Tuesday, March 24, 2009

Daily Update/ Market Thread 3/24

Good Morning,

S&P futures are down about 12 points this morning, typical of what you would expect after a monstrous run the day prior. Here’s the overnight action:

If you didn't catch it in the comments of last night's post, the CMBX triple A and double A spreads came in some yesterday. The lower rated levels did not:

By the way, how much commercial real estate is still over rated? Have the rating agencies done as fine a job here as they have done with equities? My guess would be yes.

The ICSC store sales data came in at -1.4% yoy, as expected. Here’s how Econoday summarized it:
The Easter shift is coming into play, depressing comparisons in the March 21 week. Easter, which is a major holiday for retailers, is much later this year than last year (April 12 vs. last year's March 23). Sales fell 0.4 percent in the week for a very soft -1.4 percent year-on-year rate. But outside of the Easter effect, the report stresses that activity is in line with January and February.

The Redbook chain store sales came in slightly worse than the previous week, falling 1.4% versus the previous week’s -1.1%.

Durable goods and new home sales come out tomorrow.

No changes from last night that I see in the technicals, we are very overbought and thus I expect that we’ll be seeing some meaningful retrace soon. If McHugh is correct in his count, we have likely finished wave 5 up. If we do finally get a meaningful retrace, the 23.6 is at 787, the 38.2 is at 763, and the 50% is at 746 with the 61.8% at 726.

I think it’s very, very interesting that yesterday’s rally ended at exactly 23.6% of 666. Those Fibonacci numbers are everywhere. 23.6% of 666 is 157 points, and that’s exactly what we’ve done to reach a high of 823.

We are on a weekly buy signal, but everything below that time frame is extremely overbought. Sentiment is very bullish and people still don’t even see or talk about the roots of the problems. While I agree that the current administration was handed a total mess, many of those people were responsible for setting up the conditions that created the mess. The actions to date are also setting up the economy for future turmoil, not stability. If you want stability, you must remove the leverage and primarily the debt from the system. It’s obvious that won’t happen while the corporations and bankers sponsor the politicians.

I’m going to be busy for a few days working on several projects, so you may notice fewer articles and a little less participation on the market thread. That will be temporary; your contributions to keep that going are appreciated.

Hope everyone has a good day,