Monday, August 2, 2010

ISM Manufacturing, China PMI, & an SPX Trade

ISM Data
New orders slowed abruptly in July, in what is the key headline of the Institute For Supply Management report. New orders fell to 53.5, still above 50 to indicate month-to-month growth but down five points from June to indicate a significantly slower rate of growth. The 53.5 reading is the lowest since the manufacturing sector emerged from recession this time last year. Backlog orders also slowed, to 54.5 for a 2-1/2 point decline and its lowest reading since December.

China PMI
A purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics slid to 49.4 from 50.4 in June. A separate, government-backed PMI fell to 51.2 from 52.1, the Federation of Logistics and Purchasing reported yesterday. Fifty is the dividing line between expansion and contraction.

Around 09:30 EST I decided to go long some SPX E-mini Futures. The inspiration came last night. Before bed I performed various Synthesis and Analysis of China PMI data coupled with quotes from the Global debt market before bedtime. Sentiment pointed toward a rally in equities. In addition, The German Xetra Dax was up over 2% before U.S. equity trading opened. Confirmation, or so I surmised. Hence, I made a quick play and will wait for more catalysts to reveal themselves.

Related ETFs: iShares FTSE/Xinhua China 25 Index Fund (FXI:US), Materials Select Sector SPDR Fund (XLB:US), iShares Dow Jones Transportation Average Index Fund (IYT:US)

Music Selection: I saw Nas & Damian Marley perform in Brooklyn on Saturday. Positive music with a powerful message. My favorite track is leaders.

Sports: Unfortunately, NY Jets Defender Darrelle Revis wants more money. I can't blame the guy. He is the best Cornerback in the game and the backbone of our defense. We need him back.

Patrick M. Ambrus
Analyze Capital LLC
Twitter: Analyze Capital

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