OUCH!

by Larry Levin


Yesterday I mentioned that this morning's economic data should provide some fireworks. They sure did – OUCH! All the indices were down big before the open and finished significantly lower. The S&P 500 closed down 2.27% and the NASDAQ closed 2.20% lower. But it didn’t end there; the S&P is down ANOTHER 14.00-handles, while the NASDAQ is getting mangled…down another 45.00-points as I am writing. More on this later.

Sparking the morning sell-off was the retail sales report. In it we find that the consumer isn’t spending as freely as she had before. The Commerce Department reported December retail sales fell 0.4%, the first such decline in six months and a performance worse than analysts had projected. "The weakness sharply boosts the likelihood that the U.S. economy entered recession in the fourth quarter, and it is almost indisputable now the idea that the economy contracted in December, "wrote Tony Crescenzi, chief bond market strategist for Miller Tabak & Co. Even using the government’s CPI-esque "core" fidgeting, the number was bad: excluding both autos and gasoline, sales fell 0.2%. OUCH!

The other big report this morning was the Producer Price Index (PPI). Overall, the PPI was a fairly benign report showing prices fell 0.1% in December. The "core" prices rose a bit, +.2% for the month. The 2007 PPI increase, however, is not benign; it was the largest increase since 1981. OUCH!

Although the aforementioned reports were "non-bullish," the market was really taken aback by Citigroup…again. This morning Citigroup reported its first quarterly loss since 1998, ending the suspense on Wall Street over just how badly it had done. Or did it end the suspense? Many on the Street expected what was being called a "kitchen sink" quarter. In other words, the Street was expecting a breathtakingly large…throw out everything, including the kitchen sink…type of quarter. And that just didn’t happen.

The Street was looking for larger write-downs and a much larger self-inflicted scalping of jobs. And although the dividend was slashed 41%, which is bad for stockholders, it could have been looked at in a bullish light, as if Citigroup was getting its house in order. However, the company is in such bad shape, the Street openly wondered why Citigroup is paying ANY dividend at all. OUCH!

The aftermarket news wasn't so hot either. For all of those who pinned their hopes on a market reversal due to Intel's earnings, well, looks like that aint gonna’ happen. As I write this, INTC is down over 14% after the close, which is driving the indices lower as mentioned in the first paragraph. Oddly enough, INTC reported a 51% INCREASE in net profits, but apparently gave a gloomy outlook for sales. OUCH!

Real Time Trading Signals*for

Trade Date: 1/15/08

E-Mini S&P Trades*
(before fees and commissions):


9:32 ENG Buy 98.00 = +.75, b/e

10:23 ID VA Sell 94.75 = +.75, +2.50, +1.75

11:22 ENG Buy 94.50 = +.75, +1.25, -.75

2:28 OTF Sell 2.50 = -1.50 all

2:42 MD Buy 3.50 = -1.50 all

E-Mini Russell Trades*
(before fees and commissions):


1) Sell @ 8:33am at 705.4 = b/e & b/e

2) Sell @ 8:59am at 705.7 = +3.4 (1 lot)

3) Sell @ 9:18am at 701.6 = +2.1 (1 lot)

4) Sell @ 9:47am at 697.9 = +.4 (1 lot)

5) Buy @ 10:20am at 700.3 = -1.0 (1 lot)

6) Sell @ 10:36am at 699.4 = +1.7 (1 lot)

7) Sell @ 10:50am at 697.5 = +.4 (1 lot)

8) Sell @ 11:07am at 698.6 = +.5 & b/e

9) Buy @ 11:19am at 698.1 = b/e & +1.0

10) Buy @ 11:53am at 698.6 = +.5 & +2.9

11) Buy @ 12:23pm at 700.4 = +.6 (1 lot)

12) Buy @ 12:30pm at 700.1 = +.2 & +.2

13) Buy @ 12:42pm at 700.1 = -.6 & -.6

14) Sell @ 12:58pm at 699.4 = +.5 & b/e

15) Sell @ 1:12pm at 701.2 = -.4 & -.4

16) Sell @ 1:38pm at 700.3 = b/e (1 lot)

17) Sell @ 1:40pm at 701.1 = -1.0 (1 lot)

18) Buy @ 1:52pm at 700.7 = +1.7 (1 lot)

19) Sell @ 2:22pm at 700.1 = +.5, +.7, -.6

20) Buy @ 2:31pm at 702.2 = +.6 (1 lot)

13) Buy @ 1:42pm at 715.6 = -.1 & -1.3

14) Buy @ 2:04pm at 715.8 = +.5 & -.9

15) Sell @ 2:30pm at 714.4 = +1.0 (1 lot)

16) Buy @ 2:46pm at 715.4 = b/e (1 lot)

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