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Tuesday, January 8, 2008

S P 500 support


A little support.
Will it hold or fold.  Next stop could be lower.  

S P 500 Bull is capitulating


The Bull looks like it is capitulating......

Take a look at this long term daily and the roll over.  Remember the market falls twice as fast as it rises.

2008 what is in store......watch out.

I would like to touch a few areas I will be watching this year. I know this is a little out side our trading scope but it might be of interest for you as your perspective changes to the money maker/market maker plays.

Commodities,,,,I expect this to be a big year for commodities especially food products.
1. Livestock This Past year China and India have added almost 80 million middle class families to their burgeoning group of 300 million middle class. One of the key areas we have seen the impact on is fishing industry; the next will be beef and poultry. The yearly consumption of beef this last year went up 50% in both Chinese and Indian households.
2. Corn Biofuel and the 138 Biofuel processing plants in the Midwestern United states have pushed demand through the roof. We no longer ship corn to Asian countries for feed which has wiped out Japan’s poultry farming. Corn Syrup is also been affected and being our largest commercial sweetener I can assume that we shall see some price increases on some of our every day food products.
3. Gold and Silver the increasing world demand, (see Above) and the dwindling supplies of mines world wide are increasing the price of gold as we speak. I would not be surprised to see gold going to $1100 this year and $950 by February if the market starts to Tank. Technically we can see this occurring already.
4. Oil- supplies dwindling, dollar is falling as Fed pumps more dollars in to curb the credit markets….Project around $148 to $160 a barrel. Since August, the Bush administration has been adding 50,000 barrels a day to the Strategic Petroleum Reserve — the nation's emergency oil stockpile — with plans to kick up the pace to 70,000 barrels a day by the end of January. (at what looks like a high price)


Financial Markets
1. Foreign investors have helped save our markets. The Collapse of the dollar against major currencies has made it a bit of a bargain to pick up companies in the US. CIC the China Investment Corporation bought close to 10% of Morgan Stanley, and a large interest in the Blackstone Group the largest private equity firm in the US. The CIC has 200 billion at its disposal with a lot more available considering the Chinese government holds 1.43 trillion dollars in reserve and couple this with another 9% increase in gross domestic product they foresee in 2008. One more respectable world player is the Dhabi’s Investment Authority that bailed out Citigroup with 7.5 billion and has another 875 billion in cash earmarked for investment.
2. Bonds- MBIA, the world's largest bond insurer, is on the verge of losing its triple-A rating. This alone could trigger a veritable ratings collapse — downgrades on the one hundred and seventy-three thousand municipal bonds, mortgage-backed securities and other collateralized debt obligations (CDOs) that MBIA guarantees. Investors may begin to seriously question Wall Street's entire system for rating the nation's $2.6 trillion in municipal bonds ... $10.6 trillion in corporate bonds ... and $1.9 trillion of commercial paper and other money market instruments. A ratings collapse will affect all sectors of investing.
3. The Fed- dumping dollars – expect to see the dollar heading down and the Pound sterling as they are also dumping into their markets.
4. Housing Market - Existing home sales have collapsed 31% from their 2005 peak. New home sales are down even more — 48%. IT IS NOT OVER. Some people are making their moves into the market and they are premature. Unless you are getting in at 50 to 60 LTV’s be careful……
Home prices dropped 4.5% from a year ago in the third quarter, according to S&P/Case-Shiller, the biggest drop on record (the data goes back to 1988). New home prices, for their part, plunged 13% in October, the sharpest decline in 37 years.
Single family home starts have cratered 55% from their January 2006 peak. Meanwhile, the issuance of building permits for future construction has dropped to its lowest level since 1991.
An index that measures home builder optimism, buyer traffic, and expected sales sits at record lows — 19 compared with readings in the 70s during the boom.
The nationwide home vacancy rate is running at a near-record of 2.7%, a testament to the dramatic glut of empty, unproductive homes piling up on the market.
About 5.6% of the nation's homeowners have fallen behind on their mortgage payments — the most since 1986.
The percentage of homes in some stage of foreclosure has surged to 1.7%, the highest rate the Mortgage Bankers Association has ever found (its data goes back to 1972).

Hope this helps you see what is happening a little bit and look forward to connecting with you again this year

ES Trader

January 8 daily ES

Daily for S&P 500 January 8, 2008


S&P 500 January 8, 2008

Long term trend line adding to support.
Could be an Inverted H&S

Trade what you see,
Always use stops.

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