Friday, February 29, 2008

Market Wrap: Bulls Give Up The Ghost

Today was certainly a change in character for the market, at least compared to the last couple of weeks.

The market was starting to show some resilience, in that it was beginning to hang in there despite more bad news coming out on bank write-downs and the economy. But then today, AIG came out with a write-down that was totally expected, and the market got slaughtered.

Looking at the technicals, in one fell swoop it looks like the market went from a setup of benign consolidation to one that looks like a retest of the January lows may be in the cards.

Of course, bearish sentiment is spiking ahead of this, as everyone rushes to buy downside protection in the options market. So what happens if the market doesn't make new lows? I suspect you could then see one heck of a short-covering rally.

But right now the bears are salivating. The financials led the way down today, and you can't have sustainable rallies without the financials participating. Energy stocks also got crushed today, and they had been a standout in terms of leadership.

Two stocks that I don't think are going to new lows right here are GOOG and AAPL, which look like they have bottomed. But there is certainly not many growth stocks leading this market. Let's hope March can usher in a change, and tech can get some mojo back.

long AAPL, GOOG

Investor Sentiment Check

The markets are still hovering near their lows of the day, and have not really mounted any type of intraday rally so far.

Investor sentiment indicators are at high levels of angst today. The CBOE put/call ratio closed at 1.24 yesterday, and is at 1.32 today; the ISEE is at a depressed level of 70; and the ARMS Index has been as high as 1.95 today, indicating heavy selling pressure.

It seems that traders are quickly positioning for a retest of the January lows, and putting downside protection in place.

My biggest worry in the near-term: the new highs in the Yen

Negative Financial Headlines Weigh On Stocks

The market is back under heavy selling pressure, after some negative headlines out of the financial sector weigh on investor sentiment.

AIG took a huge $11.1 billion write-down on assets last night, and reported its largest loss ever. This morning, UBS said financial companies ae likely to write-down as much as $600 billion, a figure that dwarfs the current $160 billion in write-downs we have seen so far.

Additionally, there was a news report this morning that the bailout talks for Ambac (ABK) have hit a "snag". The combination of these news items was enough to spark heavy selling in the indexes, which had enjoyed a multi-day relief rally.

The Fed has already hinted about lower rates to come, and now the market is pricing in even deeper cuts. The fed funds futures are now pricing in a 62% chance of a 75 basis point cut at the March 18th meeting, up from just a 2% chance last week. And 50 basis points is now fully priced in.

Asian stocks were lower across the board last night after the Yen spiked to new highs vs. the dollar, and sparked selling. Carry-trade unwind? You know I have been harping on the Yen, and how its recent rally hasn't mattered but likely would at some point.

Oil is trading only slightly lower at $102, but profit-taking in the energy complex has all of those stocks down. But every sector I follow is currently lower.

Weak economic data is once again beginning to weigh on bond yields as well, with the 10-year yield falling another 12 basis points today, back down to 3.59%.

That leaves the 10-year only 17 basis points off of its multi-year low made in January at 3.42%. If the bond market can't hold that 3.50% level, I would expect the recession talk to heat up again, not that it ever really went away.

Let's see if the bulls have anything left in their tank to erase some of the early damage in the markets.

Thursday, February 28, 2008

A Disappointing Session, But Not All Bad

The market was lower today on comments from Bernanke as well as disappointing economic data. But growth stocks held up reasonably well, and GOOG and AAPL were actually able to buck the weakness and go up for once.

4Q GDP was left unrevised at 0.6% this morning. Many were hoping for some positive revisions that showed growth a bit stronger than first forecast, but there were no revisions.

Bernanke spoke for a second day in front of Congress, and said that he though there might be some banks that fail, but no major ones. That doesn't exactly instill confidence in the market. Maybe he should have said if they lower rates quickly enough, and provide ample liquidity, that he hopes to avoid that scenario?

The inflation trades still worked today also: energy, agric, commodities, etc. But retails and financials got whacked.

Let's also not forget that the market has been up for 4 straight days, so a pullback is not surprising. The SPX fell -0.9%, so it could have been worse. Also, the Nasdaq 100 only gave back -0.30%, which was nice to see. And volume looks like it was lower on the Nazz today than yesterday, so there was less conviction in the selling than past declines.

I am still holding on to my outlook for the market to trade sideways for a little while before mounting another move to the upside that breaks through near-term resistance.

long AAPL, GOOG

Wednesday, February 27, 2008

**** Scheduling Conflict ***

---------------------------

I will not be making any morning posts tomorrow as I have to take my son in for ear tube surgery. It is a relatively minor surgery, but it is still no fun watching them put your little guy under.

Hopefully I will be back at my trading desk by midday.

---------------------------

Market Wrap: Growth Stocks Finally Rally

The market consolidated its last 3 days of gains nicely today. The SPX closed only slightly down, while the Nasdaq rose on the day.

A look at the chart above shows that the S&P 500 rallied right into resistance at its overhead (and downsloping) 50-day average. That is a natural area of resistance, and it is normal to see the index rally halted at these levels.

The scenario the bulls are hoping for would be for the market to kind of mull around in this area, just chop around for awhile in low volume, quiet trading. Then after a few days or so, make a spirited rally right up and through this resistance on a increase in volume.

Given how high the put/call ratios have been running, and how the market has reacted positively even in the face of negative headlines, I think this scenario can come to frution. It might not be picture perfect like I describe, but I think the market can continue to move higher into quarter-end.

Tech stocks finally rallied today, with the semis leading the way today, +1.21%. This is a welcome change, as lately all we've seen is energy and commodity stocks rallying.

I am still worried about the dollar weakness, but not so much that I won't look to add to my positions on a pullback.

Have a good night--

Midday Check: Gentle Ben Testifies

The market shook off its early losses, even as Bernanke testifies before Congress. Doesn't it seem like every time he goes on TV the market sells off?

The big news today was that the housing authority OFHEO is going to remove its portfolio caps on Fannie and Freddie, which would greatly improve liquidity in the mortgage market.

IBM made more positive comments about its business and outlook, which seems to be helping boost the tech sector. Many of these stocks have come down so much that they are due for a healthy bounce. The Nasdaq 100 is my biggest ETF weighting right now.

The Dept. of Energy said crude inventories rose for the 7th straight week, but all of this supply does not seem to be having much effect on oil prices, which are still over $100. Go figure.

The dollar is weaker again today, as the Yen and Euro spike higher. I am most worried about the Yen hitting new highs. This could spark some selling of things associated with the yen carry-trade, although anything inflation related has been on fire lately.

Asian markets were up across the board overnight, led by Hong Kong and China.

long QQQQ

Tuesday, February 26, 2008

Nice Day For The Bulls

When I saw the high put/call ratios early this morning, I thought they might help the market rally during the day. That proved to be the case, as the big stock buyback from IBM helped ignite some buying interest.

The market also shook off the negative economic data, including home prices. In fact, the homebuilders index was the biggest gainer on the day, +3.55%. Retail and semis were the next winners on the day, while financials lagged.

MBIA had its AAA rating reaffirmed today, which also emboldened the bulls. This downgrade was one of the big fears in the market, and with this off the table I think bulls will feel its a bit safer to put more money to work.

Oil closed above $100 today, and the energy stocks were on fire again. It's really those companies with big natural gas exposure that are leading the way. This is one group where you could throw a dart at a board and likely hit a stock making a new 52-week high. I would look to add some exposure to this group on an inevitable pullback.

The Yen (FXY) moved higher today while the dollar was lower, but the market rallied anyway. Right now there are enough stocks and groups working related to the inflation trade (think: energy, commodities, agric, infrastructure) to carry the overall market higher. I still want to see the Yen move lower, but the longer it hovers in this territory, the more likely we see an upside breakout soon.

Last, the volatility index (VIX) moved solidly lower today, falling -4.91%. It is now very close to its 200-day support. The last time it hit its 200-day, it bounced much higher and coincided with an overall market selloff.

If it bounces higher again this time, I would expect another selloff. But if it can break below this 200-day support, that could unleash a bigger rally, which might extend itself into quarter-end. So it is possible to envision a bullish theme developing into that time frame.

I also covered what was left of my short ETF positions today, fyi.

Market Pulls Back After Big Rally On Monday

The market is under light selling pressure in early trading, despite some positive earnings reports from retailers.

Macy's (M) and Target (TGT) both reported better than expected earnings, and their stocks are getting a boost. Seperately, consumer confidence fell to 75.0 (vs. 82.0 consensus) as the negativity bubble continues.

PPI inflation data came in higher than expected, but the market reaction is fairly muted, probably since the CPI data that came out last week already prepared investors for this. If the market were worried, bond yields would likely be higher today. But the 10-year yield is down today to 3.85%.

Asian markets were almost all higher overnight, except for Japan. Oil is flat hovering near $99. And investor sentiment indicators are running high witht the CBOE put/call over 1.0, and the ARMS Index over 1.50.

I think that the high put/call and ARMS data could put a floor under stocks, and help the market rally today. My guess is many are still underinvested, and if the market turns higher, managers will be looking to put more money to work on the long side.

Monday, February 25, 2008

More Signs Of The Negativity Bubble

More signs of the negativity bubble surface on a daily basis.

There are front page articles on stagflation fears, the media talks about bank write-downs endlessly, the general public thinks the odds of recession are near 100% and that the outlook for the stock market is terrible.

And the fact that the fed funds rate is 3.00% and going lower next month seems to be lost on most market participants. Not to mention that unlike 1999-2000, stocks are historically cheap relative to both earnings and interest rates.

The chart above shows that short interest on the NYSE just hit a new record. Yes, record. This is as much evidence of the current negativity bubble as anything. And while I am not trying to use this to call a bottom in the stock market, at some point it will matter and will likely lead to a huge rally.

Just something to keep in mind...



Monday Morning Musings

The market opened on a slightly weak note, but has shaken it off and is rallying as of this post.

Goldman Sachs (GS) reduced estimates on a number of bank and brokers, which weighed on the financial stocks early on. The broker index is still in negative territory.

Biotechs are getting the biggest gain (+2.84%) after Genentech (DNA) got approval for Avastin to treat breast cancer. The stocks spiked +10% on the news, its biggest gain since 2005.

Existing home sales came in a bit above expectations, which is helping to lift the housing index. But meadian home prices fell -4.6% yr/yr, and it seems a bottom in the industry is still not at hand.

There were two M&A announcements this morning, something we haven't seen in a while. Take-Two (TTWO) got a 50% premium buyout offer from Electronic Arts (ERTS) for a deal offered at $2 billion. Getty Images (GYI) also received a $2.4 billion buyout offer from a private equity firm.

Oil is up over $99 again, and this is helping the entire energy complex. Ag stocks and infrastructure are also trading firm today.

Asian markets were mostly higher overnight, save for China which posted another big drop. The Yen is lower today, which may also be helping support this rally in U.S. stocks.

And bond yields are higher with the 10-year yield up 9 basis points to 3.88%. Overall, the market seems to have a bit underneath it as talks swirl that a bailout plan for troubled bond insurer Ambac (ABK) could be announced at any time, and would help it maintain its AAA rating.

long GS

Sunday, February 24, 2008

Weekly Wrap

Here is a copy of Briefing.com's Weekly Recap:

With Monday being a holiday for market participants, it can be said that the week began on a good note. Thanks to a late rally on Friday, it ended on one too.

Throughout the week an assortment of economic concerns - or perhaps we should say economic terms - kept many buyers away from the action.

The market appeared to be unsettled by inflation concerns at certain times, by recession concerns at others, and by the specter of stagflation still at others. No matter the worry, or the term, none of it had an attractive ring to it.

Rising commodity prices, a jump in consumer inflation, cautious earnings guidance from retailers Wal-Mart (WMT) and J.C. Penney (JCP), a weak regional manufacturing report, and new economic projections for 2008 from the Federal Reserve, which included a downward revision to the GDP growth forecast and upward revisions to the inflation and unemployment rate forecasts, were overriding influences during the shortened week of trading.

Fortunately, it wasn't all negative. Dow component Hewlett-Packard (HPQ) had a great quarterly report that was replete with better than expected fiscal year guidance, weekly initial claims fell 9K to 349K to remain well below typical recession-like levels, and Blackberry maker Research In Motion (RIMM) said its net subscriber account addition will be 15% to 20% higher for its fiscal fourth quarter than previously projected.

Separately, the continued surge in commodity prices across the agricultural, precious metal, and energy complexes caught everyone's attention. By way of example, wheat prices rose 2.2% to $10.64 per bushel, gold prices surged 4.6% to $947.80 per ounce, and oil prices jumped 3.7% to $98.96 per barrel. Earlier in the week, gold and oil prices hit new, non-inflation adjusted highs of $958.40 and $100.86.

The move in commodity prices combined with the Bureau of Labor Statistics report on Wednesday that consumer prices rose 4.3% year-over-year in January and 2.5%, excluding food and energy, were the primary items feeding the market's inflation concerns.

In expected fashion, the CPI report led to a decidedly lower start for the stock market on Wednesday, but remarkably the major indices all rebounded sharply in the afternoon trade to finish comfortably above the unchanged mark.

The reversal of fortune was helped along by a sense of relief that early losses weren't any worse than they were and minutes from the Jan. 29-30 FOMC meeting that indicated members felt inflation expectations would remain reasonably well anchored.

The latter view aside, the Fed still raised its core inflation forecast for 2008 to a range of 2.0% to 2.2% from 1.7% to 1.9%. In turn, it cut its 2008 GDP forecast to a range of 1.3% to 2.0% from 1.8% to 2.5%. The takeaway for the market was that the updated forecasts continue to support the view that further rate cuts remain likely.

A regional manufacturing report from the Philadelphia Fed on Thursday reinforced the rate cut notion as it checked in at -24.0 versus a consensus estimate of -10.0. A number below zero is meant to indicate a contraction in manufacturing activity. The major averages sunk on this news as the report played into recession fears. Conversely, Treasury prices rallied as it was the type of report that suggested inflation pressures should moderate and that the Fed should cut rates again.

Friday's trade wasn't looking any better as persistent concerns about deteriorating earnings prospects in the financial sector took the Dow, Nasdaq, and S&P down as many as 129, 34 and 15 points, respectively, at their lows for the session. Then, the market stormed back in the final 45 minutes of trading.

The catalyst for the sudden turn was a CNBC report that a bailout plan for bond insurer Ambac Financial (ABK) that would enable it to retain its triple A rating could be announced as early as Monday or Tuesday. This news led to a large wave of buying interest and a short-covering rally that left the Dow, Nasdaq and S&P up approximately 97, 4 and 11 points, respectively, at the closing bell.

Importantly, the late rush of buying activity saved what was shaping up to be a losing week for the broader market and helped the Nasdaq and Russell 2000 curtail their losses.

So, while economic concerns got plenty of press this week, it may surprise many readers to know that the stock market isn't embracing those concerns in earnest fashion like it did in late 2007 and in January. To wit, the Dow Jones Transportation Average, considered to be a leading indicator of economic activity, is up 2.4% for the year. Meanwhile, the consumer discretionary sector is down just 2.6% and the financial sector, down 7.4%, is slightly outperforming the S&P 500, which is down 7.9%.

It is still too early, admittedly, to sound the all-clear signal, yet the outperformance of the aforementioned groups suggests the stock market's economic view isn't as dour as many sources like to indicate. Arguably, it has a slant to it that suggests a reflation trade is winning out right now over a recession trade.

Friday, February 22, 2008

More Pressure On Financial Stocks

The market is under some selling pressure in early trading led by weakness in the financial sector.

Merrill Lynch (MER) downgraded Fannie (FNM) and Freddie (FRE) to Sell, citing weak credit trends. Also, a popular analyst said that another dividend cut is likely at Citi (C). This has the financials down over -1.0% so far.

There were some favorable revisions to the recent PPI inflation figures, which is a good sign after the elevated CPI readings. The 10-year yield is down to 3.75%. What we really need is for mortgage rates to come down to take some pressure of the housing market, which is also lower today.

Asian markets were lower across the board overnight, led by China and Japan. The Yen has also been moving higher over the last 2 days, which isn't helping our markets. And oil is roughly flat today, hovering near the $98 level.

Retailers are the one standout group this morning. The retail index is bucking the weakness a bit, up +0.56%.

Thursday, February 21, 2008

Boone Pickens Bets Oil Prices Will Fall

The market is getting a nice boost in early trading, let by several positive developments in the tech sector.

Cisco (CSCO) was upgraded to Buy at Citi, RIMM raised its net subscriber guidance significantly, and Microsoft (MSFT) said it will be making a "significant" announcement this morning that is not related to its Yahoo! offer.

Of those items, RIMM is getting the biggest lift, as this news flies in the face of the well know consumer slowdown that was thought to hit the handset makers as well as the layoffs in the finance and real estate industries that were supposed to hurt subscriber growth. Wrong.

As for oil, it is slightly lower this morning, trading near $98.80. On CNBC, T.Boone Pickens, who first predicted $100 oil, said he is currently short oil and natural gas as he expects prices to come down in the 2nd quarter.

A very weak Philly Fed survey is weighing on bond yields, with the 10-year yield down 13 basis points to 3.78%. And jobless claims came in at 349k, lower than last week, and still below levels that would normally be associated with recession.

The market is acting like it wants to break out of this recent trading range, and break out to the upside. I added some long exposure yesterday, and will add more on a successful breakout.

long RIMM

Wednesday, February 20, 2008

FOMC Minutes Show Fed Concerned Over Economic Growth

The FOMC minutes from the last meeting just came out, and paint a picture of a Fed that is finally concerned with the growth prospects of the economy, even though all the Fed-heads ever talk about in their speeches is inflation.

Here are the highlights:
  • Fed raises core inflation forecast to 2.0%-2.2% from 1.7%-1.9%
  • Fed says decisive rate cut seen as 'reducing economic worries'
  • Fed raises total inflation forecast to 2.1%-2.4% vs 1.8%-2.1%
  • Fed Minutes says 50-basis-point rate cut not seen contributing to inflation pressures given weakness
  • Fed raises '08 jobless rate forecast to 5.2%-5.3% vs 4.8%-4.9%
  • Fed judged inflation data "disappointing," expects core inflation to "moderate" over next 2 years
  • Fed sees slower US economic growth, rising price pressure in '08
  • Fed cuts 2008 GDP growth forecast to 1.3%-2.0% from 1.8%-2.5%
  • Fed says chance of steeper home price drop, cutting wealth and credit access, a 'significant risk'
  • Fed says some worried Jan 22 cut would be seen as mkt-driven
  • Fed says it lowered U.S. economic growth forecast due to housing contraction, tighter credit
  • Most Fed officials saw risks to growth as weighted to downside, jobless rate risk tilted to upside

Aside from this, I suggested this morning that the early strength in the financials might be a good 'tell'. So far, that is exactly the case. The markets bottomed early, and have since reversed all of their losses and are mounting a nice rally.

Let's see if this can hold into the close--

Inflation Concerns Weigh On Market Early

The market is weak out of the gate due to some slightly elevated readings on inflation today. Core CPI rose +0.3% m/m vs. expectations of +0.2%. This is worrisome, as the Fed does not like to lower rates when inflation is rising. But weaker economic growth usually leads to declining inflation.

Telecoms are under pressure again today after AT&T and Verizon (VZ) announced an unlimited wireless plan for $99.99. I think this might spur a lot of people to simply use wireless at home and get rid of their landlines. The phone companies need to make a wireless phone for the home that looks and works like a normal cordless phone.

The brokers are bucking this morning's weakness, and Goldman Sachs (GS) is nicely higher. This is the opposite of what we saw yesterday, so maybe it will work in reverse today. That is, early strength in the brokers could be a sign that the markets will firm into the close.

Given the inflation news, I would not have been surprised to see the market down more. If stocks can pair their losses into the close, it would lead me to believe that maybe stocks are washed out here, and there isn't much downside momentum left in the market.

Tech is mixed after strong reports from both HPQ and Garmin (GRMN). The semis are up more than +1.0%. Solar stocks are lower after Suntech (STP) reported disappointing earnings.

Asian was down -2-3% overnight, led by a decline in Japan. Oil is off its $100 high, trading above $98. And the 10-year yield is up slightly to 3.88%. I don't want to see yields continue higher, because we need low rates to help the housing situation.

long GS

Tuesday, February 19, 2008

Oil Reaches $100, Rally In Stocks Fades

Now you know why I continually say that I don't like strong market opens. I can't even count how many times in the last few months we have seen the market open on a very strong note, sucking in more enthusiastic buyers, only to run out of steam and fade into the close.

This is very disheartening action for the bulls. What you want to see is markets that start out slow, or even lower, and then build strength into the close. That is the type of action bull markets are made of.

Oil continued to climb throughout the day, eventually closing right at the $100 level. This made the energy stocks rally, along with materials, mining, and commodity-related stocks. But it came at the expense of most other groups.

When financials were down at the start, that might have been an early sign the rally didn't have real conviction behind it. And as the session wore on, tech and other growth stocks began to fade. The action in GOOG was terrible all day.

This market needs to prove itself with a change in character. On a technical basis, the market is oversold. Sentiment is bearish, and at levels often associated with market rallies. And valuations seem cheap relative to interest rates.

But the themes that were working today all had one thing in common - they benefit from inflation. And that hurts the rest of the market. The last thing we want is the Fed to start worrying out loud about resurging inflation. That will make them less likely to cut rates further, which we have said is something that this market needs desperately.

Let's hope we get some good inflation readings in the upcoming data.

long GOOG

Financials Lower, But Stocks Rally Anyway

The market started the week on a positive note after being closed yesterday for the holiday. European and Asian markets both rose yesterday, and our markets followed suit this morning.

The financials are lower across the board after Credit Suisse (CS) and Barclays (BCS) warned about increased write-downs, and the WSJ reported that Lehman Bros. (LEH) may also face a substantial write-down.

Also, oil is spiking again and topping $98 after a Texas refinery shut down. There is also talk that OPEC might cut output, but with prices topping $98 I think that would be a mistake.

Oil stocks, agribusiness, infrastructure, and industrials are up the most so far. Tech and retail are mixed.

Fidel Castro stepped down as President of Cuba, but their economy is so small I don't think it really is impacting the markets.

Bond yields are up, with the 10-year yield at 3.82%. The yield curve is now steeper than its been in nearly 3 years, which is a positive indicator for both financials and the economy going forward.

Now let's just hope this early market strength doesn't fade like its been prone to do recently--

Friday, February 15, 2008

Home Sales Report Shows Big Price Drops Hit California

Yesterday, the National Association of Realtors released their quarterly report on existing home sales prices for metropolitan areas.

The report basically showed more of the same from last quarter, but the big difference was the number of areas in California that showed double-digit declines for the first time in many years.

There were also some surprising areas of strength, and others that showed resilience from declining prices. Here are some of the highlights:

Largest Price Declines
  • -18.5%: Sacramento, CA
  • -16.8% Riverside, CA
  • -16.8%: Jackson, MS
  • -13.0%: Ft. Myers, FL
  • -13.0%: Palm Bay, FL
  • -13.8%: Detroit, MI
  • -13.1%: Los Angeles, CA
  • -12.8%: Las Vegas, NV
  • -12.4%: Memphis, TN
  • -12.2%: Tampa, FL
  • -9.8%: San Diego, CA

Largest Price Gains

  • +19.0%: Cumberland, MD
  • +18.0%: Yakima, WA
  • +14.8%: Binghamton, NY
  • +14.4%: Springfield, IL
  • +13.5%: Bismarck, ND
  • +11.2%: San Jose, CA
  • +11.0%: Amarillo, TX
  • +10.7%: Atlantic City, NJ

Other Major Cities

  • +5.5%: San Francisco, CA
  • +0.5%: Dallas, TX
  • -1.1%: New York, NY
  • -2.6%: Chicago, IL
  • -5.1%: Washington, DC
  • -5.7%: Miami, FL
  • -6.3%: Denver, CO
  • -7.8%: Phoenix, AZ

The declines in the real estate market are well known by now, though they may not yet be fully discounted in the market. Falling home prices causes a decrease in the "wealth effect" that has boosted consumer confidence in recent years. As such, the economic slowdown is being driven by a retrenchment in consumer spending.

Additionally, the real estate woes for the most part have been primarily a residential ordeal. But if the weakness spreads to the commercial real estate market, the economy could take a bigger hit.

Of course, none of this is lost on the Fed, who is now lowering rates furiously to try to ameliorate the situation, which up until a month ago they seemed totally indifferent to. Monetary policy (read: rate cuts) will kick in at some point, but its too early to say we are out of the woods yet.

And for all of those people who for years said that real estate could only go up, the recent events in the housing/subprime/mortgage/bond insurance markets should be a wake up call that no asset class can grow at above-average rates for very long without reality setting in at some point.

long one declining Los Angeles home

Writedowns, Earnings, Sentiment All Weigh On The Market

The market closed at its lows yesterday after bond insurer FGIC lost its AAA rating at Moody's, and was downgraded a notch. This hit the financials, and weighed on the overall market as selling picked up.

Yesterday's big move down was also likely due to the fact that we are in an options expiration week, which typically sees at least one big down day. Yesterday's action certainly fit that bill.

Today, UBS said that it may write-down an additional $203 billion, due to the bond insurance credit crisis. That's quite a figure, and is pressuring the bank index. The brokers were down also, due to some earnings estimates cuts by analysts, but they seem to be shaking off the early weakness as I type this.

Best Buy (BBY) lowered its FY08 earnings guidance this morning, and the stock is trading down. Also, the University of Michigan Sentiment survey dropped to a low reading of 69.6. So sentiment is low right now, which is what you would expect at this point in the economic cycle.

But the main question remains how much of this is already discounted by the sharp decline in stock prices? We know that stocks will bottom and quickly start moving higher well before the economy, and well before these economic data reports show any improvement.

Oil is higher again today, now over $96. This should continue to support all of the oil, ag, and infrastructure themes we have mentioned recently. Asian markets were mixed overnight. And bond yields are off slightly, with the 10-year yield at 3.78% after a big move higher yesterday.

Thursday, February 14, 2008

Sentiment Check

The markets remain under pressure, and have not really mounted any rallies today.

Investor sentiment is skeptical again, with the ARMS Index just hitting 1.20, the CBOE put/call at 1.01, and the ISEE Index depressed at 81.

As long as sentiment remains this bearish, I think the rally can continue, albeit it in fits and starts. When investor sentiment begins to flash more signs of optimism, then it will likely be time to take cover again.

Tech stocks are mixed, infra and ag are up, and the rest of the market is basically lower.

Here is today's list of stocks making moves on above-average volume:
  • STRA, SPWR, BIDU, EDU, TBSI, CHU, LII, OMTR, DEO

long SPWR

Bernanke Speaks, Emphasizes Economic Slowing

The markets are under some selling pressure in early trading, likely due to profit taking after several up days in the market.

Bernanke is testifying before Congress this morning, and basically reiterating the same comments he has made recently. Here is the jist of them:
  • Bernanke says weakening of bond insurers forcing banks to take markdowns, adding to market strains
  • Bernanke says more cuts in home building, related activity likely,softer jobs market to weigh on consumer
  • Bernanke says outlook for economy has worsened in recent months, downside risks to growth have increased
  • Bernanke says policy works with lag, stance must be assessed in light of mid-term forecast, risks
  • Bernanke says Fed will act as needed to support growth, provide insurance against downside risks - Reuters

Currently, the fed funds futures market continues to price in 100% chance of another 50 basis point cut at the FOMC March meeting.

The jobless claims fell a bit this week to 348k, which is still below levels that typically precede a recession. Also, the trade defecit fell in December, which should cause some slight upward revisions to Q4 GDP. Given these datapoints, the odds of a full blown recession have gone down in my book.

The 10-year yield is reacting positively to these economic reports, up 8 basis points to 3.78%. Asian markets soared overnight, with several regions up more than +4.0%, including Japan.

Oil is up again today, nearing the $95. This is helping the energy complex, as well as ag and infrastructure stocks. The oil index is one of the few that is actually higher on the session. Tech, financials, and retail are lagging so far.

Wednesday, February 13, 2008

Market Wrap: A New Uptrend?

The market had one of its best days this year, as the Nazz led the way and posted a solid +2.3% gain. Volume was higher then yesterday, which is a good sign, but overall it was not as high as some of the down days we've had.

Breadth was also solid, but the Hi/Lo index is still bothering me, as it barely improved from yesterday. I know its early, but I want to see more stocks making new highs and less stocks making new lows.

While the media may point to the retail sales report this morning as the catalyst for the rally, there was more to it. What got the rally going today was that traders were revisiting the global growth story.

All of the stocks and sectors that had been associated with the global growth story had a great day. And the Yen goes hand in hand with this theme. You need to see the Yen go down for this thesis to work, and the Yen was down big today.

And with AMAT reporting great earnings last night, growth stocks were on fire today. RIMM gained +5.8%, AAPL +3.6%, GOOG +3.2%, and ISRG +4.0%. In the energy, materials, and infrastructure space there was a handful of stocks up +5%.

While this rally feels good, it really has not yet broken through any resistance levels or reversed the downtrend that has been in place. As such, I want to participate in it while it lasts, but I do not think we are entirely out of the woods.

long GOOG, AAPL, RIMM

Sentiment Helps Market Build On Early Gains

We still have a little over 2 hours to go in today's session, but so far the market has been able to build on its early gains. The Dow is currently +150 points, while the Nasdaq is up more than 2.1%, and leading the way.

I think the early bearish sentiment readings really helped this rally. The CBOE put/call is still running at 1.06, a high reading. And the ISEE is still really low at 65, after hitting an extreme reading of 48 this morning.

Also, the Yen is moving nicely lower today. I mentioned yesterday that I would like to see it break below the $92.50 support level, which has occurred today. If this marks a new downtrend in the Yen, that would bode well for the carry trade and at least temporarily stem the selling that we've seen in global equities, commodities, etc.

Here are some stocks making big moves in strong volume:
  • FSLR, ECOL, CMP, MCRS, WW, ORB, ATLS, SPWR, APA, MEE, MORN

long SPWR

Will The Market Hold On To Early Gains?

I have to admit the reason this post is later than usual is that I have not been able to turn my attention away from these Congressional testimonies with Roger Clemens and his trainer. I don't know why I find it so interesting, but it just seems to me that Clemens is having a tough time making his case believable.

As for the market, there were some solid earnings reports this last night and this morning from the likes of Applied Materials (AMAT), Coca-Cola (KO), Deere (DE), and Waste Management (WMT). The AMAT report is what is helping boost the semis stocks as well as the Nasdaq.

There was also a retail sales report that came in better-than-expected before the bell this morning, although this isn't really helping any retail stocks today.

Energy stocks are strong again as oil remains near the $93. If oil stays up here, most of these stocks should head back to new highs. Also, the solar and alternative energy stocks are getting a big boost today and should stay strong.

The HMOs are under heavy selling pressure again today after the NY atty. general is said to be launching an investigation into the health insurers.

Asian markets were mixed overnight, but the Yen is down nicely today, which should help support the market. Also, the ISEE hit a very depressed level of 48 this morning, indicating heavy put buying relative to call buying. So skepticism of this rally remains elevated, which is good from a contrarian prespective.

I remain skeptical of strong market opens, as they often have a tendency to fade. I prefer markets that open flat or weak, and then build strength into the close. It remains to be seen how today's rally will hold up, but given the high put/call ratios, I am a little more optimistic.

Tuesday, February 12, 2008

Nasdaq Gives Up All Its Early Gains

I was worried when I saw the market up so much, so early. You know how I dislike strong opens in the market. Too much time for sellers to knock things down and profit taking to set in.

That is precisely what happened today. The enthusiasm off of the Buffett news probably was never enough to sustain a huge rally. Goldman Sachs (GS) never participated today, and when AAPL, RIMM, and BIDU rolled over, the writing was on the wall.

The S&P 500 didn't give up all of its gains, but the Nasdaq did, and then some. After hours, Applied Materials (AMAT) reported a solid quarter, which could help the Nazz tomorrow.

Interestingly, options players never bought into today's rally. The ISEE was low all day, and finished at 82. The CBOE put/call was high all day, and closed at 1.14.

So options players look like they were in there buying puts all day, maybe in anticipation of more market weakness ahead. That said, I would be more worried if options players were getting bullish.

Stock of the Day: Potash (POT)

My Stock of the Day is Potash Corp (POT).

This stock has held up well during the recent market correction, causing its relative strength ratings to move higher. It briefly dipped below its 50-day average on Jan. 17, but quickly recovered within 4 days.

The fact that it remained above its 50-day recently, and not far off its previous highs, put the stock in good shape to stage another breakout. That breakout occurred today.

The stock gapped higher this morning, and volume has been strong. Many of the stocks in the agribusiness group are strong today, but POT is leading.

The CEO was on CNBC's Fast Money last night, and painted a very bullish picture of the supply and demand picture for potash (both the company and the product). He said that potash is in short supply and will stay that way all year.

He said the picture is bright around the globe. Farmers get a huge return on investment from the increased yield of good fertilizers, so they are more than willing to pay higher prices for it. That has enabled POT to put through several price increases, as well as bring on idle capacity.

The profit picture continues to look bright for POT and the ag stocks, even as they trade at what looks like high multiples relative to historical P/Es. I was getting cautious on the group, but breakouts like this make it likely that the run continues.

long MOO

Markets Surge On News Of Bank, Bond Insurance Relief

The markets are flying this morning on the news that Warren Buffett sent an offer to the mortgage insurers (MBI, ABK) to reinsure their municipal bond holdings, a liability of roughly $800 million. This would help them maintain their AAA rating, but it does not include their CDO portfolios, or other securities.

As such, one of them has already turned him down. This would be a sweet deal for Buffett, but if they don't accept it, it is hard to see how long this enthusiasm lasts. There is also a press conference being held this morning to discuss a plan to help deliquent homeowners.

Treasury Secretary Paulson is getting ready to speak to outline the details. But basically it is supposed to include up to 6 major lenders, and freeze foreclosures while the banks help come up with loan modifications.

The combined news is helping the bank index lead the way today, +2.90% as of now. Oil stocks are also up over +2.0% on another rise in oil, currently near $94.

Asian markets were up overnight, while the Yen is lower today. I want to see the FXY break the $92.50 level to signal a new downtrend. And bond yields are nicely higher, with the 10-year yield up 10 basis points to 3.72%.

Monday, February 11, 2008

Oil Heads Higher For Second Day

Take a look at the oil ETF (USO) chart, and you'll see a bullish picture of a security moving up through resistance on strong volume.

The USO gapped higher on Friday, and volume was stronger than it has been in months (see graph above). Today, it followed through on that strength, and moved further above its 50-day average.

The ETF looks to have formed a triple bottom near the $68.50 level, which it successfully tested again last week. This looks like a bullish breakout, although it would need to eventually go to a new high on this move to avoid another type of bearish pattern from developing - the head & shoulders top.

I am not long oil right now, at least not directly. But I do have expsure to the energy sector via the oil services ETF (IEZ), as well as some alternative energy plays that benefit from higher oil.

Take a look at the PowerShares Clean Energy ETF (PBW), and you'll see that it surged +3.59% higher today. This one has come down a lot, and if oil stays strong it should continue to enjoy a relief rally.

Some of the individual solar stocks had outstanding days. For example, both First Solar (FSLR) and SunPower (SPWR) both spiked roughly +10% today alone. Nice moves. FSLR reports earnings this week, and a good report would propel both of these names even higher.

The agriculture names fared well today also, and have pretty much held up better than many other areas during the recent market weakness. Another group is probably the global materials stocks. I sold our ETF in this area recently, but a relief rally would not be surprising.

long IEZ, PBW, SPWR

Monday Morning Musings

The market opened under heavy selling pressure after losses in Asian markets overnight, and news from AIG that weighed on financials.

AIG said it has yet to determine the value of its CDO portfolio, a comment the marekt did not like, due to the fact that it adds uncertainty to the picture. As for Asian markets, they were down fairly heavily following the poor showing of U.S. markets last week.

In the silly move department, Dow Jones said that it will be adding Bank of America (BAC) and Chevron (CVX) to the Dow Jones Industrial Index, and removing Altria (MO) and Honeywell (HON).

I don't understand these moves, and think they add little value to the index. Citi (C) is already in there, so BAC adds nothing. Ditto with Exxon (XOM) being in there. Who needs another behemoth oil company? I would have preferred HON stayed in there. Personally, I think they should just do away with this index. But I know I am alone there.

Yahoo! is rejecting Microsoft's bid of $31, saying that they feel the company is worth $40. I disagree with them, and if that was the case, there would likely be other bidders. They should just accept it.

Oil is higher this morning, above $92.50, which is helping the energy complex. The Yen is also higher, which I don't like to see. It had a big downward reversal day last Thursday, so I was hoping to see some follow-through on the downside. I'll be keeping my eye on this.

And bond yields are lower, with the 10-year yield at 3.60%. The economic calendar is light this week.

Friday, February 08, 2008

OPEC Starting To Worry About Oil Prices

The market is higher this morning as tech stocks are bouncing. Most of the big tech stocks have had big pullbacks, and a bounce is certainly in order. I bought some QQQQ yesterday in anticipation of some sort of relief rally unfolding.

Amazon.com (AMZN) is up nicely after the company announced a $1 billion stock buyback. It also said that it may redeem $1 billion of its outstanding debt as well. They certainly have the cash to do it.

Oil prices are higher also, above $89, after OPEC said that it may cut output next month to keep crude oil prices above $80 per barrel, according to Bloomberg. I guess they're finally starting to worry about falling prices, and the potential effect of slowing economic growth and demand.

The U.S. Senate came to an agreement on the fiscal stimulus package, and the President is expected to sign it next week. There have been comments that checks could be in the hands of consumers as early as May. Do you know what you will do with your check? I'm thinking....iPhone!

Energy stocks are leading the action, along with semis. Drug stocks, biotechs, and financials are lagging so far. Given the underperformance of tech ytd, I'm betting that they can play catch-up for a little while.

long QQQQ

Thursday, February 07, 2008

Retail Sales Roundup

Here is a look at how some of the retailers January comp sales came in:

Better-than-expected results
  • ARO (+4.7% vs. +3.3% estimates)
  • BJ (+7.8% vs. +4.6%)
  • PLCE (+6.0% vs. +3.0%)
  • COST (+7.0% vs. +6.6%)
  • GPS (-2.0% vs. -6.4%)
  • HOTT (-3.6% vs. 6.7%)
  • JCP (-1.9% vs. -6.1%)
  • SKS (+4.1% vs. +3.2%)
  • ZUMZ (+1.7% vs. +1.5%)

Worse-than-expected results:

  • AEO (-7.0% vs. -3.1%)
  • CHS (-22.1% vs. -11.4%)
  • DDS (-12.0% vs. -5.0%)
  • KSS (-8.3% vs. -7.8%)
  • LTD (-8.0% vs. -7.3%)
  • JWN (-6.6% vs. -0.6%)
  • PSUN (-7.4% vs. +1.3%)
  • TGT (-1.1% vs. -0.7%)
  • WMT (+0.5% vs. +2.1%)

Despite many below average results, the retail sector is the strongest sector in the market today. That usually means that the stocks have discounted all the bad news for the time being, and should enjoy a relief rally.

Look at most of the stocks from the "worse-than-expected" list and you'll see that even those stocks are up on the day. I don't own many retailers right now, but I have to admit a lot of them look good for a trade here.

Cisco Guidance, Retail Sales Disappoint Investors

The declines this morning were not as bad as some had feared after Cisco (CSCO) disappointed investors last night when it gave revenue guidance that was below consensus expectations.

Actually, the market bounced for a while and had completely erased its early losses, but it has since dipped back into the red.

Retail sales were also mixed, but for the most part they were not strong. That said, a handful of stocks have traded higher after reporting, which indicates that maybe these stocks are washed out and due for more of a rally. I'll have more of a retail sales roundup in a bit.

The exchange stocks (CME, NMX, ICE) are getting a big bounce after several upgrades, as well as the CFTC coming to their defense and saying that the DoJ comments were off base.

The Bank of England got on board with a 25 basis point rate cut, while the ECB has held rates steady at 4.00%, as expected. I think the ECB is falling behind the curve, and will experience more slowing like the U.S. is experiencing now. They should look at what is happening here, and get ahead of the curve.

Bond insurer MBIA (MBI) raised $750 million in capital from a stock offering, which might help them retain their AAA rating. This is helping the bank index buck today's weakness and trade higher.

Wednesday, February 06, 2008

Sentiment Check

The market has given up all of its early gains, as selling picks up again.

Sentiment is somewhat mixed. The ARMS Index is at 1.08, fairly neutral. The CBOE put/call ratio is also not that elevated at 0.93. But the ISEE Sentiment Index is fairly low, at 79, showing fairly heavy put buying.

The volatility indexes are mixed, with the VIX higher again, but the VXN (Nasdaq) lower.

Yesterday, I added some downside hedges to my accounts, and when I saw the market up a lot this morning I was not worried about them. I simply don't really trust this market right now, and have not seen the kind of high volume rallies that show any conviction on the part of buyers.

As such, I am looking to make smaller, shorter trades to try to rack up some incremental profits. I would buy some stocks that have come down quite a bit, but then look to take profits on any rally. But I have not started buying anything yet.

Disney Propels The Dow Higher

The markets got a small bounce at the open, and have since built on those gains. The Dow has been up as much as +100 points after Disney (DIS) reported strong earnings. Tonight after the close, Cisco (CSCO) reports earnings, which should color the action in the Nasdaq tomorrow.

The exchange stocks (CME, NMX, ICE) are lower after the Dept. of Justice is complaining that the combination of futures exchanges controlling their own clearing functions has thwarted competition. I don't buy their argument, and if the exchanges hadn't gone public recently, I don't think this would have ever come up.

Asian markets got whacked overnight, following the drubbing on Wall St. Japan fell -4.7%, while Hong Kong swooned -5.4%. I added a hedge yesterday in the form of an inverse ETF on emerging markets (EEV).

Bond yields are steady, with the 10-year yield at 3.61%. It has found good support around this level over the last week or so, which is a good sign.

Oil inventories rose again, pushing crude prices lower (near $87.50). Pull up a chart of the oil ETF (USO) and you'll see a fairly negative picture. As such, it looks like oil could continue lower in the near-term.

This bounce looks small in comparison to yesterday's decline. I don't know if a retest of the lows is imminent, but it seems the market has more work to do before its ready for a more sustainable rally.

The market had also become very overbought (stochastics, oscillators), so we'll have to see how it holds up once that overbought condition is alleviated.

long EEV

Tuesday, February 05, 2008

ISM Report Points To More Weakness In The Economy

The markets were set to open only slightly lower, but the ISM Services report that came out this morning was much weaker than expected. It showed the first contraction in business services in nearly 5 years. This hit the market, and the selloff picked up steam.

The fed funds futures increased the probability of another 50 basis point cut at the next FOMC meeting to 100%. The odds of recession have certainly gone up on this report. I have been of the opinion that there is probably only a 50/50 chance of recession, given strength in other parts of the economy. But now I might have to raise those odds.

I am also hearing more chatter about retesting the lows from January. While I have been talking about this for a while, it seems it is now becoming consensus. While the consensus is often wrong, if everyone is waiting to see if this happens, it could become a self-fulfilling event.

Asian markets were lower overnight, and the int'l ETFs are all lower today. I am considering hedging some of my international exposure with an inverse ETF.

Oil is also lower, nearing $88. This is a reflection of weaker economic growth, and is taking the energy complex lower. The 10-year yield is down 10 bps to 3.54%

Monday, February 04, 2008

Monday Morning Musings

The market is opening under some selling pressure this morning after several downgrades in the financial sector are weighing on the banks and brokers.

But the ARMS Index, CBOE put/call ratio, and ISEE Sentiment Index are all at elevated levels early on, which could lend a bid to stocks at some point today.

Last week was a big week in the market, so some selling should not be surprising. But on the flip side, a lot of managers are likely underinvested if the market continues to rally, myself included.

I said on Friday that Asia would probably be up over the weekend, but that was an understatement. China surged +8.1%, which is the equivalent of the Dow spiking +1000 points. Quite a move. The ETFs are not up as much this morning, but still higher.

GOOG has reached out to YHOO and offered their support to help thwart Microsoft's bid. If I were YHOO, I'm not so sure that I would want to thwart the bid. I would probably sell.

Oil is a bit higher, but still under $90. Most of the energy stocks are up nonetheless. The 10-year yield is up a bit also, at 3.65%. But the Yen is still lurking near its old highs, making me worried that another upside breakout could be coming. Keep an eye on that one.

long GOOG

Sunday, February 03, 2008

Weekly Wrap

Here is Briefing.com's weekly recap:

Roughly 20% of the S&P 500 reported their quarterly earnings results in the past week, yet that cascade of results seemed insignificant at times to other developments that included the FOMC meeting, manic reports about bond insurers' credit ratings, January employment data, and a blockbuster announcement from Microsoft that it was offering $31 per share, or nearly $45 billion, to acquire Yahoo!.

Looking at the week, the FOMC meeting has to be regarded as the most important happening. The rate-setting committee convened in a two-day affair that culminated in a widely anticipated decision Wednesday afternoon. Specifically, the FOMC elected to cut the fed funds rate another 50 basis points to 3.00%. In a related move, the discount rate was also cut 50 basis points to 3.50%.

The stock market responded favorably to the FOMC decision, sending the major indices sharply higher in its wake. The FOMC-related rally on Wednesday was short-lived, however, as speculation that one of the major bond insurers was on the cusp of being downgraded fueled a sense of angst that led to a broad-based wave of selling pressure.

Still, the indices suffered only modest losses on Wednesday that were quickly recouped on Thursday after MBIA held an assertive four-hour conference call in which it declared that its capital raising plan will exceed triple-A rating requirements and that it was virtually impossible to imagine a situation where it would become insolvent.

On Friday it was also reported that eight banks were in the midst of trying to work out a rescue plan for Ambac Financial.

For the most part, market participants were in rescue mode all week, coming to the aid of battered stock prices, primarily in the financial and retail sectors. The prospect of further rate cuts, and then the rate cut itself, fueled the bullish bias that had been missing for most of January.

The unique element to the past week, though, was the shift in sentiment. Although bad news invited some dips at times in the broader averages, it was the good news that resonated with participants.

To the latter point, if we told you at the beginning of the week that Yahoo!, Google, Boeing, Bristol-Myers and Starbucks would disappoint with their earnings results and/or guidance, that new home sales would fall to a 13-year low, that weekly initial claims would jump to 375K from 306K, that it would be reported Q4 GDP grew just 0.6%, and that January nonfarm payrolls declined by 17K, you would have probably thought we'd be in for more tough sledding.

All of those things happened, yet the market digested them with relative ease, preferring instead to focus on the positives like reassuring earnings news from 3M, Burlington Northern, UPS and Verizon, a report that durable orders rose 5.2%, a jump in the manufacturing sector's ISM Index to 50.7 (a number above 50 reflects growth), and the Microsoft buyout offer for Yahoo!.

The proposed acquisition dominated conversations Friday on account of the 62% premium that the bid represented relative to Yahoo's previous closing price. Additionally, it drew a lot of praise for being a good strategic move on Microsoft's part and raised concerns about a new level of competition for Google, which suffered a 9.0% drop on Friday, bringing its year-to-date decline to 25%.

Underlying all of the positive activity during the week, though, was the Fed and its accommodative policy. The FOMC has now slashed the fed funds rate 225 basis points since Sept. 18 - and that's with initial claims still running below recession levels, the labor market still operating at full employment, and final sales in the fourth quarter, which excludes inventories, increasing 1.9%.

Granted there are clear signs of an economic slowdown, but the Fed is very much acting in a preemptive manner. We think this week's trading action reflected a growing acceptance of that viewpoint. Accordingly, there was broad-based strength behind the move. The financial sector led the way with an impressive 8.5% advance and was followed by telecom services (+6.8%), consumer discretionary (+6.7%), basic materials (+6.2%) and industrials (+5.5%).

The scope of those moves was driven in part by short-covering activity, yet it's not a stretch to think either that in the past week a fear of missing out on future gains following the Fed's rate cuts supplanted the fear of a fallout that has prevailed most of this year.

Friday, February 01, 2008

Another Strong Rally To End A Very Good Week

The market rallied again into the close, capping one of its best weeks in several years. Of course, it is too bad that it had to come in the worst start to the year since 1990. But I think the big Fed moves should help investor psychology, as well as the renewed strength in financials.

The MSFT bid for YHOO was the big news of the day, and YHOO stock surged +48%. But every group participated today, even the energy stocks (despite oil moving down again).

The semiconductor ETF (SMH) rose +7.4% today. That is HUGE. I can't remember the last time it has such a big move. That should help boost sentiment in Asia over the weekend.

And homebuilders rose again today (+2.46%), after a weak jobs report helped push bond yields lower. The 10-year yield finished at 3.60%, and these low yields are leading to a surge in refi activity. This is important, and really helps alleviate the negative sentiment in the homebuilders.

Oil and gold were both down big today, as the bloom seems to be coming off of the commodity rose. Some of this weakness likely stems from China, whose market has not bounced back like the U.S. did this week. If China continues to weaken, it could alter many of the global growth themes that have been driving certain groups of stocks. So this bears monitoring.

Here are some stocks that had huge moves today on surging volume:
  • FLS, MCRS, ISRG, IRM, CALM, MEE, ECOL, LKXQ, CHRW, MC

The S&P 500 is approaching the 1400 level, where I think we could see some initial resistance. And another area I would watch, if it gets through 1400, would be the downsloping 50-day moving average.

I am still of the mindset that the market will experience some sort of retest of the lows at some point, but the swift move of 125 bps of rate cuts by the Fed in just 10 days time lessens my conviction, and makes me more likely to want to buy future dips.

long MEE; short GLD