Roller Coaster

by Larry Levin

What a day - WILD that is. The major indices were getting boot stomped again Thursday, with the S&P500 trading below the October 27th low. At its nadir the S&P futures reached 817.50, and that is when the big money stepped up. Institutional money poured into the SPDRs (S&P ETF known as the Spiders) causing a massive reversal that nearly reached 100.00-points in length. Roller coaster indeed!

You're probably wondering - is this the low for real? Well, if today's news was the barometer then the answer is surely NO.

An announcement from Intel on Wednesday kicked off the early pressure. Intel cut its outlook, warning fourth-quarter revenue would be as much as 17% lower than previously forecast due to significantly weaker-than-expected demand in all geographies and market segments. For its worse than expected efforts/comments, INTC closed up +6.7%.

GE was hammered most of the day before the reversal saved its bacon. At one point, GE was down 11%. Investors are fearful that GE needs to raise more cash to cover its debt costs. And since GE says it doesn't need to raise cash, the market is actually saying GE isn't telling the truth.

There was also the fear that GE may cut its dividend. These rumors apparently were sparked by the conglomerate's decision Wednesday to participate in the new temporary liquidity-guarantee program operated by the FDIC, backing up $139 billion in GE Capital debt. And if things deteriorate further, GE can just tap Uncle Sugar Daddy's TARP program for some (nearly) free taxpayer funds. No problems here.

Unlike GE and most other stocks, Citigroup failed to close with a gain today. Citigroup traded as low as $8.73, which hasn't been seen since 1996. Isn't it 2008? How's that Buy & Hope theory working for Citigroup shares? No answer needed. In my opinion it's headed to about $5.50.

The real news nugget of the day, however, was the weekly jobless claims data. It was awful. First-time filings for state unemployment benefits hit their highest level since September 2001, rising to 516,000 in the latest week. The four-week average of new claims, which measures the underlying trend in joblessness, also hit a historic high as it shot up to 491,000. That's the highest since March 1991.

The initial jobless claims represent job destruction, while continuing claims indicate how difficult it is for those out of work to find employment. Continuing claims rose to 3.89 million in the week ended Nov. 1, up 65,000. The four-week average of continuing claims was 3.79 million. Both are the WORST since 1983!

Let's revisit the question at the top - is this the low for real? Umm, no.



Previous Day's Trading Room Results:

Trade Date: 11/13/08

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


1) VA sell @ 8:35am at 860.75 = -1.50 (1 lot)

2) 80% buy @ 9:30am at 860.25 = -2.00 (1 lot)

3) Algorithm positions (28)...combined daily total...+19.75

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


1) No trades today.



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