Whee, what a ride!
At 2:52 it struck me as strange that Paulson was coming on with a prepared 3pm speech that was fairly positive in nature and the markets were selling off with a vengeance so I said to members: "Paulson coming up! Talking about China, housing and will say economy is good so this might be a flush right now. Be ready to take out callers you are way ahead on, roll things that are cheap. Not for sure but worth a chance…"
We were ready for a bounce anyway as my earlier bearish comment at 11:01, with the Dow "bouncing" off 13,240 was: "If the Dow fails another run at 13,300, we should be heading to our midpoint of 13,150 at least" so we expected at least a technical bounce off that level.
There's no great trick to these predictions, we've been observing the pattern for a month where Bush goes on TV, reminds everybody he's the President and panics the markets followed by Paulson coming on and reminding everyone that Goldman Sachs is actually running the government and giving everyone a ray of hope. With time getting short before the holdidays and GS earnings tomorrow, we figured a bounce off 13,150 was going to be the best chance the bulls would have to goose the markets.
We'll see what tomorrow brings but that downturn was way overdone and we accomplished most of our target drops on the short side so it was worth a chance to see if we could get a good bounce as we headed into the mid-range of our predicted trading range.
Generally these market pumps are globally coordinated (which is why you need GS running things, there is no way the US Government can coordinate global economic action) so we'll see what tomorrow will bring. ADBE had great earnings and raised guidance and we went with the Apr/Dec $42.50s around lunch so we'll see how that play pans out in the morning. DLLR raised guidance substantially and I'm not sure I'd call that a sign of a healthy economy but good for them!
Money flew into treasuriies today, driving the 10-year yield down to 4.14% and the the very pathetic Empire State Manufacturing Index that we talked about in the morning drove the materials sector down 3.1% and gave us a huge victory on our oil puts, which we took half off the table at the day's end as we look for yet another pointless rally into Wednesday's inventories, which are extra scary as it's also contract rollover day.
As predicted, 25M barrels were dumped at the NYMEX, with traders making sure there would be no oil in the nation's stocking by cancelling the delivery of two days worth of imports during the day's trading. There are still 79M barrels on order for January, enough to bring US storage to record winter levels but these bastards are going to cancel more than half of them in order to create an artificial shortage and drive up prices in order to line their pockets at the mere cost of the world's political stability not to mention the hundreds of people who will freeze to death this winter as they make heat a precious commodity.
Once again I expect we'll just let it happen but I just feel the need to mention it while the crime is taking place.
"All that is required for evil to prevail is for good men to do nothing."
