Let us go back in time…
Way back to January 14th, when the Dow was at 8,440 andthe Beige Book of that day said: “”The New York Fed reported that “a contact monitoring the financial sector maintains that the industry is still far from hitting bottom.” Gosh – we should really take these thing seriously don’t you think? The XLF fell about 50% from that day to March 9th but had already gone from $11 to $8 by Jan 20th. Over at PSW, we actually go through the trouble of reading this report as it’s actually a really great indicator of what’s going on in the economy. Today, at 2pm, we get the Fed’s third report of the year and we’ll be looking for those “green shoots” Bernanke has been talking about.
We were pleased to hold our levels yesterday, with only the Dow giving us a real scare as they tested 7,900 in the early afternoon and finishing at just 7,920. As the overall action continued to mirror last Tuesday’s move, we’ll be looking for a repeat of last Wednesday today,where we get another level test, probably ahead of the Beige Book, followed by (hopefully) a rally into the close based on optimistic data coming in from the Fed’s 12 reporting districts.
We MUST move sharply higher this week or we will end up in technical hell, as is neatly illustrated in this chart tutorial of the S&P. As Adam Hewison suggests, we NEED to retest our lows to build a strong base. A big breakout rally here will only keep us nervous that is will all come undone one day so we’re in the funny position of preferring to see a correction here, during earnings month so we can find a real floor and hopefully bring some long-term money off the sidelines. As it stands now, the market is full of day traders, moving up and down 2.5% sometimes several times in a day.
Now that GS had gotten their $5Bn at over 100% off their Janlows, after using our TARP money to game the markets (see yesterday’s post and where the hell is our cut?) – will the market be able to stand on it’s own? Don’t get me wrong, GS will still play their games but the money has been made on the long side for them so, if it’s easier for them to flip short – down we may go. This isn’t…
