Monday, February 9, 2009

Morning Update/ Market Thread 2/9

Good Morning,

It appears that our new Secretary Treasurer is having a little problem getting his latest $1.3 trillion off the ground – yet again. It seems that it’s not so easy pricing and then transferring the burden of the debts from those who recklessly created them to the taxpayers. Thus we are left to ponder the announcement for yet another day.

But not to worry, the futures managed to dig themselves out of a hole and stay within the confines of their uptrend channels – for now. I actually have the S&P futures slightly beneath my channel line, but following the bottom upwards.

There’s an article in Bloomberg this morning about possibly having to force GM and Chrysler into Bankruptcy in order to “protect” the taxpayer investment. Once again, simply unbelievable! Why didn’t they force them into bankruptcy before giving them my money? I’ll have more on this later.

The job slashing continues this morning as Nissan announced that they will be letting 20,000 workers go, I haven’t seen if this affects workers here or just in Japan yet. At least they took action to end all executive bonuses and to slash executive pay by 10% across the board. Hey, I don’t see inflation there either.

Whirlpool missed on their profit expectations, their profits were down 76% year over year for the fourth quarter.

So, here we sit with the futures recovering despite automakers failing, jobs being slashed in record numbers, the government spending trillions it doesn’t have to prop up the bad actors in the banking world, while offering little of meaningful substance to help the people who actually make up the economy. That’s a recipe for disaster and it still looks like the greatest heist in the history of mankind to me.

The XLF is up in pre-market while bonds are lower.

The short term oscillators are very overbought, there is still that bearish RSI divergence in the NDX which is also way above its upper Bollinger, yet the channels and Elliott Wave counts seem to suggest that we are likely to head higher still. I remind everyone that we are still within the confines of the triangle/ pennant and that opening new trades in the middle of triangles is usually NOT very rewarding. The way to play triangles and flats, in my opinion, is to catch them on their boundaries, using those lines as stop points to protect your entry.

We are going to open with the SPX just beneath its 50dma at 869, the next strong area of resistance will be at about 878, the upper Bollinger is at 885 (and descending rapidly), while the next higher long term pivot is at 912. 850 is the pivot beneath us that is now going to be support.

The NDX daily stochastic is overbought while the rest of the indices have a ways to go. It’s going to be an interesting couple of days with Obama speaking about STIMULUS this evening and Geithener scheduled to talk about bailouts for the pigmen tomorrow – IF he can get his act together.

Counting on a rocket ride? I think it’s just plain old dangerous in here until we get the current fun and games behind us.

Please share your best ideas with us on the daily thread, we appreciate good contributions as this is a team sport, one that doesn’t have to be done by one person staring into a screen!

Have a great day, and best of luck with your trades.

Nate