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Thursday, September 15, 2005

Market Soapbox 09/15/05

Resistance: DJIA 10750; SP500 1250; Nasdaq 2200; NDX 1625
Support: DJIA 10250 ; SP500 1200 ; Nasdaq 2050; NDX 1535

Today's SOOHEY PIG PIG award goes to me, for letting the pig have a quiet day in its poke.

The last two weeks good market resilence in the face of $70 oil and the aftermath of Katrina. This week, Monday a split tape day DJIA +4, Tues, a down day with AUTHORITY DJIA -85.

Wen, a follow through down day DJIA -53. Retail Sales - 2.1% vs. est - 1.4%, marking the largest decline in nearly four years.

However, sales excluding autos +1.0% vs. est 0.5% that suggest possible underlying demand. Gold & Oil were up big, while bonds got pounded down.

Today, started up +32 DJIA but the milk turned sour on bad internals (especially on the Nasdaq) and the indices oscillated up and down, all day long, like a drunken sailor with the dry heaves.

Utilities, XAU, gold bugs, healthcare, telecom & biotech were up, semis & airlines pounded down, everything else in the red.

European & Asian markets up. Dollar up vs. Yen/Euro , XAU & gold up, XOI & oil down, commodities & bonds down.

The last two days, mixed retail sales reports, couple this with last weeks consumer credit downturn, and todays Philly Fed. The fed showed +2.2% growth, falling far short of the expected 13.3% rise and a 17.5% prior read.

Taken together this data indicates an oil price shock latency which is starting to effect the economy.

In this blog, we have previously commented on the deception which the CPI perpetrates. See our Favourite Missives section in the sidebar and read up on the CPI fraud in both the "Meet the New Boss" and "It's Getting Better?" series.

Comments from a neighbor naybob or the average American Joe: "just feeding 2 kids and 2 adults is costing over $150 a week with nothing special on the menu."

"Everything at the stores has gone up at least 10% and at $3 a gallon they are really bending us over and f__king us royally at the gas pumps."

Today's CPI report was "in line" +0.5 and indicated "tame" core inflation +0.1 for the 4th straight month. With oil spiking into the $60 - $70 range during this period, this is absolutely IMPOSSIBLE and quite unbelievable.

How long can this go on before the public finally wakes up and puts it collective head out the window and screams "we're not going to take this anymore"?

As oil continues to pull back, the dollar rises and bond prices are still falling with the 10 year yield increasing to 4.23%. The gap between 5 & 10 year notes stands at 23 basis points.

From last Thursday: "I am going out on a limb, tomorrow, expect Semi's to give back everything they gained today on a sell off. Today's pump was nothing more than short covering."

Last Friday, initially semis sold off but rebounded, SMH Semis were down. I was premature in my call last Friday and should have said that the short covering would be exposed by options expiration.

This week Semis have given back everything gained on Thurs & Fri last week. So it was a pump & dump with short covering.

From last week my optimism: "This market is continuing to show heart in the face of adversity. I expect the up trend to last through the end of this month."

The markets behaviour this week has been anything but up. On 09/09 the NYSE index hit an all time high at 7667.73 and has run down hill since.

I did some checking and noticed that after the last major US event 09/11/01 the markets were on their way down. After closing for 1 week, the market plummeted for 1 week then climbed up through the end of the year.

Just speculating: We could be seeing the exact opposite right now, the market was heading down in Aug, after the event a sympathy rise for 2 weeks. Then the gravity and reality of the situation sets in and the weak hands get shaken out as the market falls for the rest of the year.

We take it day by day and keep our eyes peeled to the sky, because it could be a name brand that pancakes us. Just my opinion, I could be wrong.

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