Worst June Since The Great Depression!

by Larry Levin

Stocks finished the week sharply lower with surging oil prices and a resumption of falling financial & bank stocks amid heightened concerns about the sluggish economy. At one point on Friday the Dow had fallen 20% from the peak in 2007, marking an official entry into bear-market territory. The major indexes were all down more than 3% for the week.

Amid the raft of downgrades in the financial sector last week, there were also new calls that these investment banks need to continue raising capital due to the never-ending credit crisis. It was suggested by some analysts today that AIG and Merrill Lynch will need to raise more capital to shore up their balance sheets - again. AIG also fell 1.2% Friday after the insurance company said it will absorb $5 billion in losses from securities lending. Merrill Lynch & Co. might have to write off nearly $6 billion of risky mortgage-backed debt. And on Thursday, a Goldman Sachs analyst forecast another $9 billion write-down at Citigroup.

Moody's Investors Service said it is reviewing Morgan Stanley for a possible downgrade.

With the FOMCs inaction on the current commodity inflation (no rate hike), oil continued its advance. Crude oil hit a new intraday high at $142.99 a barrel on Friday, causing the market to become more restless.

With oil prices bursting through the $140 threshold and seemingly unstoppable, economists are busily debating whether it's all going to end in fire [inflation] or ice [deep recession], said Doug Porter, senior economist at BMO Capital Markets.

But it's not all about commodity inflation and banking stocks; the next potential shoe to drop looks like the tech sector. The market was pounded last week not only by a resurgence of the bad news mentioned above, but by poor outlooks for high-tech companies and the automotive sector, which reminded Wall Street that the economic troubles are spreading. And Oracle Corp.'s warning of difficult times ahead didn't put a damper on that debate.

In fact, many are now questioning their rosy "2nd half of the year will be great" mantra.

Real Time Trading Signals*for

Trade Date: 6/27/08

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

1) VA sell @ 8:30am at 1287.50 = +3.50 (1 lot)

2) VA buy @ 9:15am at 1287.00 = b/e (1 lot)

3) OTF sell @ 10:30am at 1283.75 = +1.00 (1 lot)

4) OTF buy @ 11:30pm at 1282.75 = -1.75 (1 lot)

5) OTF sell @ 1:10pm at 1279.00 = -1.75 (1 lot)

6) Engf sell @ 1:50pm at 1282.75 = +2.25 (1 lot)

7) Engf sell @ 2:00pm at 1282.50 = -1.25 (1 lot)

8) Algorithm trades (3)...combined total...+0.75


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

1) No ER trades today.


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