Hit Me

by Larry Levin

Like yesterday, more bad news hit the tape today - very bad. And like yesterday the market traded higher in a volatile session. At times, the buying resembled madness - buying at any price. It were these mad buying sprees that made me remember the 1975 film One Flew Over The Cuckoo's Nest. In the movie we see patients playing cards where Martini keeps saying "hit me" to the dealer. He doesn't comprehend, however, that he already has a great hand and he should "stay."

Over the last few days we're seeing people in the stock market, faced with horribly bad economic data (and getting worse) employ the same madness screaming "buy" rather than "hit me." If they're not mad, they're either incredibly brave - or just plain stupid. Friday's monthly jobs data is expected to be a shocker. If it is, we could see another leg down in all the indices. If not, the current buying spree may prove to be correct, albeit dangerous. Finally, if the data Friday is indeed poor and the market continues to rally despite it that would be a sign traders are looking past the economic data and this time a low may actually be in place.

Auto sales data were released yesterday, plunging to the worst levels since 1982.

Fords car sales fell 31.5%. GM car sales fell 41.3%. And bringing up the rear was Chrysler whose car sales plummeted 47%.

It was yesterday that Representative Nancy Pelosi said the automakers will not be allowed to file for bankruptcy. She went on to say some thing like - We will ask for concessions, pay concessions from executives. It's not right for these companies to ask the taxpayer for money and expect to keep paying their executives millions of dollars per year.

Gee, is that all they have to do to get tens of billions of dollars? I'll one-up you Nancy. Why don't you demand that the executives, AND the board of directors of each firm (including the UAW) are all fired? Once replaced, then we can talk.

And I understand taxpayers not wanting to fund the lifestyle of these CEOs, but what about the union's benefits? Is it right to make a waitress who only earns $10 an hour fund the lifestyle of the UAWs jobs bank via her taxes? That's where the UAW member is paid 90% of his wages even when he's not working due to a plant closure. If that waitress's restaurant is closed, will she be able to collect 90% of her wages and tips from some socialistic claptrap idea? Of course not.

So these clowns are back in Washington this week. GM says it needs $18 billion real bad, and needs $4 billion at the end of this month - or else. Or else what you're wondering? Or else it files for Chapter 11 bankruptcy. In that case, I'd make sure Congress was out of session until the New Year.

These companies that have been around for an entire century. Isn't that enough time to learn their trade? Moreover, they've been in the center of the best auto market in the world - the United States of America. If you couldn't make it in the car business here, you had to be hopeless. Nobody bought more cars than Americans and they didn't have to ship their cars across an ocean to sell them.

And with all of their advantages they still went broke. Do they deserve a bailout? Hell no. They deserve forced Chapter 11 reorganization.

The government reported this morning that the ISM nonmanufacturing index fell to 37.3% from 44.4% in October. It's the lowest level since the survey began in 1997. Readings below 50% in the diffusion index indicate more firms are contracting than expanding. Last month, only one industry - health care - reported growth. On Monday, the group reported that the ISM manufacturing index also plunged in November to 36.2%, the lowest level since May 1982. Economists said this confirmed that the recession may be protracted.

According to the ADP national employment index released today, the private sector shed 250,000 jobs in November, which is the biggest job loss in seven years.

Falling employment at medium and small firms clearly indicates that the recession has now spread well beyond manufacturing and housing-related activities, said Joel Prakken, president of Macroeconomic Advisers, the economic consulting firm that produces the ADP report from anonymous payroll data.


Previous Day's Trading Room Results:

Trade Date: 12/3/08

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

1) B/away sell @ 8:30am at 829.00 = b/e (1 lot)

2) VA buy @ 8:50am at 829.75 = +2.25 (1 lot)

3) VA sell @ 9:45am at 851.00 = -1.25 (1 lot)

4) OTF buy @ 11:05am at 855.00 = +.75 (1 lot)

5) VA buy @ 2:05pm at 850.00 = -1.75 (1 lot)

6) Algorithm positions (12)...combined daily total...+11.75

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


1) No trades today.



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