The ‘Rebels’ Head for the Caribbean Sea…

The ‘Rebels’ will be back in one week.

As previously written the ‘Rebel’s" are headed for a one week cruise to the Caribbean. I will return on Sunday (November 23) at which time the RebelTraders commentaries, market analysis, observations of the economy, and of course the technical analysis of the charts will resume in full force. 

Please go and hang out in the Rebel Forum and continue to discuss the market. I’ll check in from time to time from aboard the ship and see what is happening.

The ‘chat’ box on this site will still be active for you to continue your market chat while I am away.

I will be turning off the ‘comments’ portion of this blog while I’m away to prevent any SPAM attacks to the site.

I’ll leave you tonight with a recent commentary I wrote last week. This commentary brought a lot of emails and interest. I’ll republish it here for you tonight for our new readers, or if you missed the original posting.

See you all in one week from now…

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Weekend Update - Unprecedented…

Posted: November 9, 2008 at 2:05 am by Chuck

It is getting very difficult to find new words to describe what has been unfolding in our nations economy over the past year. Each day brings more news about declining corporate earnings, economic conditions deteriorating, and a falling consumer confidence of record levels.

And with each bit of news that further points to a bleak economic outlook I find it difficult to find ways to describe it without sounding repetitious. Just how many times can I say “unprecedented” before it becomes ineffective, or it looses its strength? The dictionary defines unprecedented as follows…

–adjective

without previous instance; never before known or experienced; unexampled or unparalleled: an unprecedented event.

Roget’s Thesaurus gives some alternate words such as “abnormal“, “anomalous“, “extraordinary“, “remarkable“, and “unrivaled” as some other ways to describe unprecedented. But, there is simply no better word to describe what has happened over the past year. So with fear of sounding repetitious once again… we are witness to unprecedented events unfolding at an almost daily rate.

Lets recap:

• The failure of Bear Stearns
• The failure of Lehman Brothers
• The disguised failures of the Goldman Sachs and Morgan Stanley by converting to bank holding companies
• Largest bank failures in US history (Washington Mutual, IndyMac)
• Other banks merging and/or failing
• The failure of Freddie Mac and Fannie Mae and their subsequent nationalization
• The failure of AIG (yes, it is a failure otherwise the Government would not have had to step in and become essentially an 80% owner of the company)
• Record foreclosures on residential properties
• Record losses among many US companies
• Rapidly rising personal bankruptcy filings
• US Government bail out funding of $700 Billion
• Federal Reserve’s creation of numerous “lending facilities”
• Record depletion of reserves among the US banks
• Direct tax payer funds being injected into the banks balance sheets
• $150 Billion Stimulus bill and more to come
• Rapidly increasing layoffs
• Rising number of retail stores filing chapter 11 and others going out of business
• Numerous mortgage companies closed up operations
• Collapse of the credit system
• Drastic declines in US home prices
• The collapse of the economic systems of Iceland
• The increasingly likelihood of entire nations becoming insolvent (Hungary, Argentina, Ukraine, etc)
• Numerous Federal Reserve emergency rate cuts. And now an effective funds rate of near zero
• The near bankruptcy of the major auto manufacturers (General Motors, Ford, and Chrysler)

That is just what comes to mind without going back and looking through my many notebooks. And all of that happened within just the past year. Now you know why it is I use the word “unprecedented” so often. Because it is!

The bear market of 2000 - 2003 reduced the S&P 500 index 47% from peak to trough. That bear market was pale in comparison to the problems that are unfolding currently. Back then it was driven by an over exuberance in the stocks of the Internet revolution (aka ‘tech boom’). When many Internet and technology companies could not survive unemployment went up and the nation entered into a brief recession. There were no systemic risks to the US and global economies like we have now. There is simply no comparison between the previous bear markets of the past 70 years to the one we are in now.

Market analysts in the mainstream media like to keep saying that stocks are a great value currently. They keep trying to draw comparisons to the last bear market and how we are very close the percentage declines from that one. And that in itself they believe is reason enough to think it is a good time to scale back into the stock market for the long haul.

The professional Wall Street analysts have never changed their ways. During the bear market of 2000 - 2003 many analysts kept advising to ‘buy, buy, buy’ as the market kept declining. And they were advising their clients to buy the very companies that were in the most in danger of going out of business… and many did.

You think the professional analysts who work for the major institutions (of those that are now still in business) have your best interest at heart? Well just go back to the last bear market and this news item…

From April 2003…

Wall Street Investment Firms Fined Historic $1.4 Billion in Settlement

In a settlement announced on Monday, April 28 2003, ten Wall Street Firms - Salomon Smith Barney, Merrill Lynch, Credit Suisse First Boston, Morgan Stanley, Goldman Sachs, J.P. Morgan Chase, Bear Stearns, Lehman Brothers, US Bancorp Piper Jaffray, UBS Warburg (UBS Paine Webber) - will pay out at least $1.4 billion and will be required to accept business reforms. No firm or individual has admitted to having misrepresented information presented to investors. Internal emails were used as evidence that analysts had known the stocks were not represented accurately. In fact, while the stocks were being touted in public, they were being disparaged in private emails.

The settlement with its fines, payments, and reforms are geared towards increasing investor confidence. $387.5 million of this fund has been set aside to reimburse investors who were victims of stock broker fraud.

And some memorable quotes following that suit…

William Donaldson, Chairman of the SEC: “These cases reflect a sad chapter in the history of American business – a chapter in which those who reaped enormous benefits from the trust of investors profoundly betrayed that trust.”

Eliot Spitzer, New York State Attorney General, speaking about Salomon executives awareness of manipulating research to benefit investment banking business:  The executives “fully grasped and understood the way research was being manipulated.” Reimbursement fund for “small investors lead astray…because of fraudulent research”.

John Markese, President of the American Association of Individual Investors: The settlement “brings home just how rotten this thing was.”

Dick Grasso, New York Stock Exchange chairman: “This historic settlement establishes a clear bright line – a banker is a banker and an analyst is an analyst.  The two shall never cross.”

Today nothing has changed. The professional Wall Street firms always have, and always will, continue to look out for themselves and their ‘big money’ interests, not yours.

The problems we face today have been greatly amplified by the greed of the very same Wall Street firms who recklessly sought to capitalize in every way possible in the credit and housing growth of the late 90’s and early 2000’s. Their creation of securities that were all tied right back to the mortgages of the average home owner was done without any regard for the dangers and perils of what they were doing. And in order to get even more mortgages to ‘play with’ the mortgage industry loosened their lending standards so that more and more people could obtain a mortgage. All ingredients for a major disaster which we now have.

And now that these same firms are in serious financial turmoil and they are begging the Government (tax payers) to keep them alive. They want you and I to kiss their wounds and make it all better. Well you know my position on this.. I say “kiss off’.  No more tax payer funds to keep companies that made bad decisions alive. We have become a nation of rewarding bad behavior with rescue packages, bail outs, and low interest loans. The companies that got in over their heads, and lost Billions, need to fix their own problems… or fail. 

Now we have the automakers at the brink of collapse. The CEO’s of the largest automakers all went to Washington last week to cry and whine about how bad business is. Now you and I will be asked forced into bailing them out too.

You might be asking yourselves just where the hell are all of my tax dollars going when these companies get handed checks by the Government. Well your not alone, people have been trying to get data out of the Government to see just what they are doing.

From the Wall Street Journal:

November 7, 2008, 5:09 pm

Bloomberg News Sues the Fed

Bloomberg News is going to court to compel the Federal Reserve to disclose securities the central bank is accepting as collateral for its raft of new lending. The company is filing its suit based on the U.S. Freedom of Information Act.

Bloomberg says:

Bloomberg News on May 21 asked the Fed to provide data on the collateral posted between April 4 and May 20. The central bank said on June 19 that it needed until July 3 to search out the documents and determine whether it would make them public. Bloomberg never received a formal response that would enable it to file an appeal. On Oct. 25, Bloomberg filed another request and has yet to receive a reply.

The Fed staff planned to recommend that Bloomberg’s request be denied under an exemption protecting “confidential commercial information,” according to Alison Thro, the Fed’s FOIA Service Center senior counsel. The Fed in Washington has about 30 pages pertaining to the request, Thro said today before the filing of the suit. The bulk of the documents Bloomberg sought are at the Federal Reserve Bank of New York, which she said isn’t subject to the freedom of information law.

“This type of information is considered highly sensitive, and it would remain so for some time in the future,” Thro said.

The information is considered “highly sensitive”… Just a convenient way of hiding the facts from the people. There is only one way to end this problem. And it begins with the immediate disclosure of all assets and their mark to market values. Let the losses be realized in full. This way the strong will survive and the weak will die. Flush the system out in the open and then, and only then, can the problems be dealt with.

Right now the Government is trying to apply bubble gum to a dam that is springing numerous leaks. They need to open the emergency flood gates. By opening the flood gates it will likely destroy some innocent companies downstream, but it is easier to rebuild some as compared to rebuilding everything should the dam fail completely which is becoming increasingly likely with each passing day.

The S&P 500 index is has declined 37.5% from peak to trough during this current bear market. Do you think that it is over and we are beginning a new multi year bull market? I have bad news for you… Take the 37.5% experienced so far and double that for starters. There will be the occasional ‘bear market rally’, but the long term picture remains very bleak.

These ARE unprecedented times…

Market Wrap - Who Pulled the Plug?

First let me announce that the "Rebel Forum" is now "on the air". More on that at the end of tonight’s wrap up.

 

10am: Market started to sell off

12:15pm: Market began to rally

3:15pm: Someone pulled the plug and the market sold off and closed at the low of the day

So what happened? Same as every day lately… lack of confidence. Traders are still well aware of the growing stresses in the financial system and there is little desire to keep money in the market. Only a strong bear market rally will traders be willing to keep their chips on the table.

The economy is still in a downward spiral and the projections of what is yet to come are not good. This mornings government report on retail sales revealed a dramatic drop, the largest one month decline in history. The prognosis for the Q4 US GDP is falling apart rapidly. I would not be surprised to see a Q4 GDP print of -4.

There is some news today that Costco (COST) has asked customers who receive rebate checks for purchases not to deposit the check.

This communication contains important information regarding the redemption of Costco Mail-in Rebate checks dated prior to November 13, 2008.

Due to a significant business disruption at the company that processes Costco Wholesale’s Mail-in Rebates, no rebate checks dated prior to November 13, 2008, should be deposited into your bank account. These checks should be redeemed at your local Costco warehouse.

Mail-in rebate checks dated after November 13, 2008, are not affected by this business disruption and may be deposited or cashed at your bank, or redeemed at any Costco warehouse.

Wow… even rebate checks are not safe anymore. Also this today…

Continental Promotions Group, a rebate processing company, filed for bankruptcy protection today, with an estimated $10M rebates outstanding.

I have no idea if this is the company that Costco was using, but $10 Million in unpaid rebates is going to make a lot of customers very angry.

Insurers want to apply for ‘Savings and Loan’ status. What? Since when is an insurer a savings and loan. If they move forward with becoming classified as a saving and loan institution it would allow them to dip into the tax payers wallets for funding. See the Bloomberg article HERE.

Talk continues to escalate about what to do with the automakers. General Motors (GM), Ford (F), and Chrysler are all at the brink of collapse. They are lobbying Washington aggressively for emergency funding. Long time readers here know my position on this subject so I’ll spare you my rant tonight 

I foresee the automakers remaining in ‘critical condition’ even if government funding is provided. I predict that at least one of the major automakers will end up in bankruptcy in the future with or without a government bail out.

Citigroup (C) is to hold an employee town hall meeting on Monday morning. It is expected Citigroup will announce another round of layoffs. The talk on the floor of the exchange has the layoffs being somewhere between 10,000 to 20,000 employees.

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Tonight I have flipped the switch on the ‘Rebel Forum’. I wanted to find a way for the many readers of ‘RebelTraders’ to be able to be more involved in discussing the markets, looking over charts, present your own ideas, and view my charts in a format that provides much easier access and organization.

From this point forward the charts that I normally would include here on the RebelTraders site will now be in the ‘Rebel Forum’. But don’t worry… they can be viewed just as easily, everyone will still be able to view the charts. By placing them in the forum they will be kept in chronological order, always available without having to search through previous posts here on this site, and will also be higher quality as I will be able to make larger files available for you to download and view.

RebelTraders began on May 17th 2007. Since that time our readership has grown dramatically. We were among the first to warn of the coming bear market back in September 2007.

Many emails have been received since RebelTraders was born. Many have been personal thank you’s for providing a fresh and honest analysis of the markets and economy.

I take extreme pride in providing stock market commentary and analysis in a fashion that separates RebelTraders from many of other stock market web sites. That is why RebelTraders was born…

Rebel…

Someone who exhibits great independence in thought and action…

That is what we are all about. And now with the addition of the ‘Rebel Forum’ you can be a contributing part of the RebelTraders community.

The forum is for like minded people who want a place to interact that is free of the junk that is so prevalent in other public forums. I welcome all ‘RebelTraders’ readers to signup on the forum (It is FREE) and have your own place to discuss the markets in an environment that will be different than the rest.

The forum will evolve and grow over time. Just like this web site has evolved and grown over time, so to will the forum. It is my intention to make the forum the best place to discuss the markets…

Signup now and be among the first to start topics and make the forum a success.

Now for tonight’s charts…

S&P 500 Index and E-Mini Futures

Dow Jones Industrials

Nasdaq Charts

Reminder: Rebeltraders will be on holiday next week. Regular commentary and analysis will resume on November 23rd

Market Wrap - US Postal Service to Layoff "Tens of Thousands"??

Today I spoke with a post office manager and asked him if the rumors on the Internet about big layoffs were true or not.

The conversation is paraphrased here:

Me: Are you guys hearing these rumors about big layoffs coming? And do you think there is any truth to them?

Post office manager: Yes, I think it is true

Me: Is there any talk of who, where or how many?

Post office manager: The word here is that junior members with less than 5 years of seniority will be let go.

Me: When

Post office manager: I think it will all happen after the Christmas holiday.

Me: Any idea how many people will be impacted?

Post office manager: The number being floated around here is in the many tens of thousands

Me: Will there be any post office closings?

Post office manager: They will have to. I think what they will do is consolidate in a major way all of the small rural offices.

Me: How is the mood in the post office?

Post office manager: Not too good. Everybody wants to hear something official and not just this unconfirmed speculation. These guys want to know if they will have a job after Christmas now and not be informed at the last minute.

So there you have it. This is still speculation and a lot of rumors. But the word from ‘inside‘ the post office is that they believe the speculations will end up being true. Just like the postal employees, we have to wait and see if it turns out to be fact or not.

Full market wrap later tonight.

Pre Market - Advance Retail Sales Fall by Record Numbers

The official Government data on Retail Sales fell in October by a never before seen amount.

We did not need the Government data to know that it was deteriorating. Real world indicators tell us more than Government data.

OCT ADVANCE RETAIL SALES: -2.8% V -2.1%E; LESS AUTOS: -2.2% V -1.2%E
- Prior Advance Retail Sales revised from -1.2% to -1.3%
- Prior Less Autos revised from -0.6% to -0.5%

The current S&P 500 E-Mini futures chart (5 minute chart)

Notice: RebelTraders will be on ‘holiday’ next week. We will be happily sailing the Caribbean Sea next week. I will have my Blackberry with me and hopefully with the technology of satellites I will be able to keep tabs on what the market is doing. I may even make a post from the ship if anything major develops.

I am attempting to get the ‘Rebel Forums’ up and running before we leave. This way you can discuss in numerous subjects, post your own charts, and bears and bulls can battle it out (in a friendly manner).

Ben Bernanke Speech in Frankfurt, Germany

The full text of Federal Reserve Chairman Ben Bernanke’s speech follows:

Chairman Ben S. Bernanke

At the Fifth European Central Bank Central Banking Conference, The Euro at Ten: Lessons and Challenges, Frankfurt, Germany

November 14, 2008

Policy Coordination Among Central Banks

I am pleased to be here in Frankfurt today to celebrate the 10th anniversary of the euro. The euro’s introduction was a remarkable achievement. As an academic, I did a bit of consulting for the European Monetary Institute, the European Central Bank’s (ECB) predecessor, on monetary transmission mechanisms; I thus played a part, albeit an extremely small one, in this grand project. I mention this only as a reminder that the creators of the euro drew on monetary expertise from around the world, an early example of the international cooperation that has since proven to be one of the hallmarks of the ECB. Indeed, the run-up to the euro’s establishment and the experience of the past decade have been associated with an unprecedented degree of policy coordination among the sovereign states within the euro area, including cooperation in the areas of fiscal and regulatory policies as well as monetary policy.

The current financial crisis and global economic slowdown likewise have been an occasion for unprecedented international policy coordination, within Europe but also globally. For example, in its regulatory capacity, the Federal Reserve has worked closely with regulators and supervisors from a number of European nations, and we are active participants in the international Financial Stability Forum and the standard-setting bodies operating under the aegis of the Bank for International Settlements. My focus today, however, will be cooperation in monetary policy and, especially, in the meeting of the liquidity needs of our increasingly globalized financial markets.

As you know, financial markets remain under severe strain. The proximate cause of the financial turmoil was the end of the U.S. housing boom and the attendant losses on mortgages and mortgage-related assets by many institutions. However, more fundamentally, the turmoil was the product of a global credit boom, characterized by a broad underpricing of risk, excessive leverage by financial institutions, and an increasing reliance on complex and opaque financial instruments that have proven to be fragile under stress. The unwinding of this boom (and the associated financial losses) has led to the withdrawal of many investors from credit markets and deleveraging by financial institutions, both of which have acted to constrict available credit to households and businesses. This credit squeeze is, in turn, a principal cause of the economic slowdown now taking place in many countries.

Central bankers have been working closely together throughout this period of financial turmoil. Personally, I have found the opportunity to share views regularly with President Trichet and other leading central bankers at various international meetings extremely valuable. We are all in frequent contact by phone as well. Our consultations allow us to keep abreast of developments in other countries, to compare our analyses of developing trends, and to draw on each other’s experience and knowledge.

The merits of coordinated monetary policies have been discussed by policymakers and academics for decades, but in practice, such coordination has been quite rare. However, on October 8, the Federal Reserve announced a reduction in its policy interest rate jointly with five other major central banks–the Bank of Canada, the Bank of England, the ECB, Sveriges Riksbank, and the Swiss National Bank (SNB)–with the Bank of Japan expressing support. Last month’s joint action was motivated by the abatement of inflationary pressures and increased indications of economic slowing in our respective economies. In addition, the coordinated rate cut was intended to send a strong signal to the public and to markets of our resolve to act together to address global economic challenges.

As you know, however, monetary policy actions have not resolved the ongoing strains in financial markets, including interbank funding markets. The Federal Reserve has responded to the strong demand for funding by banks and primary dealers by dramatically increasing the amount of term funding that it auctions to banks, providing new lending facilities for nonbanks, supplying high-quality securities for use in repurchase agreement (repo) markets and for other collateralized lending, and funding purchases of commercial paper. Elsewhere, including Canada, the euro area, and the United Kingdom, central banks have introduced or expanded similar measures to boost the provision of liquidity in their local currencies. In addition to these measures, governments in many countries broadened deposit insurance coverage and announced plans to inject capital into their banking systems and to guarantee bank debts. All of these steps are consistent with the principles agreed to by the Group of Seven finance ministers and central bank governors in their October 10 communiqué.

Although the range of mechanisms we have used has been broad, our provision of liquidity conforms to a central bank’s traditional role as the lender of last resort. However, a novel aspect of the current situation is that the balance sheets of financial institutions have increasingly come to include instruments denominated in foreign currencies. The need for currencies outside an issuing country’s markets arises primarily from the global role played by key international currencies, such as the dollar and the euro. For example, over the past decade, international loans and deposits have grown tremendously, as has the issuance of international debt securities–that is, bonds, notes, and money market instruments sold outside the borders of the borrower’s country and sometimes denominated in foreign currencies. These developments have posed new challenges for conventional central bank liquidity and lender-of-last-resort policies. For example, injecting euros or sterling into national money markets may not be sufficient to restore market function in these economies when funding shortages are in dollars.

Indeed, a significant feature of the recent financial market stress is the strong demand for dollar funding not only in the United States, but also abroad. Many financial institutions outside the United States, especially in Europe, had substantially increased their dollar investments in recent years, including loans to nonbanks and purchases of asset-backed securities issued by U.S. residents.¹ Also, the continued prominent role of the dollar in international trade, foreign direct investment, and financial transactions contributes to dollar funding needs abroad. While some financial institutions outside the United States have relied on dollars acquired through their U.S. affiliates, many others relied on interbank and other wholesale markets to obtain dollars. As such, the recent sharp deterioration in conditions in funding markets left some participants outside the United States without adequate access to short-term dollar financing.

The emergence of dollar funding shortages around the globe has required a more internationally coordinated approach among central banks to the lender-of-last-resort function. The principal tool we have used is the currency swap line, which allows each collaborating central bank to draw down balances denominated in its foreign partner’s currency. The Federal Reserve has now established temporary swap lines with more than a dozen other central banks.² Many of these central banks have drawn on these lines and, using a variety of methods and facilities, have allocated these funds to meet the needs of institutions within their borders.³ Although funding needs during the current turmoil have been the most pronounced for dollars, they have arisen for other currencies as well. For example, the ECB has set up swap lines and repo facilities with the central banks of Denmark and Hungary to provide euro liquidity in those countries. The terms of many swap agreements have been adjusted with the changing needs for liquidity: The sizes of the swaps have increased, the types of collateral accepted by these central banks from financial institutions in their economies have been expanded, and the maturities at which these funds have been made available have been tailored to meeting the prevailing needs. Notably, in mid-October, the Federal Reserve eliminated limits on the sizes of its swap lines with the ECB, the Bank of England, the SNB, and the Bank of Japan so as to accommodate demands for U.S. dollar funding of any scale. Taken together, these actions have helped improve the distribution of liquidity around the globe.

This collaborative approach to the injection of liquidity reflects more than the global, multi-currency nature of funding difficulties. It also reflects the importance of relationships between central banks and the institutions they serve. Under swap agreements, the responsibility for allocating foreign-currency liquidity within a jurisdiction lies with the domestic central bank. This arrangement makes use of the fact that the domestic central bank is best positioned to understand the mechanics and special features of its own country’s financial and payments systems and, because of its existing relationships with domestic financial institutions, can best assess the strength of each institution and its needs for foreign-currency liquidity. The domestic central bank is also typically best informed about the quality of the collateral offered by potential borrowers.

The efforts by central banks around the world to increase the availability of liquidity, along with other steps taken by central banks and governments, have contributed to tentative improvements in credit market functioning. However, the continuing volatility of markets and recent indicators of economic performance confirm that challenges remain. For this reason, policymakers will remain in close contact, monitor developments closely, and stand ready to take additional steps should conditions warrant. In times like these, we are especially aware of the importance of having close working relationships with our central bank colleagues around the world. These relationships are fostered by the ties established in forums like this one and in the many venues where policymakers regularly gather.

The 10th anniversary of the euro is an opportunity not only to celebrate an impressive and historic achievement, but also to reaffirm our commitment to cooperation as we address the challenges of an increasingly integrated global economy. Central bankers and other policymakers around the world must continue to work together to address disruptions in credit markets and to promote a vibrant global economy.

---

Footnotes

1. See Patrick McGuire and Goetz von Peter (2008), “International Banking Activity amidst the Turmoil,” BIS Quarterly Review, June; also see ECB (2008), “The International Role of the Euro (923.7 KB PDF),” July. The ECB report noted that investment banks based in the United States and financial institutions based in the United Kingdom have been among the top non-euro-area issuers of euro-denominated bonds; it also said that banks in Europe and some firms located mainly in the United Kingdom with business concentrated in the securitization of residential mortgages have been among the top non-U.S. issuers of dollar-denominated bonds. Return to text

2. The central banks include those in Australia, Brazil, Canada, Denmark, the euro area, Korea, Japan, New Zealand, Mexico, Norway, Singapore, Sweden, Switzerland, and the United Kingdom. Return to text

3. Some other countries with extensive accumulated stocks of dollar reserves have made these dollars available in their economies through auctions and regional arrangements.

Market Wrap - Gandalf Magic?

The significant 825 level on the S&P 500 E-Mini futures was breached with strong momentum. Then came the sudden reversal within minutes.

The reversal was extraordinary because of how far below the 825 level the futures dropped. This important and key support had been breached but like magic the futures reversed. I said last night that when the 825 level is reached it would be like one of those battle scenes from ‘Lord of the Rings’. Well it was and the reversal had to be the magic of the wizard Gandalf.

After waiting for the upward move to break above resistance levels to reduce risk I then took a long position in SSO (S&P 500 Ultra). The charts below should be self explanatory.

Tough call here to say if this is the beginning of a bear market rally or not. We have to be quick to respond to sudden moves should they occur. Risk remains VERY high.

Even if a bear market rally ensues it has no impact on the long term projections of the market. Long term remains solidly bearish.

 

 

 

 

 

 

 

Market Close - Uh… wild is an Under Statement

S&P broke below very critical support level of 825 at 12:55pm (market hours). The drop below support was an impressive 10 points. When the break occurred it brought a sudden surge of sellers but then the decline stopped in mid air and reversed. To say it was a ‘throw under’ is stretching it, but it is what it is.

After watching resistance levels for a sign of the rally failing or continuing the break above the triangle from this morning was the point at which I took a long position (SSO).

This rally has much overhead resistance and I can’t say at this time how long it will last. I will keep raising my stop on SSO the higher this rally goes. But, one thing is for sure… this will fail at some point and I am confident that the lows will be breached again… but the next time they won’t bounce.

 

 

 

 

 

 

 

More later tonight…

S&P 500 E-Mini Futures Update

Market Open - Futures say "Confusion"

5 minute chart of the S&P 500 E-mini futures.. A difficult and messy pattern here this morning.. Watching these levels in the first hour of trading.

Weekly Jobless Claims for November 13th 2008

INITIAL JOBLESS CLAIMS: 516K V 480KE; CONTINUING CLAIMS: 3.897M V 3.825ME
- Prior Initial Jobless Claims revised from 481K to 484K
- Prior Continuing Claims revised from 3.843M to 3.832M

Weekly jobless claims is a 7 year high

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