Smoke 'Em if You Got 'Em

Tobacco might be healthy right about now.  Back into the safe harbor of Altria Group (MO $16.91).

WOW. GDP -3.8%

A Q4 decline that is much better than expected.  Of course, this will be adjusted in the months ahead but still a very agreeable number.

The markets should act nicely today but who's to say.  Once you think they will they won't so don't trade on speculation, trade the market that is.

GDP Release Today; Expecting -5.5% Q4

We will finally start to see GDP numbers materialize that supports the critical condition of the economy.  Today's release will be the first of a couple of bad quarterly reports.

A drop -5.5 number would be the worst since 1982.

Broadcom and Urban Outfitters

Markets are acting poorly and the new "stimulus" package is drawing much deserved criticism.

Out of BRCM today following a series of lower highs.  Long term I expect greater things from Broadcom but considering the current state of uncertainty I will error on the side of caution and book 11%.  And now I see that it's down about $0.83 in the after hours trade.

URBN will be gone too if it breaks below $14.93.

Fund my Mutual Fund

It seems this gentlemen is a tireless worker and I appreciate some of his work:

http://www.fundmymutualfund.com/

http://www.fundmymutualfund.com/2009/01/im-old-school.html

AutoZone

Let's see AZO move above 142 before a nibble and past 144 on 3 mm shares for a bite.

Caterpillar (32.65)

CAT's upside volume never materialized, no position taken and now the stock is falling apart down $3.00 in pre-market action putting it at $32 and retesting its October 2008 lows.  At some point, regardless of technical merit, fundamentally the stock is going to offer a reasonable risk/reward tradeoff.

The company announced record revenues and profit per share for 2008 but falls short in Q4 and expects a very challenging 2009.  CAT plans 20,000 job cuts and forecast sales to plunge 25%.

Broadcom (17.54)

BRCM is up nearly 6% on above average volume of 13 mm shares on a pretty rocky day in the overall market.  Itchy trigger to add more but must stay disciplined looking for the move up and above $19.15 on heavy volume.  Yes, it is worth the opportunity cost of 9% in order to be more confident in the stock's overall strength.  Hang tight 'til it's right.

S&P 500

Breaking 804 would be a sign to me that we're going to test the bottom, 740.  In that case I'd put on the RSWs.

Urban Outfitters

URBN closed at $15.93.  I'm looking for a break above $16.58 on good volume in order to add more.

Oil Heading Back to $65?

Goldman Sees ‘Swift, Violent’ Oil Rally Later in Year

Bloomberg article

Florida Power & Light

FPL Group (FPL 49.83): I'm looking for a break above $53.

Plane Crash in the Hudson

What a fantastic story of grace under pressure.  Captain Chesley Sullenberger puts down flight 1549, an Airbus A320, into the Hudson River without a casualty.

Dow Losses Mirror 1988's January Start

1237 ET 14Jan2009-Dow losses mirror 1988's January start -- CitiFX ------------------------------------------------------------------------------

 The losses of the Dow Jones industrial average so far this year are tracking close to the start of 1988, according to technicians at CitiFx.

 They noted that following the recovery off the 1987 low, the Dow rallied through year-end to peak at 2,066.15 on the 5th Jan. 1988. It then corrected to 1,850.96 over 12 trading days (-10.4 percent)

 The peak so far on the rally off the November 2008 low was posted on Jan 6 at 9087.82. The market has since been falling for 6 trading days. "A similar drop of 10.4 percent off the 9087.82 high gives a level of 8,140.87. The low today (so far) has been 8142.16," CitiFX said in a note.

 Reuters Messaging: ellis.mnyandu.reuters.com@reuters.net 1139 ET 14Jan2009-Widespread selling among broader marke

Urban Outfitters. Again?

Into an underweighted position of URBN at $14.87.

Tee up RSW

890 has been breached so the warning flag is up.  Sizing up hedges and looking for a break only below 850 on the S&P 500.  850 to 870 is limbo.

Gold and the Dollar

A question was posed to me last week, "why is the dollar and gold moving in the same direction?" Historically gold and the dollar have an inverse relationship so you could speculate that the move is rather anomolous and can't be rationalized as some paradigm shift in market principles. As expected expanding your reach beyond just a couple of days of price action doesn't yield much of a deviation from that long standing position.

I'd found that the USD bottomed around the middle of March 2008 and has continued to rise from the end of September/beginning of October while gold hit it's high in the middle of March and continues to fall.  Most recently, the dollar has lost some ground since the beginning of December but gold increased during the same time frame.

Like a number of financial securities and derivatives with similar relationships there will certainly be anomolous blips when USD and gold deviate from their historical norm but for now it's unlikely that some paradigm shift has taken place and that the dollar to gold relationship, as we know it, is intact.

S&P 500 Hedge

Look to hedge this market again if the S&P falls below 890.

Unemployment Rate at 7.2%

U.S. employers slashed payrolls by 524,000 in December, driving the unemployment rate to its highest level in almost 16 years, a government report showed on Friday, suggesting that the year-long recession was deepening.  

Read CNBC report

"Suggesting that the year-long recession was deepening."  I'd like to know who did not think it was deepening before it gets better.

When the unemployment rate starts to ease and the news of recovery hits the wires it will be late in a equity up-cycle.  You won't need to be told that the economy is getting better.

Retailer's Reports are Weak

Bucking the sector's beat down today is Urban Outfitters (15.46 +1.46).  They'd released decent retail numbers today and the stock surged 10 % on healthy volume.  Don't get too overzealous though a break above 15.80 = good.

GameStop (GME 25.58 +2.97) had good numbers.  Look for a move above $26.51.

Earnings were better than expected at Sears.  The stock was up over 20%.

EZCORP (EZPW 14.18)

Seemingly inevitable restrictive policies out of Washington is weighing heavily on the stock of this pawn shop and pay day loan company.  

$1,000,000,000,000

Is a trillion dollars in stimulus really necessary?  Do we really need the package?  Do you get the feeling that we're bottoming anyway?  Afterall, the bad news is almost at a fever pitch and the misery and suffering is euphoric.  In fact the consumers are starting to save money rather than spend it and as a consumer driven recession that has been the crux all along and therein lies the paradox of thrift.

What about the $500 "stimulus" check that all citizens will receive whether you've paid income taxes or not.  That sounds reasonable.  Wellfare and socialism in full effect.  Why not just have a tax holiday. If the government is willing to fund a trillion dollars than why not forgo a trillion dollars in tax revenue and let the consumer reap the benefit where he dictates.  Additionally it is the only way to be certain that the consumer puts his own stimulus package to work rather than save it.  The entire $500 check is unlikely to get spent much to the government's chagrin.

S&P 500 Financial Sector Index (SPSY)

Despite their catastrophic performance the financials will likely play a pivotal role in signalling a bottom.  SPSY moving up past 183 would be a positive development for the overall market.

Broadcom (BRCM 18.64)

Nice action today.  Look for a break above $19.15 on 15 mm shares or more.

Madoff Bailouts Coming?

Please, please say it ain't so.

Newsday.com article

Toyota, Honda lead declines in Dec. auto sales

DETROIT (AP) -- Toyota and Honda's U.S. sales fell more than their U.S. competitors' in December, with Toyota's 37 percent decline and Honda's 35 percent drop showing the Japanese company's popular fuel-efficient models were little help as consumers steered clear of showrooms due to the dismal economy.

Read Full Article

Jobs Isn't Dead

Jobs isn't dead but he's not healthy either.

3 PM Addendum, more on Jobs.

I Heard the News Today oh, Boy

I heard a news broadcaster trumpet this morning, "2008 and the worst economic performance since the Great Depression is behind us."  You must be joking me.  Unemployment that hasn't even approached 10% and two quarters of negative GDP, -.17% Q4 of 2007 and -.5% Q3 2008, has produced the worst economy in 80 years!

A quick Google search yields:

Grasping Reality: Worst Economy since the Great Depression?

It's the worst economy since the great depression.

Worst Economy Since the Great Depression: GOPUSA.com

I have been advocating since Q4 2007 that a recession was looming and while there is a certainty of negative GDP numbers for Q4 2008 and similarly the likelihood for the Q1 2009 results is there really evidence to support calling this the worst economy in 80 years?

Just keep this in mind.  We won't need economic news nor the proclamation that the economy has bottomed before we're fully invested into US equities.  When the rosy news fills the airwaves we will have already filled the blotter with buys.

Step by Step, Inch by Inch

I like the way DLTR, CAT & EZPW are acting.  

EZPW moving to 18 would be good up and past 19.25 would be great.

CAT with an Ascending Triple Top Breakout signalled we just need volume to fill in. Convincing up volume would be around 15 mm shares.

DLTR moving through 44 would be good and 46 even better.