Hey-ho, let's go!
I've got a song stuck in my head and you will suffer… This is one of my power songs, the kind I crank up on the IPod when I'm zooming down a mountain on skis or driving too fast on the way to the shore. That's the kind of day this is – things look very, bright this morning (oops, that's another song!).
Nothing get's the blood pumping better than good rock and roll or your holdings in WFR being added to the S&P unless it's AMEX announcing you can now charge your mortgage (and get frequent flier miles) and having the futures move into full breakout mode certainly doesn't hurt either.
Hank Paulson had his shades on yesterday as he greeted Chinese delegates but took time to go on CNBC to assure viewers that the housing "slump is largely over." This was a great coincidence on the day the Kirk Kerkorian made a move on MGM and their ambitious CityCenter project in Las Vegas. Also coincidental was the Fed's Bear-in-Chief, Jeff Lacker, suddenly deciding that "The current funds rate has us on track to achieve what we want," he told reporters after a speech to the Money Marketeers of New York University. "So I'm comfortable with where the funds rate is now."
We caught onto this yesterday afternoon when my comment, after observing several moves in bankers and builders was: "MTN flying too – something has changed in real estate."
The market looks so good today that AL want's to say no thanks to $27Bn from AA, saying they think they can do better, setting a stage for a major brouhaha in the Aluminum market. RTP has $7.5Bn in ready cash, BHP has $8.7Bn, AA $9Bn… and that's a mere pittance compared to what the foreign firms can put down if they convert their good currencies into dollars. MT could buy anyone in the group for cash and don't forget that there's nothing stopping AL, with $7.6Bn in current assets and a $30Bn market cap, from turning around and buying AA, with a $30Bn cap. Wheeee!
Speaking of wheeeee, I'm getting instant action on my call to arms against oil as the House passes a bill to sue OPEC, which you would think I'd be happy about but I'm not as it is attacking the wrong end of the problem. OPEC, bless their slick little souls, is "only" marking up a barrel of crude $30 at the most but our friends in California are paying $4 per gallon for gas. At 42 gallons a barrel that's $168 for a $65 barrel of crude so $103 of costs are being squeezed out of you right here in the good old USA. Attacking OPEC is fun and easy but it deflects our attention from the real issue right here at home.
This is a typical lobbyist trick, deflecting Congress' attention away from the real contributors crooks to focus on a foreign an easy target that will divert the public's attention and make for lots of bullsh*t fiery campaign rhetoric that will ultimately accomplish nothing while they bleed American consumers dry at the rate of $1.7Bn a day (20M barrels a day times 42 gallons per barrel times $2 more than we paid before Bush took office).
While this cartoon alludes to taxes being part of the problem, gas prices have risen so far as to make taxes a very small part of the problem and a Civil Society survey finds that more than half of Americans would support higher gas taxes if the money went to alternate fuel research. Mr. Gore – the people are finally ready for you – oh wait, more than half the people already voted for him…
Over in China, you don't vote for anybody and the Shanghai Stock Exchange is flourishing under the weight of all that oppression and jumped another 1.5% this morning, led by banking and real estate. This is not too surprising with close to 1M people a week opening brokerage accounts in China, as I said on Monday, they are putting $2.5T of cash to work so, if this is a bubble, it can be a pretty big one. Our decision to buy out our TM caller yesterday was a good one as Toyota was snapped up in Nikkei trading this morning along with our long-suffering MTU leaps as that company jumped 4.4% (1/2 off the table, selling calls into the excitement!).
BHP and RTP led European markets higher as merger mania is no longer confined to Mondays. Russia's Norilsk Nickel is buying LionOre for $6.28Bn and BAB is bidding on Iberia Airlines and the EU is clearing a $2.2Bh deal between BMG and Univeral. Marks and Spencer (Britain's Macy's) reported a 26% jump in earnings and is firing on all cylinders, much like the EU economy! Crazy socialists that they are though, the EU is clamping down on roaming fees charged to mobile phone customers as THEY don't like their citizens to be gouged.
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Day’s |
Must |
Comfort |
Break |
Next |
|
Index |
Current |
Move |
Hold |
Zone |
Out |
Goal |
| Dow | 13,539 | -3 | 12,468 | 12,600 | 13,000 | 13,500 |
| Transports | 2,925 | 10 | 2,825 | 2,900 | 3,000 | 3,250 |
| S&P | 1,524 | -1 | 1,430 | 1,460 | 1,500 | 1,550 |
| NYSE | 9,900 | 3 | 9,218 | 9,465 | 9,600 | 10,000 |
| Nasdaq | 2,588 | 9 | 2,454 | 2,500 | 2,600 | 2,750 |
| SOX | 493 | 2 | 477 | 490 | 500 | 560 |
| Russell | 839 | 6 | 803 | 820 | 850 | 900 |
| Hang Seng | 20,798 | -44 | 20,200 | 20,600 | 21,000 | 22,000 |
| Nikkei | 17,705 | 25 | 17,400 | 17,500 | 18,300 | 18,500 |
| BSE (India) | 14,363 | -90 | 13,200 | 14,000 | 14,725 | 15,000 |
| DAX | 7,721 | 62 | 6,900 | 7,000 | 7,400 | 8,000 |
| CAC 40 | 6,109 | 20 | 5,650 | 5,800 | 6,000 | 7,000 |
| FTSE | 6,642 |
35 |
6,325 | 6,450 | 6,600 | 7,000 |
The FTSE came close to our 6,600 watch level yesterday but took a neat bounce off it at the close and hasn't looked back today (9 am). Anything down (other than oil) will be a huge disappointment today but the dollar is breaking up so let's keep an eye on gold at $660 as well as oil at $65.
Zman's been having some computer troubles but let's look sharp today as we head into the 10:30 oil inventory report but I'm on plan to stick with the puts over the holiday weekend but taking 1/2 off on the spikes per our DD and reduce strategy.
Mega kudos to Happy Trading, Gary and everyone else who followed him on last week's MGM trade, 17 times in a week is a pretty good return, even in such a good market. Our S&P chart of the day says it all – so have a good one:
