Another dull day in the markets.
I didn't like the way the Dow kept failing to break back over 13,300 but we didn't short anything although I remain very cautious. I'll just repost here what I wrote in comments at 4:28 and we'll see if I'm still right 15 hours later:
"Am I still expecting a sell-off? We opened Friday at 13,460 and opened yesterday at 13,350 and today we close at 13,250… I’m pretty sure the sell-off is here! My midpoint is 13,150 and that’s what we want to see hold if the range is going to improve but today we fell below 13,300 and then treated it like a cieling at 10:30, 11:15, 12:45 and 1:50 before giving up and heading lower in 2 40-point major drops and now we bounced off 13,240, which is right were we bounced this morning as well as last Thursday but, below this I don’t think we have much support above 13,000 other than a stop at the mid-point.
"The Nas has already crashed well below last Thursday’s levels and is probably heading back to 2,600 and the S&P is pretty much the same as the Dow so the key to a recovery is the Nasdaq getting back over 2,625 and the key to that is BIDU getting back to $400 so we’re pretty much screwed!"
I was only 1/2 kidding about BIDU, which zoomed to $400 on rumor it was going to become part of the Nasdaq 100 but pulled back to $389 by the day's end and will likely give up the other $10 tomorrow. BIDU is a great example of how silly the markets are, as if joining an index makes you WORTH more. Yes it means you are more likely to attract vaunted index and ETF dollars but, once that game is played out, even closer scrutiny will be placed on your individual performance and I have long said that BIDU's 186 p/e is NOT the kind of thing you want to shine a light on! I have yet to see a confirmation re. the Nasdaq and look out below if it's not true!
So tomorrow it's either hold our levels or don't. We have the OPEC meeting to look forward to as well as inventory reports that have already been gamed by last week's closing of the Houston Shipping Channel as oil tankers who travel 5,000 miles through some of the most dangerous weather conditions imaginable in sqalls and storms and 50-foot waves battering the side of the boat are stopped dead 50 miles outside of Houston by fog. Let's just pray that our Navy never runs into fog on the eve of a battle as modern technology seems to be no match for this ancient menace!
Anyway so we are very light on our oil puts ahead of tomorrow's inventory and hoping for a huge run-up and I called it at 2:36 when I said: "XOM flying up for some reason, they probably know something – expect Nigerian rebel attack this afternoon" and low and behold at 10:39 am, GMT, we have Nigerian gunmen attacking and oil vessel operated by (drum roll please) ExxonMobile! I know, it would almost be funny if a guy didn't die but he was, of course, a Nigerian, not one of the XOM execs so expect their stock to get a nice boost for failing to protect this man's life
FNM sought a different sort of protection after hours today as they are going to raise $7Bn in preferred stock (meaning any stock YOU may have of there's is NOT preferred) and cutting the dividend 30% in a move to meet capital requirements against their devaluing virtual portfolios. FRE made a similar move last week and was rewarded with a 10% gain so I'm in favor of buying into this dilutive and dividend cutting dip. The Jan 35s are $3.65 and may be less in the morning and I'd be looking for $5 on a good pop, selling Decembers if we're wrong but taking the money and running to the mall so we can do our bit for the retail sector.
Someone is spending money at GES as Q3 same store sales were up 15.8%, not bad for a brand I remember from junior high-school! In the fickle world of fashion, CHS missed their targets with just a 3.4% increase in revenues and said "We are greatly disappointed with our performance to date. Numerous challenges continue to affect the entire retail sector. It now appears that based on our November sales performance, our Q4 earnings could approach the break even level."
Punk Ziegel downgraded GS, BSC and LEH to sell and JPM downgraded GS, LEH, MS and MER. ""We fear that weaker market conditions for 2008 will reduce the number of profitable trading days," Ken Worthington wrote, adding that a modest slowdown in advisory sales will also pressure earnings. Needless to say the financials had a bad day with GS and BSC hitting the 5% rule so don't be fooled by a 1% bounce tomorrow although BSC looks very oversold to me at $94.
The dollar is down in overnight trading, usually a market booster as it rebounds the commodity sector and the Fed is about to make a move that will guarantee new all-time lows. Effectively, a fed rate cut that cuts the dollar by 5% is the government's way of seizing 5% of your cash assets to get the banks out of a bind. When money is tight, then the banks have to offer YOU more money for what you've worked your whole life to accumulate, they are forced to give YOU a reasonable return on your money. Somehow this game got turned around on us and we have been trained to feel that the banks are doing us some kind of favor by holding our money. In fact, if you give them your money to play with at 4% they will "only" charge you 6% (plus fees) when you need to borrow some and they are willing to "guarantee" that up to $100,000 of the money you give them will come back to you in a crisis.
What happened to my toaster? I want my free toaster!
I'm getting close to calling for a national money strike. If you think the writers can bring Hollywood to a standstill in two weeks, watch what happens if you refuse to put money in a bank that pays less than 6% interest.(we're willing to waive our fees on this round as a "teaser"). Don't even get me started on "free" checking. Would they rather have 2,000 people in line withdrawing the cash they don't actually have at the branch to pay for things?
Anyway, I'll save it for a weekend rant… Oil is now down exactly 10% from it's double top at $97.50 so the 5% rule says we go back to $90. Again, don't be fooled by XOM's rebel attacks or whatever, there is no uptrend until they break $90 and not breaking $90 with all this "good" news for oil will lead to BIG TROUBLE. Look how pretty and symmetrical the daily chart would look if we head back to $68 over the next 2 months (if we do I'll have it etched in gold and framed!), wouldn't it be a shame to break that pattern?
Gold went flying and the miners lagged but that play seemed pretty obvious to me so we went back into some mining plays as it shouldn't matter if the market tanks on a broker meltdown or rockets on yet another pre-fed rally, either way gold wins.
