Gustav

by Larry Levin


Today's action mostly revolved around Hurricane Gustav's lack of destruction, which led to a massive oil reversal. Stocks were initially up a lot with a gap open in the Dow of several hundred points. From a short-lived gain of +250, however, the Dow collapsed and closed down -26.63 points - surprising just about everyone.

At one point early this morning oil was almost $10.00-barrel lower but gained some back, closing down $5.75. Some talk on the floor today, which probably hurt equities, was that part of oil's fall was due to a global economic slowdown and a production cut by OPEC at its next meeting.

Oil is down because [Hurricane] Gustav didn't do that much, but oil is also pulling back because a global slowdown is going on, which is not ideal for stocks or corporate earnings, said Robert Pavlik, chief investment officer at Oaktree Asset Management.

New economic data didn't help equities either. Construction spending fell 0.6% in July, while the important ISM report showed manufacturing activity once again contracting. The Institute for Supply Management index was lower at 49.9%, which was the lowest reading since May.

Overall, the sector is hanging in, but we expect output to continue drifting lower despite the strong export performance,

There was a lot more volume today which should facilitate good trading opportunities.

Real Time Trading Signals*for

Trade Date: 9/2/08

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

1) B/away buy @ 8:35am at 1298.00 = +4.00 (1 lot)

2) Engf buy @ 10:30am at 1294.50 = -1.25 (1 lot)

3) 80% sell @ 11:10am at 1293.75 = +3.00 (1 lot)

4) PP buy @ 1:25pm at 1276.75 = b/e (1 lot)

5) Algorithm positions (1)...combined total...+7.50


ZB (30 Year Bond) Trades*
(before fees and commissions):

1) Buy @ 10:35am at 117.230 = +4.0 (1 lot)

2) Sell @ 12:41pm at 117.315 = -2.0*2...combined total...b/e


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