Housing and Confidence

by Larry Levin

But for a few trending down days, January has been quite a range-bound month and today was no exception: it was VERY choppy. The entire range was just 15.90-points, however, 70% of all the volume traded (violently at times) within a narrow 8.00-point range. The market wants to make a move but needs a reason. Will tomorrow be the day?

Standard & Poor's reported this morning that home values in 20 major U.S. cities fell a record 18.2% in the 12 months ending in November. The Case-Shiller 20-city home price index fell 2.2% in November, with home values in all 20 cities falling at least 1%, while prices are down 25% from the peak in mid-2006.

Consumer confidence data was released this morning, and it doesn't show much confidence. That's odd, I thought everyone was excited about "change" and were filled with "hope?" Anyway, the January consumer confidence index fell to 37.7 - the worst reading ever.

The director of the Conference Board's Consumer Research Center, Lynn Franco, said of the data "It appears that consumers have begun the New Year with the same degree of pessimism that they exhibited in the final months of 2008. Consumers remain quite pessimistic about the state of the economy and about their earnings."

Despite two more helpings of bad news, the major indices closed higher. I guess the reports could have been worse. Oh wait - they couldn't have been worse: both set NEW RECORD LOWS. How does it get worse than that?

Tomorrow the FOMC will tell us if it has cut rates again, to maybe less than zero this time? Yeah, that's not going to happen so we should watch their policy statement for clues of futures moves. However, I am not expecting much change their either. At any rate, it could be what causes the market to get out of its current funk.

The other thing that could cause the market to move tomorrow is news of the "aggregator bank" or "bad bank" idea that I mentioned a few days ago is apparently a done deal. I cannot find many details about it, but the some news of it has leaked from the DC. The bad bank is where the government screws your children and grandchildren for generations because they can't cut some banks loose. They will wildly overpay for garbage "assets," using your tax dollars, to pump more money into INSOLVENT poorly run banks.

Hurray, the taxpayer is about to get screwed again - buy, buy, buy - the aftermarket futures are +12.00 as I type this.

Let's start from scratch; FIRE all bank and brokerage executives involved, FIRE all board of directors at each bank and brokerage involved...and FIRE ALL OF CONGRESS for allowing off-balance sheet shenanigans of the aforementioned and allowing FRE/FNM to become rotted to the core with their ACORN loans stinking up their balance sheets to high-heaven.

The remaining good banks can pick over the remains of the heretofore superhero's of Wall Street, while we get a new Congress without the vermin that currently infest DC.

And while we're at it FIRE the Fed - as in disband the central bank altogether. All it does is create destructive booms and busts that get worse as time goes by.

Previous Day's Trading Room Results:

Trade Date: 1/27/09

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

1) TP sell @ 11:50am at 846.00 = +3.00 (1 lot)

2) VA sell @ 12:20pm at 844.50 = -1.75 (1 lot)

3) Algorithm positions (4)...combined SofT and Algo total...-3.00

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


1) No trades today.



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