Downgrade

 

 

 

by Larry Levin

The bad economic news kept on coming today which you should kindly add to yesterday’s list: weekly jobless claims and factory orders.
 
Weekly jobless claims were supposed to be an unsatisfactorily high 420,000.  It was worse at 422,000.  Moreover, last week’s bad number of 424,000 was revised (again) WORSE to 428,000.  Of course, the cheerleading media spun this garbage into good news (not sure how) and said it was bullish.  
 
Factory orders were expected to be a poor -0.9% but were worse at -1.2%.  
 
Both reports were largely ignored so I guess the market is getting back to normal.  
 
In other news that was largely ignored; Goldman Sachs was subpoenaed again; Moody’s put three major banks on review for downgrade because the government handouts may be ending; and Moody’s joined S&P by saying the USA is also under review for a DOWNGRADE.
 
From Moody's:
New York, June 02, 2011 -- Moody's Investors Service said today that if there is no progress on increasing the statutory debt limit in coming weeks, it expects to place the US government's rating under review for possible downgrade, due to the very small but rising risk of a short-lived default. If the debt limit is raised and default avoided, the Aaa rating will be maintained. However, the rating outlook will depend on the outcome of negotiations on deficit reduction. A credible agreement on substantial deficit reduction would support a continued stable outlook; lack of such an agreement could prompt Moody's to change its outlook to negative on the Aaa rating.
 
Although Moody's fully expected political wrangling prior to an increase in the statutory debt limit, the degree of entrenchment into conflicting positions has exceeded expectations. The heightened polarization over the debt limit has increased the odds of a short-lived default. If this situation remains unchanged in coming weeks, Moody's will place the rating under review.
Yes sir, more really bad data was ignored so it’s back to normal.  Aint it grand?
 

 

Trade Date: 6/2/11

E-Mini S&P Trades*

(before fees and commissions):

1. No “Secrets” trades filled.
2.  Algorithm positions (7)
3.  “Reading the Tape” positions (8) …combined Secret’s, Algo, & “Reading the Tape” total… +0.00 

Sign up as an AvidTrader Member to receive "The Technician" Value Area's each day. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. Join and see how this technique can help you trade more successfully!