Mixed Data?

by Larry Levin


We must be beginning a bull market rally - bad is good and good is bad. Any poor economic data is ignored. If this continues the S&P could be at 1410.00 by next week. However, I wonder if it will last once earnings season is over?

Merrill Lynch reported another big write-down of $6-billion today along with its third straight quarterly loss. The company also said it is cutting 4,000 jobs. However, after taking those valuation adjustments on board, MER reported that it still has $64.8 billion of net exposure to complex mortgage-related vehicles known as collateralized debt obligations (CDOs), residential mortgage securities and leveraged loans at the end of the first quarter.

With the news Standard & Poor's warned, "Given Merrill Lynch's remaining substantial mortgage-related asset exposures, the potential for additional material write-downs remains a concern. We cannot rule out a downgrade in the next few quarters."

After earning $2.16-billion in the year-earlier first quarter, MER said it swung to a loss of $1.96 billion during the March quarter. Hmmm, back of the envelop math tells me that is a 200% profit loss. Wow! Given the stupendous news, MER closed up 4.1% today.

Ebay reported a 22% gain in net income for the quarter while overall revenue grew 24%, easily beating Wall Street's estimates. The stock, however, dropped 3.5% today.

Nokia reported a 25% jump in net profits for the quarter and its share price went...wait for it...wait for it...down 14%.

Let us all praise the earnings-gods this evening, for they are diverting our attention from economic data. For the week ended April 12, initial claims rose to 372,000, up 17,000. Economists say readings running consistently higher than 350,000 signal significant weakening in the labor market. Continuing jobless claims also remained on the high side: For the week ended April 5, continuing claims came in at 2.98 million, their loftiest level since the middle of June back in 2004. The number of continuing claims rose by 26,000.

A survey of business conditions in the Philadelphia region came in weaker than expected. The Philly Fed index remained negative for the fifth straight month, dipping to big-time negative number of 24.9 in April from negative 17.4 in March. It's the lowest since February 2001.

Real Time Trading Signals*for

Trade Date: 4/17/08

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

1) PP sell @ 8:30am at 1363.25 = +1.00 & +1.25

2) VA sell @ 9:15am at 1366.00 = -1.50 (1 lot)

3) PP buy @ 10:00am at 1363.50 = b/e & b/e

4) OTF sell @ 11:00am at 1361.25 = b/e (1 lot)

5) Engf buy @ 12:25pm at 1364.50 = +1.75 & b/e

8) OTF buy @ 1:00pm at 1363.75 = -1.75 (1 lot)

9) VA sell @ 2:05pm at 1365.50 = -1.75 (1 lot)

9) Algorithm trades (7)...combined total...-4.25

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

1) Sell @ 8:42am at 709.4 = +1.4 (1 lot)

2) Sell @ 8:58am at 708.2 = +1.8 (1 lot)

3) Sell @ 9:10am at 707.0 = -1.3 (1 lot)

4) Buy @ 11:22am at 705.8 = -1.2 (1 lot)

5) Buy @ 12:52pm at 707.7 = -.2 (1 lot)

6) Sell @ 2:06pm at 707.2 = -1.0 & -1.0...-$150


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