Which Way Wednesday – Waiting on the Fed

Not much to do this morning but wait patiently.  

Oil fell all the way to $42.05 in overnight trading but not the contract we were trading (thank goodness), it was the soon-to-expire April /CLJ5 contract that we knew was heading lower still (see yesterday's post).  We're back around yesterday's lows this morning and you can still take advantage of our long trade ideas on USO and UCO from yesterday's Live Trading Webinar as prices should still be good today.  

Oil inventories are at 10:30 and the API report has already indicated a huge 10Mb build is to be expected.  The wild-card is whether or not that takes into account Obama's purchase of 5Mb for the SPR last week.  Since the announcement came on Friday – it's very possible that it wasn't recorded in the current week's inventories, which are taken on Sunday.   This is why we went long on the MAY contracts (/CLK5) and not the Aprils…

I sent out a news alert earlier this morning and our Chart of the Day is cerrtainly this alarming picture of Greek 3-Year Bond Yields, which have jumped back over 20% again – something people really have to learn not to ignore!  

It was also pointed out this morning, in Bloomberg, that while Greece is scrambling to pay German Banksters 20% interest rates, there's no plan at all for paying the $1.59Bn in MONTHLY retirement benefits due to 5.5M Greeks. Greece’s economy has shrunk by a quarter under the conditions laid down by Germany and other euro-area nations in bailout terms. The jobless rate increased in the fourth quarter as the economy began shrinking again and a political standoff rekindled concern the country could leave the euro area. The percentage of adults living in households where no one works rose to 19.6 percent in 2013 to 1.1 million, from 7.5 percent in 2008.

In the midst of this looming crisis, Greek PM Alexis Tsiparis is not heading to Franfurt but to Russia, as he's heard that Vladimir Putin is a kind and reasonable man – compared to the German Banksters he's been dealing with.  Meanwhile, in Frankfurt, they are rioting in the streets to protest ECB policies which are enriching the Germans while throwing other parts of Europe into Recession (again).

Of course, the equity markets continue to keep their heads in the sand, as if it's OK for countries to have 20% debt costs in the same "union" as other countries are being PAID to borrow money.  If the US were paying 20% on our debt, our interest payments alone would be $3.2Tn a year – we would have to triple everyone's taxes just to pay the interest on the money we already borrowed.  Does that seem sustainable or would you be putting on a clown face and firebombing cars as well to get the attention of the uncaring Banksters that are deciding your fate in far away lands?  

Things are simply not as good as they seem.   Are you aware that 1/3 of the Dow components are at 52-week lows this year?   This is not what happens in a healthy market.  The laggards include the commodity-related names Exxon Mobil (XOM), Caterpillar (CAT) and Chevron (CVX), as well as broader market stocks such as American Express (AXP), IBM ( IBM), General Electric (GE), McDonald's (MCD), Verizon(VZ) and AT&T (NYSE: T).

Other blue chips haven't hit new lows yet, but are approaching them. Coca-Cola (KO), Procter & Gamble (PG), Merck (MRK) and Johnson & Johnson (JNJ) are less than 10 percent above their 52-week lows. More than half of the Dow is negative year-to-date, with Intel (INTC) the worst performing, down nearly 16 percent.

"I think whatever happens… with the Fed, the market is still headed to a technical correction based on the fact that we're going to see more and more companies lower their earnings forecast," said Peter Cardillo, chief market economist at Rockwell Global Capital. "That's a viewpoint that suggests companies are going to have to adjust and that will come in the form of a technical pullback."

He expects a decline of 8 to 10 percent in the next few weeks before stocks recover.

So do we – so be careful out there!