Wednesday, March 3, 2010

Morning Update/ Market Thread 3/3

Good Morning,

Equities are up once again this morning, below is a 60 minute chart of the DOW on the left and 5 minute view of the S&P on the right:



Both the dollar and bonds are down, oil and gold are higher with gold looking like it’s broken out.

Overall domestic sales of light vehicles was down in January, coming in at 7.6 million, the consensus was 7.9 million and that was also the amount sold in December.

The insane and worse than worthless MBA Purchase Applications report came up off last week’s record low reading. Of course we don’t know exactly what that reading was or what it means, or really anything else about it, because all the MBA will report is percentage change of an index that they made up and change at their will, but people seem to be okay with that? Fools.

A drop in rates fed a burst in mortgage applications during the Feb. 26 week. The gain was centered in refinancing applications which rose 17.2 percent. Purchase applications rose 9.0 percent but the Mortgage Bankers Association, which compiles the data, describes purchase activity as "subdued" and still in the narrow range of the last few months. The average 30-year mortgage dropped 8 basis points to 4.95 percent with 15-year mortgages down 8 basis points to 4.27 percent. Pending home sales, which have been very weak, will be posted tomorrow at 10:00 ET.
Note that it was NOT applications that rose, it was their index… 17.2% in a week? Riiiiggght… but that seems to the norm for these loons.

Both the Challenger and ADP job reports are out this morning. I take them both a many grains of salt. Of course the Employment Situation Report comes out on Friday and we already have the maniacal Larry Summers telling the media to discount it due to the weather. Larry never met a debt backed dollar he didn’t like and he wouldn’t recognize debt saturation if it bit him in the rear. At any rate, below is the Challenger report with Econoday spin:

Highlights
In a positive indication for Friday's jobs report, Challenger's count of layoff announcements fell to 42,090 in February for the lowest total since the economic strength of mid-2006. For comparison, the layoff count in January was 71,482 and was a chilling 186,350 in February last year. Layoffs in construction, a sector believed to have been hit hardest by the month's heavy weather, were minimal. The report believes employers have now shifted away from downsizing.
Well, let’s see… the private sector has downsized massively, and guess who was picking up the slack? Government…

NEW YORK (CNNMoney.com) -- The U.S. Postal Service said on Tuesday that it would reduce its workforce by another 30,000 positions and slash overtime this year in an effort to reduce costs.

Together these staffing reductions will result in cost savings equivalent to eliminating 50,000 full-time positions, according to Chief Financial Officer Joseph Corbett.
Like getting your weekend Netflix on Saturday? Not any longer.

Here’s ADP’s report:

Highlights
ADP is calling for a 20,000 decline in February private payrolls. The report said weather had only a minimal impact on its results but warns that weather is nevertheless likely to have an effect on the government's results. Equities firmed slightly in reaction to the report.
So we get to ignore Larry Summer’s ignore? I’m pretty sure I already had.

Republican Jim Bunning moved out of the way of extending Emergency Unemployment Compensation, stating that he wasn’t against the benefits, only against funding them with more debt! Wow, what a concept, and I note that Bunning voted against TARP legislation as well. But there’s our media and others shaming him for his actions. Here’s a snippet from a CNN article:

"You have made your point ... [but] the majority of the Senate disagrees with you," Reid told Bunning. The need to extend unemployment benefits is "an emergency. ... Our economy is suffering. [There are] long lines of people out of work."

Reid called Bunning's legislative maneuvering "terribly inappropriate."

iReporter: Shame on you, Sen. Bunning
Maine GOP Sen. Susan Collins sided with the Democratic leader, saying Bunning's views "do not represent the majority of the Republican caucus."
Anyone remember the quote about people calling for their own monetary destruction? Seems like that’s ringing a bell somewhere, just saying – it’s a math thing, and yes, this is “only” 10 million dollars to last until April 5th, no biggie, just put it on the tab and we’ll keep many thousands from standing up for themselves and for their country.

“Wild Man” Richard Fisher is calling for a breakup of the big banks – gaaasp! Now that’s just heresy.

March 3 (Bloomberg) -- Federal Reserve Bank of Dallas President Richard Fisher called for an international pact to break up banks whose collapse would threaten the financial system, a position that goes beyond other Fed officials.

“The disagreeable but sound thing to do” for firms regarded as “too big to fail” would be to “dismantle them over time into institutions that can be prudently managed and regulated across borders,” Fisher said in a speech at the Council on Foreign Relations in New York.

The former fund manager said his views on the issue “may be slightly radical.”
Now there’s a man of the people, a future President right there.

Turning to the markets, they are extremely overbought on the short term timeframes. The Trin has gone out at extreme levels the past two days, the put/call ration is way low especially on the NDX, and new 52 week highs have jumped back up to 360 with 0 new lows – all extreme readings.

The RUT did go on to make a new high yesterday, here's what McHugh thinks about that from his perspective, "If prices exceed the January 19th top in all major indices, it means Supercycle degree wave (B) from last March has further to go on the upside before completion. If one or two major averages exceed the January top, but several others fail to confirm, that would be very bearish for the stock market in general."

Guess we're going to find out.

McHugh also has a wave count that says yesterday’s action may have been a wave 4 and that there is a wave 5 up coming, but he once again thinks this should be the final wave prior to a correction beginning. We’ll see, we’ve been here before. Again, this market is similar to the way markets topped in ’07, but it did take most of the year to play out. I don’t think this will take too much longer, we’re way over extended here and have already fallen away from that giant rising wedge.

Speaking of rising wedges, I was tracking one on the 5 minute time frame over the past few days, and it broke support yesterday, we are still beneath it:



Patience is a virtue, for sure, there are larger trendlines in play, I think it’s most wise to wait for them to break.

These “casual” swarms we’ve started in the daily thread have been quite successful! With just a few of us making posts, we managed to double the traffic to the Swarm site the first day, and then we doubled it again the next, actually by vBulletin’s count we quadrupled it! And we’re picking up new registrants as well. Let’s keep that up, we’re planning on a Grand Opening Swarm for this Saturday, March 6th!

Steppenwolf - Magic Carpet Ride