7 million default a “Bear Stearns moment”. Perhaps a better description would be “another symptom of a failing financial system”.