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Thursday, March 28, 2024

Thursday Morning

I never could get the hang of Thursdays” – Arthur Dent

Douglas Adams also said: “An economic forecaster is like a cross-eyed javelin thrower: they don’t win many accuracy contests, but they keep the crowd’s attention.”

So I’m going to go out on a limb here and say I have no idea what the markets are going to do today!

Nothing I write now (6am) will have any meaning once the jobs report comes out at 8:30 am so I’m sitting here looking at what other people are saying and I realize that they are clueless too.  Rather than tell you they are clueless, they all give you their opinion anyway – which reminded me of the cross-eyed javelin thrower.

Of course I’m not supposed to tell you this as it damages the aura of omnipotence that financial writers are supposed to have, but I already let the cat out of the bag when I told you last week about how bad news turns off readers, so this can’t do too much more damage…

I don’t want to pick on Cramer because I do like him, but he is the very public example of this with this latest XOM reversal.  Last week we strongly disagreed with his BUYBUYBUY call on XOM at the top, calling XOM “the annointed stock” to buy while on Tuesday’s “Stop Trading” segment he said XOM was going to $80.

Yesterday he went on CNBC and reversed on XOM (while it was plunging), which was suspiciously absent from The Street’s article on the segment.

Rather than go back and forth, I’m going to choose to just say – I don’t know what will happen today so, I’m sorry, but more fence sitting lies ahead!

Asia was on the fence this morning with the Hang Seng dropping 183 points while the Nikkei bucked the general trend and rose 102 on M&A activity.

Europe continues to ignore their former colonies as Europen markets continue to grind upwards.  Don’t look for the EU to bail out the dollar until it hits $1.40 to the Euro as they are saving money on oil and we don’t buy enough imports from them to make it worth their while.

In fact, the ECB raised rates another quarter point to 3.5% but the Bank of England held theirs at 5%.  With Asia attempting to bail us out and Europe tightening, going long on the Euro vs. the Yen is the play of the day!

Back home, we are happy to just hold our levels but either a good or bad jobs report will be taken well or badly by the market (you can never tell which).  If I had to guess (7:40) I’d say jobs are roughly in-line which does not take the Fed away (as if the death of the dollar allows them to ease rates!) which raises the markets slightly but not too much.

Levels we will watch today:

  • Dow 12,300 (of course) with 12,361 the all-time high
    • Any move without TRANQ 2,650 is meaningless
  • S&P 1,410 is amazing, 1,415 is our safety zone
  • NYSE needs to retake 9.050 and will provide leadership up or down
  • Nasdaq must break 2,450 to be taken seriously
    • SOX will not help but really need to take out 490 and stay over 485
  • The Russell needs to retake 800 to avoid looking toppy

 As I predicted last week, the Asian Central Banks came to the dollar’s rescue right at 82.50 as that was all they could stand and they can’t stands no more

We’ll see if we can hold it today as it requires a lot of effort to hold up the greenback these days. 

Paulson heads to China next week to beg for mercy but don’t expect much out of it as China holds all the cards (and the dollars!) now.

I was concerned about oil’s lack of movement against the dollar yesterday until I realized that is was just BS manipulation of the front month contract.  Another up day for the dollar will snap oil prices sharply lower as they can’t risk dropping contango any further.

At 10:55 yesterday in comments Just Shiv said about oil’s drop: “hmm maybe a hurricane or nigerian attack is on the way?” to which I replied “Hey good point but hurricanes are hard to call up. I’ll bet the phones are ringing off the hook at Rent-A-Rebel!

It would almost be funny if it weren’t actually happening!  Just hours after we spoke gunment attacked an ENI facility, killing one person and taking three hostages. 

The attackers were wearing camouflage and came in about seven boats,” Mr. Ringim (Police Commissioner) said. “They burnt some vehicles and killed one person.” The identity of the dead man wasn’t immediately clear although it appeared he had been a bystander rather than one of the attackers or an Agip employee, Mr. Ringim said.

In this, the 15th attack of the year, don’t you find it surprising that they didn’t kill (or find) a guard?  While “scores” of bystanders have been killed in these attacks, only one oil worker was killed “accidentally” in a “rescue” attempt.

How much did yesterday’s death boost the price of oil?  .17 in the pre-market (7am) but I’m sure CNBC will spin it higher in the morning so the guy’s death will have some real meaning…   

Keep an eye on Gold, which looks like $635 in Europe and could test $620 again if the Asians can buy enough dollars this week.

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8:30 Update:  Jobs are so-so.  Small downward revision to last month and a small drop this month (-34K).  This could actually be the best case scenario!  Not enough to put the Fed on alert and not so little as to signal a hard landing…

I don’t think we’ll get a big boost out of this and that puts more emphasis on tomorrow’s unemployment report.  I’m more interesting in this afternoon’s money supply (4:30) but most people don’t follow it.

I like it as the moves we see in today’s markets will be real (or as real as it gets) and not just a gut reaction to what often turn out to be very inaccurate numbers.

Also, in the background for the weekend, we may get an administration official saying something to the effect of agreeing with the Baker panel.  Any hope that this war will actually end one day could be a nice boost for the markets.  Remember – at this altitude, a little boost is all we need!

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That being said I see no reason not to remain positive as long as oil doesn’t snap back on us.  Let’s keep an eye on gold $440 for signs the dollar is heading back south (or over to Europe) but otherwise it could be game on today. 

Unless we take out our high targets, I remain on the sidelines and I’m not selling my QQQQ puts just yet but here’s what I’m watching.

AXP has been lagging and looks ready to break out.  All these companies doing so well must be accepting credit card right?  And the Wall Street crowd are probably not going to use all cash to spend their $350Bn in bonus money this shopping season so I like the Jan $60s for $1.35.

HPQ is settling with California so now we’ll see if they can break $40 like the mean it.  I think they may be in a holding pattern until expiration but I’d hate to miss a move up so I’m going to take the Jan $40s for $1.30 and sell the Dec $40s for .50.

LLY had my favorite kind of guidance – the kind that sounds bad but is actually good!  They posted a slightly lower number ($3.30) for next year but that includes a .10 charge for the ICOS acquisition that was not part of analyst estimates.   Remember – it is not our job to save them but let’s be ready to bottom fish!

RIMM looks very weak.  The puts are very much like a long-shot at a horse race but what a payout if they hit.  Jan $135 puts are $8.30, an insane premium that can be taken advantage of by selling them against the Mar $135s for $11.1 (we may have to adjust this as the trading opens).  If we get to the Jan expiration below $150, we should be in very good shape!

Bad news is spreading for YUM as people in DE and CT are now getting sick too.  So much for that being under control!  $61 was the last bottom so let’s keep an eye on that.

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