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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (7106)	2/6/2004 10:46:14 AM
From: mishedlo	Read Replies (1) \| Respond to of 110194

3 silver futures, not calls. Unfortunately just minis M

To: yard_man who wrote (7106)	2/6/2004 10:50:20 AM
From: mishedlo	Read Replies (2) \| Respond to of 110194

Brodsky - Minyanville It’s all about the jobs today. Whether that makes sense or not, it is what everyone is looking at and therefore, it is what will drive the market for the day. If yesterday’s market is any indication of today, we can expect a slow, boring day. One thing that the bears have not been able to do is to breakdown the market. Recently, we have been grinding around and the S&P and Dow have been in a holding pattern and the NDX has been slipping. I feel that these stagnating markets are like powder kegs waiting to explode. All of this sideways action allows for both long and short money to enter the market and when the right catalyst comes along, we get an explosion. Which way will we go? Only time will tell. One interesting thing that I have noticed is that the three benchmark indices, S&P, Dow, and NDX, are all in different formations technically. During the steady ascent of ’03, the S&P and Dow held similar patterns and for the most part the NDX did as well but it did deviate at times. What does this all mean? To me, it is clear that this year is really setting up to be a tough one. No longer will the tide raise all stocks. In my opinion, this is going to be a sector/money flow game where the trends will hopefully be more easily discernable from the broader markets. Let's break down these indices for a second. The S&P has been in a tight range where 1122 has been the floor (although it has only been tested once) and 1135-ish is the top. I see another pattern though. If a trendline is drawn through the 1122 level and one is drawn from the 1/27 top (1155) and is connected with the 2/02 and 2/04 tops, we have a nice triangle pattern. The levels today are; support at 1122 and the descending trendline is 1132. A decisive break above 1132 could push this index higher, hard and fast. The triangle pattern is not as clear in the Dow but it is still there. Connecting the same levels we get a floor at 10,425 and the descending trendline resistance for today, is at 10,467. Yesterday’s close of 10,495 was right on the line and in front of today's job number it is understandable that it did not breakout. The NDX has been milling around its 50-day (1468) and for the last two days has closed there. The 50-day also intersects with a 50% retrace. If we take a trendline and connect the highs of 1/27 and 2/2-2/5 we get a line that if broken, could snap us back into the 1500 range. Pay attention to those levels because if all three indices start moving we could get a nasty short cover rally across the board. Good Luck. Random Thoughts: Recently I have noticed some things that will not make headlines but should. The first is the lack of secondaries that have held their issue level. And secondly we have seen some bubbly stocks blow up recently. This is the stuff that should make headlines because to me, it shows what kind of tape we are trading in. I do not think it is a good sign to have so much distribution (secondary’s) that is not holding. Nor do I think it is healthy when we have stocks down 10-15 point after hours in high-risk names. People will say it is good that these names are blowing up; they will call this a correction! A correction?! These people are nuts! Was it a correction when Microstrategy (MSTR: NASD) was down 100+ dollars back in 2000? It took three years to get the stock going again. This does not bode well for the risk-taking appetite for obvious reasons. People, will of course rationalize this away because after the tremendous gains of last year (that many including myself missed) we want a second chance. But just because we WANT something does not make it happen. And in this game, when too many people want the same thing how often do we get it?

To: yard_man who wrote (7106)	2/6/2004 10:53:16 AM
From: mishedlo	Respond to of 110194

Imbalance - US & Global John Succo Despite the spin doctors being out in force talking about revisions here and revisions there, we find these latest employment numbers downright scary. Almost all the jobs that were created were in retail and construction, whereas manufacturing jobs declined for the 42nd consecutive month.. We have no argument that America is very good at building houses and buying things. But is this what a sound economy is supposed to be built upon? Taiwan Semiconductor CEO Morris Chang recently warned that the industry faces a global recession in 2005 as China comes on line with huge capacity. China is also completing major factories to produce chemicals and fertilizers. Global imbalances continue to build as U.S. debt piles up to buy the world’s goods. The problem continues to be over-capacity with no relief in sight. It seems demand just cannot keep up with supply despite Herculean attempts at reflation.

To: yard_man who wrote (7106)	2/6/2004 10:57:55 AM
From: mishedlo	Respond to of 110194

Brian Reynolds on Employment [Mish note: People really should do themselves a favor and subscribe to Minyanville. It is cheap and worth it IMO. I do not post every good idea here but this one seems significant] Of the 112k rise in payroll in January, retail trade accounted for 75k. This segment was weak in December as stores did not hire as aggressively for the holidays, thus the lack of post-holiday layoffs make it appear that January hiring was strong. So, based on that, this number is weaker than on the surface. Aggregate hours, though they were revised down in the benchmark revision, had a strong gain in January back up to prior levels. The hours strength mitigates the retail story. Overall, though this is a soft report (the report is here), and the big story is the downward benchmark revision, which stands in contrast to expectations for an upward revision. This means that we are left with the payroll data pointing to a weaker labor market than the household survey and unemployment claims would indicate. The jump in Treasury prices this morning seems in line with the data. As of this writing, only the most recent year's worth of benchmark revisions is available on the BLS web site. The chart below thus only reflects a year's worth of revisions, but it gives an idea of how soft the data was. As today is a travel day for us, we will have a more detailed breakdown on Monday.