Sept. 7, 2010
Analysis:
Today the market decided that it was time to take the profit accumulated over the previous four trading days, and it found a reason -- the European debt concern, which has been there since May, so the market gave up all its gains driven by the Employment Report last Friday. Looking ahead to tomorrow, the Beige Book will look ocher and will be devoid of any sanguine look the Bulls would like to see. Manufacturing activities continue to grow but at a decelerated pace that are unlikely to pick up the steam before year end, while the growth deceleration in the service sectors will be more pronounced. The less somber news will be that the housing sector has stabilized, not because buyers are eager to own their new digs, but because housing activities cannot be slower compared to already historical lows; however, any pick-up in the housing sector is not in the offing, as the inventory is bloated with foreclosed and short-sold houses. Most importantly, the employment situation remains dire, as businesses are cautious in their outlook for the next six months. As a result, the growth in retail sales will be limited.
The market will be reminded of the precarious state of the economy under "unusual uncertainty." As a result, the market will drop after the release of the Beige Book at 2 p.m. and close below 1,084 to set the stage for some congested trading in the 1,060-1,080 range in the next few trading sessions.
Strategy:
Hold short at 1,080
Analysis:
Today the market decided that it was time to take the profit accumulated over the previous four trading days, and it found a reason -- the European debt concern, which has been there since May, so the market gave up all its gains driven by the Employment Report last Friday. Looking ahead to tomorrow, the Beige Book will look ocher and will be devoid of any sanguine look the Bulls would like to see. Manufacturing activities continue to grow but at a decelerated pace that are unlikely to pick up the steam before year end, while the growth deceleration in the service sectors will be more pronounced. The less somber news will be that the housing sector has stabilized, not because buyers are eager to own their new digs, but because housing activities cannot be slower compared to already historical lows; however, any pick-up in the housing sector is not in the offing, as the inventory is bloated with foreclosed and short-sold houses. Most importantly, the employment situation remains dire, as businesses are cautious in their outlook for the next six months. As a result, the growth in retail sales will be limited.
The market will be reminded of the precarious state of the economy under "unusual uncertainty." As a result, the market will drop after the release of the Beige Book at 2 p.m. and close below 1,084 to set the stage for some congested trading in the 1,060-1,080 range in the next few trading sessions.
Strategy:
Hold short at 1,080
