UPRO: -0.14 to $122.14 ( -0.11% , -0.38% overall)– bought at $122.60

Ed’s IRA: -0.11%
DJIA: 0.09%
Nasdaq: -0.02%
S&P 500: 0.00%

The S&P 500 levels to watch today:

UPSIDE: 2001 (August 25th’s high), 2005 (August 26th’s high and the all-time high), and 2011 (top of the Bollinger Bands).
LAST CLOSE: 2000.
DOWNSIDE: 1998 (August 26th’s low), 1993-1994 (2 data points), 1991 (July’s high), 1988 (August 20th’s high), 1986 (August 21st’s low), 1984 (August 22nd’s low), 1982 (August 19th’s high), 1977 (August 20th’s low), 1971-1972 (2 data points), 1968 (June’s high), 1964 (August 15th’s high), 1963 (50 day moving average), 1958 (August 18th’s low), 1955 (August 14th’s high), 1954 (20 day moving average), 1947-1948 (2 data points), 1944 (August 11th’s high), 1941 (August 15th’s low), 1927-1939 (July’s low and 9 data points), 1926 (100 day moving average), 1924 (May’s high), 1921 (August 4th’s low), 1916 (August 1st’s low), 1909-1913 (3 data points), 1904 (August 7th’s low), and 1897 (bottom of the Bollinger Bands).

S&P 500 Daily Momentum: Bullish
S&P 500 Daily Overbought/oversold: Neutral (leaning overbought)
S&P 500 Weekly Momentum: Bearish (weakening)
S&P 500 Weekly Overbought/oversold: Neutral (leaning overbought)
S&P 500 Futures: Slightly positive
Overall: The S&P 500’s bullish momentum is starting to flatten. This could indicate a bullish pause, or a reversal. On the other hand, the Bollinger Bands are still expanding, which would seem to indicate this bull has more room to run. The overbought/oversold indicators still have some bullish room left.

Yahoo Finance: Rig company Seadrill hit by profit miss and cautious outlook

Seadrill, the world’s biggest offshore driller by market capitalisation, reported second-quarter earnings below forecasts on Wednesday and offered a cautious outlook for the rig market, sending its shares lower.

Seadrill, the crown jewel in shipping tycoon John Fredriksen’s business empire, has been hit like other rig firms by oil companies reining in spending to counter rising costs.

Seadrill’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter came in at $641 million, below forecasts of $663 million in a Reuters poll of analysts and down from the $665 million it posted a year ago.

“The near-term market for ultra-deepwater drilling units continues to be challenging, partly driven by a reduction in exploration drilling that has led to a slower growth rate in overall upstream spending,” the company said in a statement.

…The company intends to prioritise returning cash to shareholders, it said, adding that it can maintain a quarterly dividend of 1 dollar per share well into 2016, even if the rig market fails to make a significant recovery.

While I have not had time to look over their latest financials, the last point is key, since the dividend is one of the top reasons I own SeaDrill shares. The other reason? They were dirt cheap when I bought them. If they drop back down to where I bought them, I might have to add some more. I will take a “wait and see” approach to it.

UPRO: -0.32 to $122.28 ( -0.26% , -0.26% overall)–bought at $122.60

Ed’s IRA: -0.12%
DJIA: 0.17%
Nasdaq: 0.29%
S&P 500: 0.11%

In case you are wondering, I am letting the UPRO run overnight, and possibly into Thursday, as the daily momentum is still bullish.

The S&P 500 levels to watch today:

UPSIDE: 2001 (August 25th’s high and the all-time high), and 2006 (top of the Bollinger Bands).
LAST CLOSE: 1997.
DOWNSIDE: 1993-1994 (2 data points), 1991 (July’s high), 1988 (August 20th’s high), 1986 (August 21st’s low), 1984 (August 22nd’s low), 1982 (August 19th’s high), 1977 (August 20th’s low), 1971-1972 (2 data points), 1968 (June’s high), 1964 (August 15th’s high), 1962 (50 day moving average), 1958 (August 18th’s low), 1955 (August 14th’s high), 1953 (20 day moving average), 1947-1948 (2 data points), 1944 (August 11th’s high), 1941 (August 15th’s low), 1927-1939 (July’s low and 9 data points), 1925 (100 day moving average), 1924 (May’s high), 1921 (August 4th’s low), 1916 (August 1st’s low), 1909-1913 (3 data points), 1904 (August 7th’s low), and 1899 (bottom of the Bollinger Bands).

S&P 500 Daily Momentum: Bullish
S&P 500 Daily Overbought/oversold: Neutral (leaning overbought)
S&P 500 Weekly Momentum: Bearish (weakening)
S&P 500 Weekly Overbought/oversold: Neutral (leaning overbought)
S&P 500 Futures: Slightly positive
Overall: Yesterday, the S&P 500’s P&F chart showed an ascending triple top breakout, which is considered bullish long-term. However, the P&F’s price target remains at 2040, which is only a little over a 2% increase from yesterday’s close. My takeaway from this signal is limited upside, keeping in mind P&F targets aren’t always accurate. On the other hand, momentum certainly belongs to the bulls in the short term. Taking long positions in day/week/month trades is probably safe here, but only if sentiment doesn’t shift. There is still enough money sloshing around in the markets to keep equities running here. One more bullish signal: The Bollinger Bands are starting to expand, just as the market is moving upwards.

Financial Times: François Hollande purges government after leftwing revolt

Plas brought this up yesterday:

François Hollande has purged his embattled Socialist government of leftwingers opposed to EU austerity after a revolt led by Arnaud Montebourg, the flamboyant economy minister.

Mr Montebourg quit the cabinet on Monday, delivering a blistering attack on what he called “absurd” austerity policies – supported by Mr Hollande – which had brought about “the most destructive crisis in Europe since 1929”.

The outspoken minister said in a televised statement that the eurozone’s fiscal stance was “the cause of the unnecessary prolongation of the economic crisis and the suffering of the European population”.

The cabinet crisis was triggered by figures this month showing there had been no growth in the French economy in the first half of the year, with unemployment continuing to rise.

The economic gloom alarmed the left, already worried by the deep unpopularity of the government. An Ifop poll at the weekend showed Mr Hollande’s approval rating at just 17 per cent, with prime minister Manuel Valls plunging nine points to 36 per cent.

This presents a unique market situation. On one hand, France moving farther away from Germany politically would destabilize the European Union. On the other hand:

Bloomberg: Draghi Pushes ECB Closer to QE as Deflation Risks Rise

Mario Draghi just pushed the European Central Bank closer to quantitative easing.

With euro-area data this week likely to show the weakest inflation since 2009, the ECB president used a high-powered central-banking conference in Jackson Hole, Wyoming, to warn that investor bets on prices have “exhibited significant declines.”

Stocks rose, the euro fell and bond yields dropped to record lows today as the comments fanned speculation the ECB is finally heading for a form of monetary stimulus it has long avoided. Draghi previously said that a worsening of the medium-term inflation outlook would provide a reason for broad-based asset purchases.

The Aug. 22 speech “was a major event and marked a turning point in ECB rhetoric,” said Philippe Gudin, chief European economist at Barclays Plc in Paris. “We think the recent economic developments have increased the chance of outright QE as the next step.”

From a market perspective, central bank action always trumps politics (contrary to popular opinion). One can argue the ECB should have done this several years ago, although I don’t: As we have seen in the U.S., QE only creates economic window dressing by artificially pumping up markets and allowing banks to sell overpriced assets to the Fed (instead of lending money to truly help the economy). If Europe wants to pursue this, expect European markets to do well.

But what about the U.S.? With the Fed ending QE this Fall, around the same time we will possibly getting ECB action, the effect on the world economy should go like this: Dollar rises in value, euro falls, U.S. exports to Europe fall, European exports to the U.S. increase. However, because most European products tend to be high-end, unless the euro falls through the floor (which would require an exceedingly large QE from the ECB, which is not expected), European exports to the U.S. have limited upside. Overall, I would expect the U.S. exporters to be hurt by this news.

As an aside, I would also expect China to be hurt by this news, being effected in the same way as the U.S. If it hurts the Chinese economy severely enough, we might even see the Chinese de-pegging the yuan from the dollar. But this is speculation on activity at least a year away (more likely several years away). Honestly, it is hard to say what the Chinese may do.

Ed’s IRA: 0.00%
DJIA: 0.44%
Nasdaq: 0.41%
S&P 500: 0.48%

The S&P 500 levels to watch today:

UPSIDE: 1991 (July’s high), 1993-1994 (2 data points and the all-time high), and 2003 (top of the Bollinger Bands).
LAST CLOSE: 1988 (August 20th’s high).
DOWNSIDE: 1986 (August 21st’s low), 1984 (August 22nd’s low), 1982 (August 19th’s high), 1977 (August 20th’s low), 1971-1972 (2 data points), 1968 (June’s high), 1964 (August 15th’s high), 1960 (50 day moving average), 1958 (August 18th’s low), 1955 (August 14th’s high), 1952 (20 day moving average), 1947-1948 (2 data points), 1944 (August 11th’s high), 1941 (August 15th’s low), 1927-1939 (July’s low and 9 data points), 1924 (May’s high and the 100 day moving average), 1921 (August 4th’s low), 1916 (August 1st’s low), 1909-1913 (3 data points), 1904 (August 7th’s low), and 1901 (bottom of the Bollinger Bands).

S&P 500 Daily Momentum: Bullish
S&P 500 Daily Overbought/oversold: Neutral (leaning overbought)
S&P 500 Weekly Momentum: Bearish (weakening)
S&P 500 Weekly Overbought/oversold: Neutral (leaning overbought)
S&P 500 Futures: Positive
Overall: Because of the low volume Friday, most of the technicals didn’t move much. But the S&P 500 futures are giving the bulls the opening today.

For the week ahead, the big event will be the release of the second guess on 2nd Quarter U.S. GDP, coming Thursday at 8:30 am EST.

For earnings reports, I get Prospect Capital (PSEC) today, and SeaDrill (SDRL) on Wednesday. Both stocks are currently in my 401(k), which I use for long-term holdings.

Bloomberg: Jackson Hole Theme: Labor Markets Can’t Take Higher Rates

Global central bankers led by Federal Reserve Chair Janet Yellen said labor markets still have further to heal before their economies can weather higher interest rates.

Even as they signaled international monetary policies are set to diverge as economic recoveries increasingly differ, officials meeting over the weekend in Jackson Hole, Wyoming, placed jobs at the center of their decision making by saying stronger hiring and wages are still needed to drive demand.

The focus on jobs suggests the Fed and Bank of England will tighten policy within a year as their economies show signs of strengthening. By contrast, European Central Bank President Mario Draghi and Bank of Japan Governor Haruhiko Kuroda acknowledged they may be forced to deploy fresh stimulus.

Making her debut as Fed chief at the annual central bankers’ conclave in the shadow of the Teton mountains, Yellen said while U.S. hiring has improved and the debate at the Fed is shifting toward when “we should begin dialing back our extraordinary accommodation,” there is still a “significant” underuse of the workforce, and the labor market has yet to fully recover from the worst recession since the Great Depression.

Yellen can cry about “job market problems” all she wants, but she is facing an increasingly hawkish FOMC. As QE nears an end in October, those hawks will become louder.

Yahoo News: Iran says it downed Israeli drone over nuclear site

Iran’s elite Revolutionary Guard said it has brought down an Israeli stealth drone above the Natanz uranium enrichment site in the centre of the country.

This news is from Iran, so take it for what it is worth. And I would normally ignore it, except for the fact recent news stories have reasonably speculated at a potential Israeli strike in Iran. If you are dabbling in the oil markets, keep this in mind.

This week we return to my previous theme of “summer of one hit wonders” for the weekend open thread, where you can discuss any topic you like.

Today, we look at Nick Gilder. Although he did chart as the lead singer for the band Sweeney Todd, his solo career had only one number one hit, Hot Child in the City, back in 1978:

According to a Rolling Stone interview with Gilder, this is why he wrote the song:

“I’ve seen a lot of young girls, 15 and 16, walking down Hollywood Boulevard with their pimps. Their home environment drove them to distraction so they ran away, only to be trapped by something even worse. It hurts to see that so I tried writing from the perspective of a lecher — in the guise of an innocent pop song.”

I question whether taking the perspective of a lecher provides a view sympathetic to the poor girls involved in teenage prostitution. Regardless, it does make for a good song, even if it screams for a Marilyn Manson cover due to the evil nature of the lyrics (sadly, he never covered it).

Speaking of covers, there haven’t been any covers of the song by big name acts. However, most of the lesser acts which have covered it seem to have little trouble (Note: If you are in a band just starting, this is a great song to cover!). But standing out from the crowd takes some work.

One of the few that does is a band named Int’l Male, whose version has a 70’s synthesized sound to it, and includes a cute little spoken riff in the David Lee Roth style (stolen almost verbatim from the Van Halen song Panama) which suits the song perfectly:

Enjoy your weekend folks!