Market Observations 01/19/07
In our top story tonight, the leader of al-Qaida in Iraq, Abu Musab al-Zarqawi, is STILL dead and someone else has taken his place.
Benny & The Feds warned that rising entitlement obligations (medicare & social security) will put enormous pressure on the federal budget in coming years, which may lead to rapid growth in debt and interest payments.
Bernanke added, "If early and meaningful action is not taken [to lower the budget deficit], the U.S. economy could be seriously weakened." A possible government financial crisis, really?
Having bounced off 82 around Dec 4th, the dollar index poked 85 and seems headed for 86. Watch the Fed's open market operations and the dollar as liquidity barometers for the market. Gold of late has rebounded from $605 to $638.
Bonds still getting punked as the 10 yr crossed 4.81% (110.18) , but rebounded to 4.74 as a media spin caused a false read on building permits & housing starts. Upon further review, SFR starts DOWN 4.1% means housing is still plunging.
Crude oil over the same period falling from $64 to our target of $52, and briefly sinking under $50. The cheap aroma of a forced liquidation (unwinding of positions due to hedge fund failure) and panic is in the air.
EIA inventories showed a major build, crude is now at a 20 month low, falling from $79 to $50 and has the DJTA rocketing back up since 12/22/06. I guess its time to trot out the "peak oil" shills and Nigerian rebels, eh?
Last week, "watch the BOJ's action and the markets reaction, as well as any sudden movement off the current level 1430-1440 SP500 for a "tell" of things to come."
The BOJ rate was unchanged at 0.25%, and the carry trade raged as the band played on. SP500, DJIA, NDX & NAZ all time & 6 year closing highs last week.
This week, the DJIA is deceivingly down slightly, while the AMEX (XMI) and DJIA comp made fresh highs.
Under the covers a broadbased sell off seems to be mounting. All the signs of a flight to safety are there as the RUT can't break through 800 and the SOXX, XAU & XOI have all been hurting since Dec.
IBM met expectations, yet got slammed 7.5% in two days, Intel meeting expectations but got slammed 8% in two days. Motorola net dropped 48% as margins collapsed, they will lay off 3500.
GE -2% as earnings doubled, but they will restate back to 2001 to account for a $343M reduction in profit due to interest rate swaps accounting methods.
Disappointing forward guidance led to a 3 day sell off in tech, with the SOXX plunging over a cliff -4% on Thurs, it was the largest single day drop in 2 months, and the largest weekly drop in the NAZ -2.4% since July.
The NDX touched 1845, then sliced through 1820 like a knife through butter coming to rest on its 25 DMA at 1793. A move below the 50 DMA at 1785 might open the flood gates.
Yesterday, the SP500 slammed its head into 1435, and fell, closing at 1426. We suspect sideways action between 1425-1435 to store up energy for the push up to 1440.
Should the SP500 break rapidly below 1420 and close there, it might be time to get out the Bermuda shorts as 1405, 1375 & 1325 await below. In the long term, a 100 point consolidation 1435 - 1335 would be healthy for the market.
Keep it tween da ditches, 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, this is The Nattering Naybob and your NOT!
Benny & The Feds warned that rising entitlement obligations (medicare & social security) will put enormous pressure on the federal budget in coming years, which may lead to rapid growth in debt and interest payments.
Bernanke added, "If early and meaningful action is not taken [to lower the budget deficit], the U.S. economy could be seriously weakened." A possible government financial crisis, really?
Having bounced off 82 around Dec 4th, the dollar index poked 85 and seems headed for 86. Watch the Fed's open market operations and the dollar as liquidity barometers for the market. Gold of late has rebounded from $605 to $638.
Bonds still getting punked as the 10 yr crossed 4.81% (110.18) , but rebounded to 4.74 as a media spin caused a false read on building permits & housing starts. Upon further review, SFR starts DOWN 4.1% means housing is still plunging.
Crude oil over the same period falling from $64 to our target of $52, and briefly sinking under $50. The cheap aroma of a forced liquidation (unwinding of positions due to hedge fund failure) and panic is in the air.
EIA inventories showed a major build, crude is now at a 20 month low, falling from $79 to $50 and has the DJTA rocketing back up since 12/22/06. I guess its time to trot out the "peak oil" shills and Nigerian rebels, eh?
Last week, "watch the BOJ's action and the markets reaction, as well as any sudden movement off the current level 1430-1440 SP500 for a "tell" of things to come."
The BOJ rate was unchanged at 0.25%, and the carry trade raged as the band played on. SP500, DJIA, NDX & NAZ all time & 6 year closing highs last week.
This week, the DJIA is deceivingly down slightly, while the AMEX (XMI) and DJIA comp made fresh highs.
Under the covers a broadbased sell off seems to be mounting. All the signs of a flight to safety are there as the RUT can't break through 800 and the SOXX, XAU & XOI have all been hurting since Dec.
IBM met expectations, yet got slammed 7.5% in two days, Intel meeting expectations but got slammed 8% in two days. Motorola net dropped 48% as margins collapsed, they will lay off 3500.
GE -2% as earnings doubled, but they will restate back to 2001 to account for a $343M reduction in profit due to interest rate swaps accounting methods.
Disappointing forward guidance led to a 3 day sell off in tech, with the SOXX plunging over a cliff -4% on Thurs, it was the largest single day drop in 2 months, and the largest weekly drop in the NAZ -2.4% since July.
The NDX touched 1845, then sliced through 1820 like a knife through butter coming to rest on its 25 DMA at 1793. A move below the 50 DMA at 1785 might open the flood gates.
Yesterday, the SP500 slammed its head into 1435, and fell, closing at 1426. We suspect sideways action between 1425-1435 to store up energy for the push up to 1440.
Should the SP500 break rapidly below 1420 and close there, it might be time to get out the Bermuda shorts as 1405, 1375 & 1325 await below. In the long term, a 100 point consolidation 1435 - 1335 would be healthy for the market.
Keep it tween da ditches, 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, this is The Nattering Naybob and your NOT!
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