Market Manipulation? Fed Fear Unfounded

I was appalled the other day when I heard the media fixating again on the Federal Reserve, because I thought Janet Yellen had clearly quelled all reason for issue in Jackson Hole. Yet, a recent report published by the San Francisco Fed seems to have the media distracted, and the unfortunate result is a misdirection for SPDR S&P 500 ETF (NYSE: SPY), SPDR Dow (NYSE: DIA) and PowerShares QQQ (Nasdaq: QQQ) traders. Today I examine whether the effects of what may be a manipulation attempt can hold and for how long, and whether or not the Fed is attempting to signal something different than what Yellen implied in Jackson Hole. The latest trading trend of the SPY shows that it matters. My conclusion is that the Fed will likely keep to its dovish tone next week, because it has tangible reason for concern in both economic data and destabilizing geopolitical factors. Thus, the latest trough offers opportunity, however it came about. See the full report Buy this Trough as the Latest Fed Fear is Unfounded.

FOMC’s Hawkish Shocker Delivers Disorder

The FOMC meeting minutes were as dangerous as I expected they would be earlier this week. The shocker offered up in the minutes was that the Fed would stop its asset purchase program sooner than some expected, and so traders wondered if that meant it would start rates higher sooner as well. Add to that revelation the fact that Germany is asking us if we ever really loved her, and you can understand the day’s emotional strife.

Today’s Market

Market ETF	07/09
Vanguard S&P 500 (NYSE: VOO)	+0.4%
iShares Dow Jones (NYSE: IYY)	+0.2%
Fidelity NASDAQ  ETF (Nasdaq: ONEQ)	+0.7%
ProShares Ultra Gold (NYSE: UGL)	+1.7%
ProShares Ultra Real Estate (NYSE: URE)	-0.1%
ProShares Ultra Oil (NYSE: UCO)	-2.3%
WisdomTree US$  Bullish (NYSE: USDU)	+0.0%
iShares 20+ Yr. Treasury (NYSE: TLT)	+0.0%

1-Day Chart of SPY at Yahoo

Stocks are unsettled thanks to the FOMC shocker and the fact that the Germans are thinking about breaking up with us on broken trust.

International Markets

EUROPE	%	ASIA/PACIFIC	%
iShares Europe (NYSE: IEV)	+0.3%	Japan Equity (NYSE: JEQ)	+0.6%
WisdomTree UK (Nasdaq: DXPS)	-1.3%	China Fund (NYSE: CHN)	-0.3%
Societe Generale ADR (OTC: SCGLY)	-1.3%	Asia Tigers (NYSE: GRR)	-0.1%
WisdomTree Germany (Nasdaq: DXGE)	+0.2%	Korea Equity (NYSE: KEF)	-0.7%
National Bank Greece (NYSE: NBG)	-0.7%	India Fund (NYSE: IFN)	-0.1%

International markets remained burdened by geopolitical chaos. Energy sources to the East and Southeast remain in question as chaos rules Iraq and as Russia continues to pester the new Ukrainian government. Let’s not even get into the volatile situation in Israel. Meanwhile, Europe does not know if it can trust the U.S. any longer, given recent espionage revelations. It has set order into disorder and regional stocks are compensating for that.

Economic Data

Economic Data Point	Prior	Current
WEDNESDAY
Mortgage Activity	-0.2%	+1.9%
EIA Petroleum Status
-Crude Oil Inventory	-3.2 MB	-2.4 MB
-Gasoline Inventory	-1.2 MB	+0.6 MB
FOMC Minutes
ADP June Regional Employment
China Reports on Inflation
US-China Strategic Economic Meeting
ECB Draghi Lecture
Economists’ Roundtable w/Greece

The key economic data point today was well discussed by your author here earlier this week in my article, Warning! The Fed Could Kill Stocks this Week. As you can see by the chart, it did kill stocks but only for about an hour or so. The FOMC offered a surprise, showing that it would be stopping its asset purchases in October of this year, dropping from $15 billion to zero rather than going on to $5 billion. That changed the timeline toward rate increase, or at least seems to have. If asset purchases are stopping early then what comes next may be doing so as well. This illustrated precisely what I discussed in my article, that the intensity of discussion about rate increases was rising, and that would deter stock investment as time progresses.

Commodity Markets

United States Oil (NYSE: USO)	-1.3%
iPath SP Crude Oil (NYSE: OIL)	-1.4%
U.S. Natural Gas (NYSE: UNG)	-1.4%
U.S. Gasoline (NYSE: UGA)	-1.0%
SPDR Gold Trust (NYSE: GLD)	+0.8%
Market Vectors Gold Miners (NYSE: GDX)	+2.6%
iShares Silver Trust (NYSE: SLV)	+0.6%
iPath DJ UBS Industrial Metals (NYSE: JJM)	-0.5%
Teucrium Corn ETF (NYSE: CORN)	-1.5%
Teucrium Wheat Fund (NYSE: WEAT)	-1.1%
Teucrium Soybean Fund (NYSE: SOYB)	-1.2%
iPath DJ-UBS Cocoa (NYSE: NIB)	-1.2%
iPath DJ-UBS Sugar (NYSE: SGG)	-1.5%
ICE Orange Juice Conc.	+0.1%
CME Lumber	+1.9%
CME Live Cattle	-1.6%

Energy prices are lower along with all sorts of commodities levered to the dollar, given that the Fed is apparently growing hawkish. If Fed tightening is ever closer, than dollar strength is as well, so the prices of commodities fall in concert. You’re welcome…

Stock Activity

Another short list of earnings reports on this light post holiday trading week, but everything turns up a notch on Friday with Wells Fargo’s (NYSE: WFC) report.

EPS REPORTS
Company	Ticker
WEDNESDAY
API Technologies	Nasdaq: ATNY
Accretive Health	Nasdaq: ACHI
CHC Group	Nasdaq: HELI
Doral Financial	NYSE: DRL
Emmis Communications	Nasdaq: EMMS
GenCorp	NYSE: GY
Griffin Land & Nurseries	Nasdaq: GRIF
Helen of Troy	Nasdaq: HELE
Hertz Global	NYSE: HTZ
MagnaChip Semiconductor	NYSE: MX
MSC Industrial Direct	NYSE: MSM
Ocean Power Technologies	Nasdaq: OPTT
Prospect Global Resources	Nasdaq: PGRX
Pure Cycle	Nasdaq: PCYO
Synergy Resources	Nasdaq: SYRG
WD-40	Nasdaq: WDFC

TODAY’S MOST ACTIVE STOCKS
BIGGEST GAINERS	% Gain
SinoCoking Coal (Nasdaq: SCOK)	+31%
CymaBay Therapeutics (Nasdaq: CBAY)	+22%
Pixelworks (Nasdaq: PXLW)	+16%
InterCloud Systems (Nasdaq: ICLDW)	+16%
Golden Minerals (Nasdaq: AUMN)	+15%
AeroVironment (Nasdaq: AVAV)	+12%
Ikonics (Nasdaq: IKNX)	+12%
Colonial Financial Services (Nasdaq: COBK)	+12%
GSI Technology (Nasdaq: GSIT)	+12%
BioAmber (Nasdaq: BIOA)	+11%
BIGGEST LOSERS	% Drop
Gigamon (Nasdaq: GIMO)	-33%
Synergy Pharmaceuticals (Nasdaq: SGYPW)	-24%
Molycorp (NYSE: MCP)	-16%
IntelliPharmaCeutics (Nasdaq: IPCI)	-14%
EveryWare Global (Nasdaq: EVRY)	-12%
Viggle (Nasdaq: VGGL)	-14%
UBIC (Nasdaq: UBIC)	-11%
Vapor (Nasdaq: VPCO)	-9%
The Container Store (NYSE: TCS)	-9%
Penford (Nasdaq: PENX)	-9%

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.