Tuesday, January 20, 2009

Morning Update/Daily Market Thread 1/20 - Inauguration Day...

Good Morning,

Big day with the inauguration… will this be a sell the news type of event?

It would seem so thus far and those hammer candlesticks that were produced on Friday seem to bee prescient (unless they get topped by today’s action). Very few people caught onto those, by the way.

Futures are down pretty strongly this morning, the DOW futures are down more than 100 points, and the S&P futures are down more than 12. Overnight the /ES was as high 847 and as low as 832. The real test for today will be to see if we break Friday’s low of 826 or if we can regain Friday’s highs and nullify those hammer candlesticks.

With banks imploding in Europe and Spain, a major country, losing their AAA credit rating the dollar has done a moon-shot against the European currencies which only fosters the deleveraging process.

One of the immediate results is that oil has fallen below $33 a barrel and the bond market is acting very skittish as well with bond prices lower this morning; TLT has broken down from its previous channel but the long bond futures, /ZB, are still within the confines of its earlier channel although threatening to break down.

In the news, Fiat has evidently decided to take a 35% stake in Chrysler and Johnson & Johnson’s profits rose year over year on an aggressive cost cutting initiative.

The XLF is down this morning, again it would seem to be leading the market, but it is getting into the price range where the effects are not going to be as directly impactful on the indices as they now make up a smaller percentage of the S&P 500 than they did before. But be mindful that unhealthy banks will have a tremendous negative impact on our economy in many other ways.

Below is a chart of the DOW futures on the left and S&P futures on the right. The immediate key levels are 8,000 on the DOW and about 816 on the SPX.

This next chart shows TLT on the left with a large gap down below the bottom channel line, and the long bond futures on the right, plunging further this morning to its channel bottom. If bonds continue in this downward direction that, too, will eventually have a very negative effect on equities:

Let’s use this thread to make market comments, please show us your own work too, now that you can add charts and pictures to the new comments section. I would ask that we please keep the discussion here market oriented and if there are other comments, let’s place those in another thread or put them here after the market closes.

Have a great day trading and enjoy the $150,000,000 festivities, they’re mostly on you!