Resistance Hit Again

The markets were up nicely yesterday until 3 PM when prices were:

• DOW 12,678
• S&P 1,386
• NAZ 2,396

Compare to these levels. Now that the markets are heading down again today I suppose now that hedging would have been a good idea; hindsight is a beautiful thing.

Fireworks Indeed

Bernanke and Co. sending a strong message with a half point cut in rates. I didn't think they'd do that and I'll be happy sitting tight, no hedges, no new positions.

Fed Fireworks?

Will the Fed provide any fireworks today? Will 50 bps be as disappointing as 25 bps? I'm speculating that the cut will be 25 bps and I'm prepared to hedge for a down market this afternoon.
Look at ETFC for the last two days; +16.5% on monster volume. Shoulda' coulda'. Insider purchases have sparked an interest.

Recent Trading Levels

Taking note of some recent levels in comparison to those that might be pivotal:

• NAZ: peaked at 2408 on Friday
• S&P: hit 1369 on Friday
• DOW: peaked at 12,487 on Friday

There are skeptics when it comes to technical analysis and the stock market. Look, it's more about psychology than it is about stocks. Just glad to know what I'm doing.

Also, as of Jan. 25, 160 S&P 500 companies have reported earnings. 59% have beat expectations, 14% have been in-line, and 28% missed, according to Thomson Financial.

And The Last of This Week's MoMo Trades

ETFC, all done, $3.76

RAIL +14%

Freightcar America making a nice move today on good volume. Maybe it's a buy on a pullback to its 50 dma of $33.84? Stevie Cohen held a 4.6% stake at one point and this stock has been associated with Buffett, too. Now there's two that couldn't be more different.

FRE 30.77

Was in @ $31.37. Out if it breaks 30.

12:52 PM update:
FRE, $30.61, gotta' go.
AGU +14%, that's enough, don't 'ya think? Gone.

3:09 PM update:
SPY, no one will want to hold into the weekend, out $132.87

I Love This Headline

"Premarket Movers: Broadcom, E-Trade Up"
Now that the market is open:

• ETFC $3.68 +5.75%
• BRCM $24.23 +7.78%

Etrade traded as high as $4.20 yesterday evening so we'll see if it's got the legs to get back up there. Ratchet up the stops and keep 'em tight.

A Couple to Look At

I read about SNCR ($25.40, +19.42%) yesterday; thought it was interesting
Agrium, AGU ($60.05 +6.26%) doing well today, watch the $65 level
Sigma Designs, SIGM ($44.88 +7.19%)

Tourniquet

The street was pretty much spared of any bloodshed & considering yesterday's monster volume (6.9 billion shares) there seems to be some conviction behind this oversold bounce. Afterall the markets overcame a near 3% drop to finish up over 2% on the day, its largest single-day reversal in more than five years. So, now what?
Probably be looking at a tradeable rally back up to the following levels:

• DOW 12,700s
• NAZ 2,400
• S&P 1370/80

It's likely that we've not found a bottom in this market since there wasn't a sense of capitulation and suffering. There was waaaay too much speculative trading going on and too many winners/penny stocks up over 30/40% in the last couple of days.

Conversely, it's worth mentioning that the financials have acted pretty well, something to watch very closely.

"What you watch here is rallies in bear markets are short, sharp and die in low volume," Art Cashin of UBS said on CNBC after the market closed. "You got very healthy volume today. When the volume starts to dry up, get worried."

"I'm going to look towards tomorrow and Friday also," Peter Costa of Eckhart said. "Because what we want to see is follow-through with volume ... If tomorrow's volume is similiar to today with this kind of move, now we've reached a base and we can start to move upwards."

ETFC

Somethings brewing: Innnn $3.47, spec stake

Markets Oversold, Maybe

I'm counting on it, spec positions (25% of full stakes):

• BRCM $21
• AGU $54.25
• FRE $31.37
• SPY $130

Regional Banks Doing Well

Regional Banks doing well today up over 4% in most cases and Money Center Banks up over 3.5%

Watching the financials to give us a sign.

Bear Stearns Upgrades National Banking Sector to "Market Overweight" After Fed Cuts Rates

Markets are Working Hard to Recover

The broad markets are still in negative territory but up nearly 3% from their lows of the morning. Particularly strong are the retailers positive by over 4%.

Concerning the Fed cut today:

Madlen Read, AP Business Writer

It was the first time the Fed altered the target federal funds rate between scheduled meetings since the markets reopened after the Sept. 11, 2001 terrorist attacks. The cut was the biggest one-day rate move by the Fed since it lowered rates by a full percentage point in December 1991, when the country was trying to emerge from recession.
One reason Wall Street is so terrified about the economy is because its own financial muscle has atrophied. The banking industry in the second half of 2007 watched its portfolios shrink by some $135 billion because of losing bets on mortgages. Just Tuesday, Bank of America Corp. posted a 95 percent drop in fourth-quarter profit, and Wachovia Corp. reported that its fourth-quarter earnings dove 98 percent.

Surprise! 75 Basis Points!

WASHINGTON (AP) -- The Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, cut a key interest rate by three-quarters of a percentage point on Tuesday, the biggest one-day move by the central bank in recent memory.
I am, like, part soothsayer.

European Markets This Morning

The FTSE bottomed at nearly -10% from Friday's levels & have rebounded around 3.5%.
The DAX, down around 12% from Friday, has rebounded nearly 3% this morning.
Similarly, the CAC 40, off 12% or so has bounced over 3%.

There is no doubt that the US markets are going to gap down big. The question is will they bounce 3% or more from the morning bottom or stay down on the matte, pulling the European markets into the toilet. I think the FTSE, DAX and CAC will see their lows of the morning again once the Mother of All Markets opens for business.

Disciplinez-vous imbécile

Discipline you Fool!

1. Holding WDFC - should have sold on 12/27 or 28, above $37, after it cracked its 50 dma
2. Holding SPY - should been out at 1363 on the volume of that decline and what was I doing buying at 138.50 when the support was 137?
3. Selling QID - NAZ shook me out with that little jog above 2480 only to top out at 2504. It WAS discipline at work so it's tough to be critical of this one. I would like to have it back though!

Keeping things in perspective: The SPY and QID trades were highly speculative with 1/4 position spec stakes or 2.5% of the portfolio. The 7% hit taken on the SPYs equates to a .18% decline in portfolio value.

Blood in the Streets Yet?

The markets are gonna' get rocked tomorrow. The futures were down significantly today (cash markets were closed due to MLK day) and worldwide markets were smashed. Expect the DOW/NAZ/S&P down 4% or more at the onset. It's anyone's guess thereafter.

Surprise Fed cut? That's not to say it would be tomorrow but it wouldn't shock me. Of course that would send buyers swooning into the markets only to see any significant gains evaporate over the weeks to come. Only time and capitulation can heal a damaged market not a single catalyst like Fed intervention. Sure the markets would surge and trading profits booked but in all liklihood the run would be short-lived.

The Dow is now 14.6% below its Oct. 9 record close of 14,164.53. A down 20% market would suggest a target of 11,331. Incidentally, the P&F charts call for a downside target of 11,500 based on the Triple Bottom Breakdown issued on 1/15/08.

Must watch the financials' earnings this week, their reaction to the releases. The eventual upturn in the broader markets will be led by financials.

Performance as of 1/17/08

Trailing 30 days:

• Return: -4.04%
• DOW (return of -8.11%)
• NAZ (return of -9.60%)
• S&P (return of -8.37%)

Down 4% despite being 43% cash and treasuries & 40% Consumer Staples. Must step up, review and find the outliers.

Home Construction Largest Drop in 27 Years

Construction of New Homes Falls 24.8 Percent in 2007, the Largest Amount in 27 Years
WASHINGTON (AP) -- The prolonged slump in housing pushed construction of new homes in 2007 down by the largest amount in 27 years with the expectation that the downturn has further to go. Full Article
From the article: Many economists believe that the current slump in housing will rival the dive in the late 1970s and early 1980s when housing construction fell for four straight years before beginning to recover after the severe 1981-82 recession. For December, construction fell by a bigger-than-expected 14.2 percent.
WSJ: Housing Starts at Lowest Level Since 1991. Full Article

Diamond Offshore

DO (116.44) -4.56% is getting crushed by a downgrade from Oppenheimer. Beautiful

Stocks are Set to Plunge on Intel's News

Intel has a poor outlook and compounding the Fed's conundrum is news of increasing inflation. What's the Fed to do? They're expected to head off the popular opinion of an upcoming recession yet they're hands are increasingly becoming tied by this inflation news.

This is going to be a bumpy ride and I'm not comfortable doing anything right now but there's a certain urge (that I must resist) to try and time the bottom and chase performance. Got to sit tight.

Diamond Offshore

Adding 25%, DO (122.14) at its 50 dma (123.25)
Total: 50% position

Blockbusted!

Blockbuster ($2.71), -16.10%, is getting killed by Apple's news to rent videos via iTunes. How low is too low, don't know, don't know. Just glad to have dodged a bullet, having been out, Jan. 7, at an average of $3.45

A Trade

Perhaps the markets will find support down here (S&P 1370ish) and start a positive run. Into a trading position with SPY, limit of 138.50, for 4% or so. Back up to 1480 (6.8%) would be nice. We'll see.

Here We Go Again

• DOW (12574) -1.6%
• NAZ (2426) -2.11%
• S&P (1388) -1.97%

Keeping an eye on those pivotal levels again. If the markets crack those levels we are in for Pain.

VIGN ($14.53) +17.77%

Well, didn't see that strong of a response to their news. Not pulling the trigger; will have to wait and see. Perhaps it will ramp into their 1/24 release then pullback.

VIGN ($12.38)

Looking to take a speculative stake (25%) in Vignette
I don't care for the balance sheet but they are investing in themselves, they've announced that they may be at the high end of their revenue range (for what it's worth) and Rennaissance Technologies has a 3.84% position.
Alright, maybe not a compelling story but I like the price here and will keep it tight.
They'll host a conference call and live Webcast regarding its fourth quarter and full year financial results on Thursday, January 24, 2008, at 8:00 a.m. EST

Markets Up on IBM Report

There really wasn't a sense of conviction behind the day's trade though; volume didn't excite. Interesting to take a note of Pivotal Levels and the market's recent action.

• DOW hit a low mark of 12,502 last Wed.
• NAZ 2,407
• S&P 1,379

I was looking at the Trap scenario again and, when it plays out, the more I think the market could trade a little higher than I'd previously thought, maybe:

• DOW 13,300ish
• NAZ around 2,630 or so
• S&P near 1,480

There are certainly some trades out there but to error on the cautious side is prudent indeed for the primary downtrend is intact.

SIGM & Apple

Contemplated a speculative position (25%) in Sigma Designs ($44.65) based on Apple's keynote coming tomorrow. They equip parts of the iPhone but based on the volume during the selloff last week I must deem it too risky, even for a spec. stake. Does the market know something we don't? Ordinarily, the answer is yes; the market always knows before you or I.

Sigma Designs, Inc. offers silicon-based digital media processors primarily for Internet protocol (IP) video technology, connected media players, high-definition televisions, and personal computers. I believe in their industry and their products just not the price, yet.

Markets...Not So Good

I guess Bernanke didn't set up the Trap and I wish I still had my QID hedge.
Markets are off again on economic worries. Despite the mostly negative reaction to the preceding news items, the financial sector is providing leadership as traders speculate on further industry consolidation and capital infusions.

DOW (12625) -1.78%
NAZ (2447) -1.69%
S&P (1404) -1.16%

Trapped or not?

No, not yet. A Trap would have you convinced that we're on the road to recovery, that all is going to be fine, that the current, depressed levels are a good buy and that you need to buy in before it's too late. One day's (1/10/08) bounce does not a Trap make. We're heading back down at the open today but what's next? Who knows. Just sitting tight.

Stocks Head to Lower Open on Worries of Further Investment Bank Writedowns
NEW YORK (AP) -- Wall Street headed toward a lower open Friday amid renewed fears that financial companies will suffer larger-than-expected writedowns from the ongoing credit crisis.
The start of earnings season has investors worried about how banks and brokerages have fared after suffering losses in the collapse of the subprime mortgage market. The nation's biggest financial institutions will report results next week, including Merrill Lynch & Co., Citigroup Inc. and JPMorgan Chase & Co.
Merrill Lynch might take a $15 billion hit from its exposure to soured subprime mortgage investments, according to a report in The Wall Street Journal. The nation's largest brokerage is also said to be seeking another capital infusion to help shore up its balance sheet.
Investors were also nervous after American Express Corp. warned late Thursday that slower spending and more delinquencies on credit card payments will hamper profit throughout 2008. This follows a similar announcement from rival Capital One Financial Corp., which set aside $650 million to prepare for unpaid credit card bills.

Separately, there was good news on inflation in December, when import prices were unchanged, the Labor Department said.
Also on Friday, Federal Reserve Governor Frederic Mishkin and Boston Fed President Eric Rosengren are set to make speeches during the session. They follow Fed Chairman Ben Bernanke, who on Thursday made clear in a speech that the central bank is poised to cut interest rates later this month.

According to the RBC Cash Index, Consumer confidence has hit an all-time low of course we've only been tracking this index since January 2002.

Bernanke on Deck

Out of QID and awaiting Bernanke's comments at 1:00 PM. His proactive comments will probably set the markets up for the aforementioned Trap. Who knows?

Hedging with QID

In ProShares Ultrashort QQQ @ $43.71
If the NAZ moves through 2480, I'll sell.

Recession & Retail

In addition to the surfacing recession debate, retailers report weak results.

Pivotal Levels:
DOW: 12,500
NAZ: 2,400
S&P: 1,370ish

The Soothsayers are Nearing a Fever Pitch

It seemed as though we got a rash of recession news yesterday. I'd previously hypothesized on similarities to the late '80s recession and, logically, rationally, fell short of any predictions as its not my place. Frankly, I don't care if we go into a recession or not, I just need to know the odds. You certainly can't fault the Soothsayers for their predictions afterall it's their job but you gotta' love the talk show-esque campaigning soon to come so to prove their theories prescient and ahead of the curve.
Goldman likes their chances at predicting a recession and they put a flag in the ground in November. They should have kept Abby quiet in December.

Mother Merrill is calling their shot.

Even Pat Robertson is throwing his hat into the ring.

CNNMoney is reporting on the Soothsayers and the Government is coming to the rescue.

The most recent Payroll numbers we'd gotten a week ago:

The Dept. of Labor said December nonfarm payrolls grew by 18K, down from the previous reading of 115K.
and Briefing.com's comment at the time:
"Briefing.com believes the market is overreacting, considering hourly earnings rose 0.4% and total spending power won't subside unless payrolls drop 150,000 to 200,000 per month, as is typical after a recession starts."

The report that got the Soothsayers revved up suggests the highest unemployment since Hurricane Katrina. Speaking of Katrina, the scourge of the earth have resurfaced. A Quadrillion dollars sounds like a lot of money.

RAI Looking Stout

RAI (69.77) +3.04%, on strong volume, is up on a UBS upgrade. Would buy more when it breaks its all-time high if we weren't in a 100% position already. Keep in mind that 2.5 million shares+ is a monster day.

Trap

I could see a Trap setting up for the indexes. From a trading perspective there are some opportunities but caution prevails for anyone looking to go loooong; that's simply a bad idea.

• DOW (12,651) could trade back up to 13,000 before turning back down
• NAZ (2456) maybe back up to 2530ish
• S&P (1396) back up to around 1440

I talked about their pivotal levels last Thursday

This Buds for You

BUD (54.56) +.76%, on 133% of average volume, has been great and looking even better. Looking to add more when it breaks its all-time high of $55.19

Our Top Performers today:

• XLP +1.3% (100% Position)
• HNZ +1.24% (50% Position)
• RAI +1.11% (100% Position)
• UST +.75% (25% Position)
• BUD +.76% (50% Position)

NAZ Cracking

NAZ (2485) illustrating a Double Bottom Breakdown today.

DOW (12,746) watching 12,724

Stimuli

I am not eager to go long in this market but there are select names that interest me:

DVD-rental service Netflix (NFLX) and LG Electronics announced plans to have movies downloaded over the Internet to play on household televisions using a new LG-branded device. The device is due out in the second half of 2008. Business Week and AP articles.
We'll take a speculative position (25% of full stake) here ($26.77)

Stocks tanked on Wednesday, with the Dow losing about 221 points, after oil prices reached the $100 a barrel level before closing just below that mark. A report that showed an unexpected decline in manufacturing for the first time in 11 months also ignited new recession fears.

Urban Outfitters Posts big holiday gains ahead of next week's retail sales report.

Markets Look Ugly

DOW (13,044) NAZ (2,610) S&P (1,447)

DOW:

• In its last two sessions the DOW has traded below its 200 dma of 13,361
• Double Bottom Breakdown on January 2; Preliminary price obj: 12,400
• Volume was respectable but not excessive
• I'm guessing 13,000 to be the next level to watch, then 12,724

NAZ:

• Sitting on top of its 200 dma of 2,614
• P&F is intact
• It's found support at the 40 dma each time; current level = 2,624
• Watching 2,554, then 2,540

S&P

• Has traded below its 200 dma (1,491) for the last 4 sessions
• P&F in intact until 1,440 cracks
• Watching 1,436, then 1,406