I am behind schedule so I will keep this brief!
I know that's very unprofessional and a writer should never let you think he hasn't fully researched everything better than you could ever hope to but I'd rather let you know I had a busy day and am a little behind as I'm sure this does happen to you at least once every few years and you can relate.
So I just finished the wrap-up and it's already ten to eight and we have 90 minutes until the market opens so let's see what we can accomplish between now and then:
Asia fell again! China is boosting the Yuan as the dollar gathers strength so it's net neutral for trade and they get to pretend they are trying to help. Very interesting action in Japan as Finance and Brokerage shares led a 100 point Nikkei drop! Take heed all you people who asked me what calls to buy on GS and MS – I still don't like them…
The Hang Seng gave up ANOTHER 182 points and it looks like they are determined to test the 50 dma at 19,250 – a 1,300 point drop since Jan 5th! As I said on Monday – "Are you prepared for a 300 point drop in the Dow?" I'm not saying it will happen but I am saying it could VERY EASILY happen and I get very worried when I see people trading with no hedges.
Europe is in a good mood as the ECB held rates steady again at 3.5% but the BOE riased rates to 5.25% as housing is making a strong comeback there and inflation is ahead of UK targets (2.7% to 2%). Russia seems to have resolved their issues with Belarus and I have to tip my hat to Putin as cutting them off for a couple of days – much better than dragging it out in court!
What's in a name? We'll find out today as CSCO sues AAPL over the IPhone name. I am dumbfounded at how Apple had the nerve to hold that event and announce the name IPhone without clearing this matter up first. Apple seems to think that a cell phone is very different from a VOIP phone and that Cisco's very legal trademark won't hold up across categories. The key to a judge's decision in a matter like this is whether the similar names will cause confusion in the marketplace so let the games begin!
And what's in a market? We'll find out today but I'm starting to think we're just kind of flatlining into next week's very heavy data, not to mention options expiration on Friday (you should be holding no January contracts other than momentum plays). Expect a downtick at the open at least as we need to retest our levels to see if they're real, if not, we will neet to do some considerable lightening up of positions so I'm setting trailing stops on 20% of the profits on at least 1/2 of all Jan, Feb and March positions:
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Dow 12,400 has to hold, below that is no support until a very critical test at the 50 dma at 12,300 that we’d rather not take.
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Transports need to hold 2,675.
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S&P must hold 1,410 but we can give it a pass to 1,407, which has held firm.
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NYSE 9,000 has to be a line in the sand – lt continues to be a canary is in quicksand!
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Nasdaq MUST hold 2,450! So far so good here, it is really up to the Nasdaq to give the oil people somewhere to put their money!
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The SOX will have a very tough time holding 480 – but breaking 480 was HUGE!!!
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Russell still needs to retake 780!
$53.75 (new dollar adjusted target) will hopefully be a top to oil for the rest of the week. We can look down the line to a test of $52.50 and, obviously $50. I don't know if there is anything they can do at this point to stop the slide with 150,000 February delivery contracts in need of selling but we'll certainly keep a close eye on it!
Gas inventories are out today and Zman has an excellent look ahead posted already (at least one of us is on top of things today) and makes a great case for an unbelievably low 42Bcf draw. Let's remember that anything under 100 is terrible news for gas companies. Like me, Z is starting to feel bad for poor OPEC and has taken to giving them some advice on how to properly support prices…
The bottom line at the NYMEX, huge drops on record volumes – even CNBC is giving up at this point!
The dollar is making further advances against the Euro and the Yen but still faces heavy resistance at 85.5 so we'll watch that closely, keying off gold's gyrations between $610 and $620.
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Again I stick with my premise – how can the markets go down with $54 oil???
I don't care what kind of drag the collapsing commodity prices exert on their sector, the rest of the market should be loading up for a major rally. It seems that, slowly but surely, people are coming around to my view but we are still climbing the proverbial "wall of worry" as we take yet another pass around the planet Dow, looking to break orbit and head back to 12,600.
No picks today (although we keep making a ton during the day) but I'm looking for us to pull out of this dreary pre-market and BUYBUYBUY as oil touches $53 at some point.
It's been a while since anyone was willing to sell me a DALRQ Jan '08 $2.50 for .05 but I may be cashing some out today as LLC raised their hostile bid to $10.3Bn, up 20% from their last offer!
DNA had huge, I'm sorry, I meant to say HUGE earnings so congrats to everyone who made that play! They were so good we may be sorry we sold the Jan $85s for $1.75 but we are so happy with the Jan '08 $85s we picked up Monday for $10, who cares!
GRMN dropped fast on us but I'm back in the Feb $55s at $1.80.
