Well that didn't clear things up at all…
The markets were all over the place today with no really clear indication of direction and we maintained a fairly cautious stance as I still think we are due for a 150-200 point pullback before we can attempt 12,750. The more 12,600 acted like a cieling, the more I added puts and at the end of the day we grabbed some QID calls, still the surest sign of my attitude turning short-term negative.
As with yesterday's index puts, hopefully we won't need them but they sure make us sleep better as we are still carrying a lot of open calls and we grabbed the CME puts as I'm specifically looking for some pushback in commodities if our Central Bankers can stop pontificating about inflation long enough to actually do something about it.
On the whole, we shook off a lot of negative data with Consumer Confidence coming in at 64.5, just over Gerry Ford record lows and more than 10% below expectations. The Case-Shiller Home Price Index showed a 10.7% decline in home prices, setting yet another record for the administration, which is really piling them on in its final year.
We noted early in the morning that the selling lacked volume conviction but we finished the day with a surge of volume that did not move the market higher so I'm not too pleased with that. I am happy that we still have our tech leadership and the Nas finished the day up 0.6% and the Transports held 2,600, very good signs but the dollar fell a full point, back to 72.21 and commodities soared, which is a huge step backwards as low dollar buying power and high oil prices are exactly what caused the dreadful consumer confidence numbers in the first place.
There was a concerted effort during the day to pump oil higher as is often the case when CNBC starts their day with TBoone and oil climbed back over $100, after breaking below it for the third day in a row and finished at $101.22, climbing 1% between 2:18 and the NYMEX close at 2:35 in an amazing last-minute showing of interest by the oil hustlers.
Let's remember that oil (and Haliburton stock) fell 10% last week prompting the Vice President to make an emergency trip to Saudi Arabia where he assured us that the Saudis have done all they can to lower oil prices and we'll just have to deal with $100 oil as there is simply nothing that our VP can see that can be done to help the average American that will line his pockets – so we're on our own.
Just in time to back up my concerns that the rest of the world thinks our government is destroying our economy, the Economist has a 10-page special report on "The Wall Street Crisis" with a lovely lead article entitled "Apocalypse Now?" and the spin being given to global investors about our country includes gems like: "Given the nervousness about banks, many savers will want to keep their holdings below the ceiling for deposit insurance (in America, $100,000 per saver per bank). The past few months have also thrown up doubts about money-market funds, some of which have taken a bit too much risk in the search for higher yields. So far, the fund-management firms have stood behind these funds. Come the real apocalypse, would they be able to do so?"
Another gem in this issue is "Comparing Bank Crises, Past and Present" which states: "In today's unholy tangle of short-term funding and long-term derivatives contracts, more banks may well fall into the liquidity traps that snared Bear and Britain's Northern Rock. If so, central banks may find they have to go further than ever and provide a floor for asset prices in illiquid markets."
Don't worry though, all hope is not lost, I found a great video that illustrates our country's future job opportunities!
