Mixed Data

by Larry Levin

After two days of large and opposite trending days, traders ran into a buzz saw. Today was extremely range bound, putting in a small 13.30 range in the S&P futures, however; 70% of the entire day's volume traded within a scant 5-point range.

There were a few bits of better than expected news today...kind of. Take retail sales for example. On the face of it, April retail sales rose 3.3%, beating estimates of a 2.5% gain. However, the details do not show reckless spending (hmmm, I find that hard to believe), they show a consumer that is downgrading his purchases by avoiding high end retailers.

"There's evidently consumer slowdown compared to a year earlier. Overall, the picture looks pretty. When you dig in the numbers, you see consumers are trading down. From Target to Wal-Mart and Abercrombie to Aeropostale, parents are trading down and teens are trading down," said Jharonne Martis, an analyst with Thomson Reuters.

"The economy continues to get tougher and the 'paycheck cycle' is more pronounced for customers than in past months,” said Wal-Mart's Wal-Mart Stores U.S. President and Chief Executive Eduardo Castro-Wright. "As money gets tighter for them toward the end of the month, sales drop more than we have seen in the past."

Another bit of good economic data was that the number of laid off workers filing for benefits fell by 18,000 to 365,000 last week. However, the four-week moving average for initial claims rose to 367,000, an increase of 2,500 from the previous week's revised average of 364,500.

"Continuing claims have budged very little in the last few weeks indicating that jobs aren't as plentiful as before. This negative trend in employment will likely continue through the end of the year," said Kevin Giddis, managing director, Morgan Keegan & Co. Inc.

Oil remains a problem...it traded at another never-before-seen-in-human-history high that nearly reached $125.00-barrel. And the next energy problem you will be told to ignore, just in time to fire up your air-conditioner, will be natural gas. It is on a tear similar to oil! But don't worry, natural gas is an "energy" that is not part of inflation. So...we got that going for us.

Finally, after the close we hear that another company is posting MASSIVE LOSSES. From the file titled "The Credit Crunch is Over...No Seriously it's Over…Seriously Dude" we read that American International Group (AIG) reported a $7.81 billion first-quarter net loss, after the close of course.

How can this be? After all, the Fed waved its magic wand...pressed the magic button and said...Abracadabra...and all is well. What's that you say - it may not be over? Oh come on now, if it weren’t true Wall Street "experts" wouldn't say it was over - would they?

The worse-than-expected results were driven by a $9.11 billion write-down on a credit derivatives portfolio and $6.09 billion of net realized losses from AIG's investment portfolio. And this comes right after a staggering loss of $11-billion the previous quarter.

OK, let's see here - using back of the envelope math we get, wait for it...wait for it...a $20-BILLION loss in 2-quarters! That plus the fact that Fitch and Standard & Poor's cut AIG’s rating this evening makes it a certainty that AIG’s stock will be up 10% tomorrow...no 15%...no, probably 25%.

Real Time Trading Signals*for

Trade Date: 5/8/08

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

1) B/away sell @ 8:35am at 1396.25 = +2.00 (1 lot)

2) VA buy @ 8:55am at 1397.25 = -2.00 & -2.00

3) OTF sell @ 10:00am at 1395.00 = -2.25 & -2.25

4) VA buy @ 10:30am at 1397.25 = b/e & -2.00

5) VA sell @ 2:05pm at 1397.50 = +2.00 & +4.25

6) Algorithm trades (3)...combined total...-7.75

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

1) Sell @ 8:50am at 717.7 = +.5 (1 lot)

2) Buy @ 8:58am at 717.1 = -1.1 & -1.1

3) Buy @ 10:37am at 716.4 = -1.0 & -1.0

4) Sell @ 10:54am at 716.0 = +.4...-$330


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