The WORST ever!

by Larry Levin

"The WORST ever!" This statement neither refers to Brittany Spears' performance at the VMA award show, nor her parenting skills. Nope, it refers to the first 2-week span of a new year, which is now the worst stock market performance…EVER! "This is the worst start to a year in S&P history," Howard Silverblatt, senior index analyst at Standard & Poor's in New York . The index dates from 1926. Hmmm, that doesn't sound too good. Do you remember my missive about "the scoffers?" That was the day I wrote about those (analysts, economists, etc) who scoffed at a bear market and the possibility of stagflation. Well, it seems like my idea is picking up a little steam. "A likely scenario is stagflation. That's the worst of all worlds. You can't lower rates without stimulating inflation pressures and you can't raise rates because the economy is stalled," said Hugh Moore, partner with Guerite Advisors in Greenville , South Carolina . "The Fed is trying to keep options open, but they really have limited flexibility." And just yesterday I mentioned how Bernanke’s promise to make-nice with Wall Street didn’t do much. Mr. Moore is right – the Fed’s options are limited, but they always were.

Speaking of the Fed, one of its members helped the market lower today. "What is important for pricing most financial assets is the path of monetary policy, not the particular action taken at a single meeting," Fed Gov. Frederic Mishkin. He went on to say that he hopes the Fed's more transparent communication policy can shift attention away from the medium term. Whoa! Does this mean he won’t be voting for a big rate cut this month? What’s going on here? Oh wait, he continues by urging us not to take anything in his speech as an indication of what monetary policy he would favor at the next meeting. Oh OK, that clears it up…like mud. Although the market dropped again today, it wasn’t a route and easily held the low of last August. If that low isn’t taken out early next week, expect another rally attempt. Since I believe we are in a bear market, however, the rally will be short lived. Jack Ablin, chief investment officer at Harris Private Bank agrees, “From an earnings perspective, we're already in recession."

Real Time Trading Signals*for

Trade Date: 1/11/08

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



9:12 ID VA Sell 11.25 = -1.50all

10:06 Ft BUy 4.75 = +.75, +2.25, +2.50

10:22 ID VA BUy 6.25 = +.75, b/e

11:02 OTF Buy 18.25 = +.75, =1.50, -1.50

11:15 ID VA Sell 18.25 = -1.25 all

1:18 OTF Sell 14.00 = +.75, +1.50, +2.00

2:40 ID VA Buy 8.25 = +.75, +1.00, +1.00

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


1) Sell @ 8:04am at 718.8 = +1.0 & +4.0

2) Sell @ 8:41am at 715.3 = -1.1 & -1.1

3) Buy @ 8:50am at 716.4 = b/e & b/e

4) Sell @ 9:12am at 713.8 = +1.0 (1 lot)

5) Buy @ 9:57am at 716.9 = -1.0 & -1.0

6) Sell @ 10:14am at 715.6 = +.5 & +2.0

7) Buy @ 10:41am at 716.2 = +.5 & +1.3

8) Sell @ 11:15am at 716.8 = -.4 & +2.0

9) Sell @ 12:25pm at 714.1 = +.7, -1.2, -1.2

10) Sell @ 12:32pm at 716.4 = +2.7 (1 lot)

11) Sell @ 12:41pm at 714.6 = -1.2 & -1.2

12) Sell @ 12:55pm at 714.4 = +2.2 (1 lot)

13) Sell @ 1:02pm at 713.4 = b/e (1 lot)

14) Sell @ 1:14pm at 713.1 = -1.0 (1 lot)

15) Sell @ 2:03pm at 709.8 = +.5 & +3.3

16) Sell @ 2:39pm at 710.8 = +1.3 & b/e

17) Buy @ 2:53pm at 709.1 = +1.0 (1 lot)

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