Tuesday, February 3, 2009

Morning Update/ Market Thread 2/3

Good Morning,

Futures have managed to work their way slightly higher as we head into the open this morning.

Data out this morning from the ICSC shows that store sales from last week were down a little more than expected, falling 2.5% versus an expected 2.4%. Here’s the report from Econoday:
Data were mixed for ICSC-Goldman's tally for the Jan. 31 week, showing a clearance-driven 1.6 percent gain from the prior week but the lowest year-on-year reading yet at -2.5 percent. The report expects full month sales to show a 2 to 3 percent year-on-year decline. The full month tally will be posted following Thursday's run of chain-store announcements.

The Redbood which measures chain store sales declined more than expected also:
Indications for January's retail sales point to accelerating decline. Year-on-year same-store sales rates for both Redbook and ICSC-Goldman are at new lows, at -2.7 percent for Redbook in the Jan. 31 week and -2.5 percent, as reported earlier this morning, for ICSC-Goldman. Redbook cited heavy weather as a special factor in the week. Chain stores will post results on Thursday.

Pending home sales data is released at 10 ET.

Obama is now talking about guaranteeing mortgages so that people can stay in their homes. Wow, hate to say it, but that is just screwing up by the numbers! That would be the height of socialism as it would encourage people to not pay their mortgages and to live for free in whatever home they overpaid for. Personally, because I did the right things, I am ready and want to see home prices and rents come down. That’s the right thing for everybody and the economy – Oh, and regardless of what Obama does, they will continue to come down – I hope you’re ready too.

The most important piece of technical information is that there was a small movement on the McClelland Oscillator which means that there is a large change in price coming soon, either today or tomorrow. That doesn’t tell us direction, just magnitude.

The short term stochastic left the 10 minute overbought yesterday while the 30 and 60 minute fast were midrange, but the 60 minute slow was just coming up out of oversold – a mixed picture, but usually once that 60 minute slow comes out of overbought it will make the trip to the top and that takes time and usually means higher prices in the short run. We’ll see… It will be interesting to see if the DOW can make it back into its pennant formation or if that line will hold.

Here's an interesting chart from the Bloomberg site - it shows various commodities over the past year and it is very obvious which commodity is leading (GLD is up slightly overnight, but I wouldn't go long unless it breaks out above last Friday's hammer):

Futures are still climbing at towards the open, be sure to share any observations you have on the thread here today, everyone appreciates the input – hey, it’s a team sport!

Have a good day,