Hangover day?

by Larry Levin

Many experts, TV personalities, and guests were hoping for follow through today. Much like the day after a night of too much "drinky drinky," however, the market experienced a hangover. After the morning buzz wore off, stocks got a queasy tummy and a headache - all finishing well below the high of the day.

Although it's doubtful that the markets would stop with a one day rally, I was still amused at reading some comments from the floor. "We came up a lot yesterday, but even after that positive action, a little profit-taking would make sense," said Paul Mendelsohn, chief investment strategist at Windham Financial Services. If there is profit taking from yesterday's one-day rally, should we be getting excited that day traders drove it up? Don't we want long term investors in there? Why would they "take profits" the very next day?

"Single-day market action rarely carries huge meaning going forward," said Kevin Tower , chief market strategist at Covered Bridge Tactical. Really? That's not what I heard in-between the lascivious panting of multiple DowGasms yesterday.

Mr. Tower went on to say, "But big up-days carry extra significance. There are very few occasions when we do see that kind of action and it does tend to happen near market bottoms." Really? I seem to recall, during the Nasdaq implosion of some 80%, there were several 10% upside days. However, before that ridiculous bubble was popped, the best it could do was a 5% up-day.

What did other markets think of Helicopter Ben's $200-billion bailout of Wall Street? One market that is directly tied to Ben's actions is the U.S. dollar. Apparently Ben's shell-game of "hide the junk debt" didn't go over well at all: the US dollar was drawn-and-quartered today. International currency traders were not fooled by Ben's attempt to pile on nearly ¼-TRILLION more debt to US citizens. The US dollar once again boot stomped to new lows!

Crude oil is being driven higher by the weakness of the US dollar, which traded another record high north of $110-barrel.

"Inflation is always and everywhere a monetary phenomenon." - Milton Friedman

The risk of losses on U.S. Treasury notes exceeded German bunds for the first time...EVER...amid investor concern the subprime mortgage crisis is sapping government reserves, credit-default swaps prices show. Contracts on 10-year Treasuries traded at a record 16 basis points yesterday, compared with 15 basis points on German government notes, according to data compiled by BNP Paribas SA.

"The U.S. government is not immune from the consequences of the credit crisis," said Fabrizio Capanna, BNP's head of high-grade corporate trading in London . "Support for troubled financial institutions in the U.S. will be perceived as a weakening of U.S. sovereign credit."

No problem! We'll just ask S&P and Moody's to rate US debt. Using these truth-challenged institutions guarantees an AAA rating forever.

Real Time Trading Signals*for

Trade Date: 3/12/08

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

1) B/away buy @ 8:35am at 1324.50 = +1.50 & -1.00

2) Momo sell @ 9:15am at 1319.25 = -1.50 (1 lot)

3) Engf buy @ 10:40am at 1329.75 = -1.50 & -1.50

4) MD rev. sell @ 1:00pm at 1320.50 = +4.00 (1 lot)

5) PP buy @ 2:35pm at 1311.50 = -2.00 (1 lot)...-2.00 points

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


1) Sell @ 9:16am at 669.7 = -1.0 (1 lot)

2) Buy @ 11:25am at 677.0 = -.5 (1 lot)...-$150


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