Finally a down day!
I thought I was going crazy. We keep going bearish into the weekends and the market refuses to go down – it's very frustrating. There is no particular bad news, mainly this is a long overdue pullback that we've been expecting, led down by oil, which is off 5% in pre-markets (8am) back at $47.50 now that the NYMEX shenanigans around contract expiration have run their course. This is nice for us as we were shorting oil futures since Thursday and I had just said to Members in in Friday's chat: "Oil is still at $52.28, that’s a total joke. Also been flatlined since yesterday’s ridiculous pump (they did spike ti to $53.50 for a bit at Europe's open)."
Today the joke is on the oil bulls as crude plunges on the same fundamentals that have been evident for weeks to anyone who read the actual inventory report and ignored the Criminal Narrators Boosting Crude and their ridiculous parade of industry "experts," who, along with the pump-monkey in chief, attempted to herd the sheeple back into the energy sector. OIH has been the focus of our shorting so far and we noted the weakness in XOM last week as a leading indicator that the party was over.
Now we'll see how well our levels hold up during a commodity correction and we will, of course, be holding off on our bullish selections we made in both the $100K Hedged Virtual Portfolio this weekend until we see if we can hold the same old levels were watching on Wednesday: Dow 8,000, S&P 847, Nas 1,585, NYSE 5,321 and Russell 456 as those are our dollar-adjusted support levels. Below that are our chart levels of Dow 7,900, S&P 833, Nasdaq 1,580, NYSE 5,225 and Russell 444, below which is a full 5% gap to the next level of support so we get very bearish if we lose 2 of 3 of those levels.
As I mentioned in the Weekend Wrap-Up, where we reviewed all 30 of last week's featured Trade Ideas, THIS is the week when the games really begin with 150 of the S&P 500 reporting and very little economic data to distract us from the fundamentals of earnings week. China did its best to distract the masses from clear signs of a slowing GDP and diving export numbers by having Premier Wen Jiabao say Saturday that the country's stimulus package is working and the economy is "better than expected," but he cautioned that complete recovery will take much more time because the global financial crisis continues to spread.
Wen pledged to pull the country out of its slump by expanding domestic demand, building major infrastructure projects, finding jobs for college students and improving the social safety net. So it's a chicken in every pot in China and that was enough to boost the Shanghai 2.25% this morning with the Hang Seng adding 149 points (1%) to finish at 15,750 after bouncing off the 40 Week Moving Average at 15,000 in afternoon trading. That's good enough for us to roll up and increase our FXPs (ultra-short China) calls because it's now or never on a China pullback.
Europe is down 2-3% ahead of our open (9am) despite a big $2.9Bn merger between GSK and Stiefel Labs. PEP also announce a $6Bn deal to buy out two of their bottlers so be VERY aftraid that this action is doing nothing to support the pre-markets. Germany has a "Bad Bank" plan and Trichet has indicated the ECB may cut rates again, which is boosting the dollar against the Euro but the fact that these steps are needed is causing investors to take profits out of the EU markets this morning.
Of couse the big acquisition news today is ORCL grabbing JAVA away from IBM for $7.4Bn, a 50% premium to Friday's close and another thing you would think would help the market but it isn't… BAC reported a big beat but the internals were not all that great and outlook isn't so great and that is becoming a theme with banks, who are lending less and less despite all the government's efforts to push cash through the system. So banks are being filled up with cheap money, aren't lending any of it out and are making a fortune on the high-interest loans they haven't written off yet – BIG FRIGGIN' DEAL! This is not a recovery people, it's a robbery – it's your tax dollars being funneled to the bottom-line of the banks while more and more Americans lose their jobs and their homes.
This is not something we are going to be able to build a read recovery on.
