Traderbill's Financial Markets Weblog

…as if Obama doesn’t have enough on his plate he now has to deal with l’affire Pelosi. What was she thinking? But the best thing from this could be for Obama to assert control over her and perhaps she is forced to step down. Ever since the waning days of the Bush administration she has had a free hand, as demonstrated when she chaired the late night meeting that got Congress on board for the TARP bill. She is a lightning rod for controversy and should go. We don’t need those kinds of distractions. Nor do we need Cheney mouthing off as an ex-VP or otherwise, especially when it is patently obvious that all he is trying to do is restore his own reputation…for trodding on the Constitution?

Once again the markets continued to waterboard us on Friday and options expiration snuck up on most of us…sorry about that…due to the 1^st coming on a Friday. Still, it was a below average volume session, with weak advance/declines and breadth and after a week of the ratio of new 52 week highs to lows treading water around even, it turned negative on Friday for the first time since April 16…quite a run for an index that was grossly negative for months…it is amazing after the selloff we had that there can be any new 52 week highs, right?

Delving deeper into the data, the Dow Industrials had a negative key reversal (higher high, lower low, and close below the prior days low. But the index was only off 0.75% and the record of late for reversals, be they positive or negative, has been less than useful. There was little useful information on the day other than Transports were the only index that was up (just 0.58%), and the S&P 500 close down 1.14% on what was almost an inside day! The Russell 2000, Barron’s 400, and the Alternext (AMEX) Composite were both down on and DID have inside days (lower high, higher low than the prior session), indicative of a continued lack of conviction…and amazing on even a minor options expiry. Banks (-3%), and REITS (-4.2%!) were the big losers along with Utilities (-2.9%). The Nasdaq indices were off the least and the Composite had the third straight higher high and higher low…struggling to resume that uptrend, while the 100  has been mired between the narrowing 40 and 200 day moving averages about to converge at around 1350 (close was 1355), so our long wait for a signal may be nigh. TB’s bet, especially with a long weekend rapidly approaching (and an early close Friday for bonds), is that they take it down. Look at the overnight summary and you will see the number of stocks reporting earnings has dwindled. In addition, a lot of key stocks are going ex-dividend this week and early next week.

Indian Prime Minister Singh’s (not Vijay) electoral win that nullified the Communists is viewed as a major victory and good for India and the world. As a result the Sensex Index, which had been very weak lately, rallied by 17.3% overnight and trading was so active it had to be suspended for a time. It is now up 48% year to date eclipsing Brazil’s Bovespa (+30.5%), for top honors in a world where single digit positive returns are above average (the Dow  is still -5.8% ytd, Dow Transports -13.7%, S&P 500 is -2.3%, Russell 2000 -4.7%, while the Nasdaq Composite is +6.5%, the 100 +11.8%. Elevating India to the top of the BRIC countries could be good for the global economy if reform takes place. Other than the Sensex however, little happened overnight. Japan’s Nikkei was -2.4%, Hang Seng +1.4%, Korea’s KOSPI -0.4%…all EXACT offsets to Friday’s moves! In Europe only the FTSE was up…presumably due to the strong link with India?

So there you have it…a week with little new economic information except the release of the minutes of the April FOMC meeting on Wednesday with little new information there.  

Have a great day and find ways to have fun in the bunker while you wait for direction. Just remember to respect any sharp breakout and watch the Dow today after Friday’s negative key reversal.

TB

Trader Bill thinks it is clear to anyone reading these missives that they are merely commentaries…as he sees it…and do not necessarily reflect the views of anyone other than his own. Information is gathered from sources he has found reliable, but no guarantees of accuracy are implied. These are merely observations of events in the marketplace offering in an attempt to offer a non-mainstream viewpoint. Hope you find it useful. Copyright TBD Capital LLC, May 18, 2009.