Monday Morning

I have no idea where this is heading! The markets are a total mess and the technicals are pointing straight to hell but the fundamentals say we are globally in great shape so who knows what is going on. I’m more of a mindset to wait and hope for a huge drop so I can start buying but there are so many things I want to buy right now I can hardly stand it… Asia is mixed and Europe is down a bit so the markets are waiting to see what we are doing and we are waiting to see what Bernanke says today (anyone want to bet it goes well?) so don’t expect too much today. The S&P needs to retake the 200 dma at 1,260, the Nasdaq is a mile below its 200 of 2,230 so I’m watching the Dow, which is sitting right on its 200 of 10,875 and the NYSE which is just above the mark of 7,910. The short of it is that another bad day will put us firmly on a trend to make new lows for the year and put us very close to moving back into the lower end of last year’s range. I would so much rather see the Dow move on down to 10,200 than see it move up from here as a turn here will be fairly meaningless and easily reversed. At least a test of 10,700 could reestablish the Fall floor but it will take a real power move back over 11,100 to bring upward momentum back to the Dow. Nothing will happen without a SOX recovery. I’ve been saying this since March! Nothing. The global economy runs on electronics and if chips aren’t moving, nothing is. We had our first named storm already but it was wimpy and missed the Gulf oil patch. It might be close enough to give small bump to that sector but not much as inventory looms ahead on Wednesday and, with the holdiday weekend gone, there may be an ugly build in the works. Iran is back to sabre rattling which should keep the floor at no less than $70 but I wouldn’t be surprised to see another run up on almost any excuse. Gold is holding $610 in Europe but not looking very promising and I am still targeting $583 before we can have a turn but this target will be dollar dependant this week. Any hint of a rate pause from the Fed and we may see another 2% drop in our currency. We have an inverted yeild curve, where the two year rate is higher than the 10 or 30 year rate indicating that the bond markets think the Fed is totally off base which translates into a general lack of confidence in the markets. Bernanke has a chance to dig himself deeper into a hole at Georgetown today and then tomorrow in Washington and Thursday in Chicago with other Fed speakers scheduled around the country. Unless they are consistant and on message we could have a huge outflow of foreign capital this week! ===================================== I find nothing compelling here other than the same up and down oil plays we made last week. I expect today to be an up day in the oil patch but I surrender my will to Valero et al as there is no way an ordinary human can guess this market! LEH looks like it should be a winner with a 48% increase in profit, 6% over high expectations, but the market is so lethargic even that might not help. If that is the case, it is crazy to bet on anything and I am going to give it another day off to see what might still be worth shorting. MNST has joined the club of companies under option investigations. The WSJ has a great summary of don’t buy companies that will be screaming buys if any of this gets cleared: http://finance.yahoo.com/q/bc?t=5d&l=on&z=m&q=l&p=&a=&c=&s=vod LLY got some great results with AMLN and the Jul $55s might make a nice play at .35 (probably higher at open though). PFE has the real big drug announcement with inhalable insulin (maybe) and Jul $25s are just .25 although lawsuits may derail these. I’ll be out smelling flowers today, this is no day to trade – my phone will beep if the market is up 150 but anything less than that will not impress me in the least! Have a good one, – Phil