Knock Knock. What's up? The yield curve.

I was looking at the yield curve this morning on US Bonds and something looked odd. The yield on the 3 month is lower than the 10 year. In a normal economics class, nothing may seem wrong with this situation, but in the recent "magical inverted yield curve land" that we have been residing in, it is something different. With the exception of the 2-year, all the maturities seem to be lining up in an orderly rising fashion. Unfortunately, the un-inversion (normalization) has come at the expense of the 10 year increasing faster than the is 3 mo decreasing. Why do all good things come to an end? Because some good things can't defy the theories of economics forever.

In a perfect world, why would anyone want to risk having their money locked up for 10 years when they could only have to put up their money for 3 months PLUS get more change back in the end. Their is little incentive for long-term investment (except for sound financial planning). I think we are one step closer to finding out way out of interest rate mania. Hopefully we can start focusing on company fundamentals as opposed to moving the ENTIRE market based on interest rate hopes.

Three Strikes

Not much time for a post tonight. We've had three down days which looks like a record. We've given up 300+ points in the past three days. I wouldn't be surprised (and consensus seems to support this) if the Dow closes up between 30-40 points. However, I think it is most likely that the market will continue to follow the 10 year. The weekend has come at a good time since it gives everybody a chance to get away and come back with a fresh mind.

Uncle Ben

Can you believe that some people are blaming him for the recent drop in the market? Look at him. Can you really blame that face? He hasn't said anything new. People just seem to be getting a little sad that a rate cut might not be as close around the corner, treasury rates have inched up, and the ECB just raised rates. Once again we are addicted to interest rates. Granted they ARE important, but isn't there more to the economy?

Clear Channel's chart looks like it might be taking a fall downwards. It is starting to fall from overbought levels and the candlesticks are forming a top. Lastly, there is a crossover on the MACD.



Carnival is another stock that has dropped from overbought levels. There was a large gap down today and given the previous resistance level at $48.50, I think we could easily see a retracement at that level.


Since mid-March, Life Time has been trading in a channel. The CCI has done a good job at tracking the peaks and valleys of the channel and it look to be on its way back down. Look for it to remain between about $49.25-$52 or watch for a breakout/breakdown. This seems to be one of the few stocks moving sideways as opposed to shooting to the moon.



As of this writing, it looks like most of Asia is in the red, but the CME futures are glowing to the upside. It should be interesting to see what things look like in the morning.

X-Ray Vision

Don't you wish you could have X-ray vision? How great would that be to see through anything. Granted it wouldn't do anything for stock picking, but it would still be awesome. I would throw in some pictures, but I wouldn't want to get flagged for "inappropriate material." Plus, it just leaves more room for stock charts.

Before I start pasting up charts, I just want to reiterate why I think technical analysis is so important. In short, fundamental analysis along gives you a great rational picture of what is going on. Unfortunately, the market the market isn't always rational. Heck, it probably isn't rational half the time. The market is a mixture of fact and feeling. The feeling part is where technical analysis comes in. When you look at a chart, you have no idea if you are looking at a profitable company or not, but you can get a feel about how the investing public feels about the stock. Once you can work fact and feeling in together, you are set to starting making more rational decisions.

Now for some charts. Here's a look at the SP 500. I would show you the Dow, but I despise the Dow. (That was in another post.) Here's three observations, one per section of the chart. Once we passed south of the 70 RSI level we have risen and bounced back down off of 70. Next, there seems to be some resistance building around 1540. I know we are in uncharted territory and don't have any resistance above us, but it seems to be either stalling or pausing. Lastly, we have a divergence on the MACD, which signals a possible reversal.



Next - Dell. Dell has moved near overbought territory on the RSI chart so it will be interesting to see if it can break through 70 and move higher or bounce off and see the stock take a tumble. Looking at the last two candlesticks, we have very small bodies with a longer upper and lower shadow. 27.50 seems to be the upper boundary, but the candlesticks show some indecision. The MACD is essentially flat, with a slight downward bias. Given the chart, I would say that the upside is going to be limited for Dell in the coming weeks, unless, obviously, some great news is released (fundamentals!!).


Starting with the price chart, I don't see nice trend like in many of the other charts out there. It does look like it has been bunching at the bottom of a recent range so an upward movement wouldn't surprise me. The RSI has the overbought/oversold at about neutral.


Based on a previous post that I had, Honeywell has had an excellent correlation with the Dow over the past decade and shorter time frames. It spent some time overbought for a bit and now looks to have bounced off the 70 mark. Also, it looks like a double top is forming. The MACD is trending down and given the strength it has show over the past 6+ months, I would expect a bit of profit to around 54, if the broader market begins to soften.



For full disclosure, I own short Dell and long Intel currently. It is hard to follow either fundamental or technical indicators in this market. The rally has had such a broad base, everything seems to be moving up regardless of the fundamental news or technical chart setup. Good luck.

i This and i That

Well after some time off, I guess it's time to jump back in. Luckily, this market is in autopilot. Until something big happens or the market starts to settle into a range, there isn't a whole lot to talk about. We've had two large drops in China followed by weakness in the European markets that have lead to a weak opening here. However, like a pitcher shaking off a bad sign, we have powered up and ended the day on strength. I could throw up some charts, but until this constant broad based rally ceases, the safest place to be looks like big to mega caps.

One topic that has been bothering me is this iPhone. The iPod is probably one of the most significant technological revolutions in history (not quite in same category as the wheel, seems just as popular). It has caught on to such a widespread audience it is amazing. I think Apple might be bitting off a little more than it is ready to chew.

Let's look at some of the Pros and Cons of the iPhone.

Pros

• It looks cool.
• It begins with "i"
• It has a nice, bright, sharp touchscreen
  
• Integrated audio player
  

Other than that, it is basically not that different than any of the other audio/cellphones on the market. Unfortunately, I can think of a lot more Cons that make me think twice about wanting to pick one up.

Cons

• Only control though a touch screen. (I've tried this before. Not the best in every circumstance.)
• No 3G service built in. (Like looking forward to dial-up.)
• Only available through AT&T. (Good for AT&T.)
• Price seems a little excessive for the average retail buyer. Not appropriate for business users.
• What happens when something malfunctions. You're not out your audio player and your cellphone.

Bottom line, the iPhone is a creative concept that is definitely visually appealing, but I don't think it is quite really for iPod like success. Once Apple works out the bugs, fix some of the above mentioned feature issues, and gets the price point down, I think we will really see this thing take off.

Despite all of the issues, don't expect to see many of these sitting on shelf without an owner. The hype is way to high for these to sit around. The only question now is to see how the reviews come out.

Back on the Fire

Well after a long weekend trip, not much to say. It looks like the market is starting to get tired. It is not exploding for no reason like we have seen in the near past. We have some decent news coming out this week. The GDP should be a big event since that will drive thoughts on future interest rates. If anything has proven to be able to move the market, it has been the market's feeling on interest rates. On that note, we have the minutes from the past FOMC meeting being released. That should give us a better idea about the true feeling of the FOMC. We seem to be at a pause. The only question is up or down from here. I think we'll be able to answer that question in the next week or two. I think whatever mood develops in the next two weeks could prevail througout the summer. I personally expect to see some time of correction to get prices back down and remain in a channel for the rest of the year unless something changes. That's all for today. Time to get some rest.

Correlate the Correlation

I don't know about anybody else, but I am constantly asking myself quantitative questions about the market. I like to use all kinds of analysis when looking at a stock. I'll usually first start by finding a chart that looks like it could make a move. Then, I'll check the news to see if anything could move the stock either with or against me. I don't think you can lock yourself in a room and just rely on one specific thing, although that would make investing much easier. I also like to think about patterns or relationships. This is usually when I bring quantitative analysis into the picture.

In this particular study, I was curious how the correlation worked out between stocks that were both in the Dow and the S&P 500. Let me lay down some quick groundwork. I got tired of hearing about the Dow constantly hitting new highs, while the S&P 500 seemed to be taking a much more sluggish more north. The Dow consists of 30 stocks, while the S&P 500 contains ___ (I'll let you fill in the blank). It seems obvious that the bag of 30 stocks should probably move easier than the bag of ___ (hope you still remember).

I picked the stocks listed below at somewhat random. Because the Dow is price weighted, I wanted to pick some of the highest, lowest, and middle priced. Then when I was done, I thought I would also make sure I have a decent industry showing. (A more dimensional study.)



As you can see there has been pretty good correlation over the long term, but as the time span shortens, the correlation tends to move around. Honeywell (HON) seems to maintain a consistent correlation with the Dow while Intel (INTC) has been lagging and by looking at the shortest time frame, is down right backwards.

Here are the same stocks only with the S&P 500 (damn I gave it away) instead of the Dow.



We get practically the same results when the S&P 500 is used. What are the exact differences you ask? Ahh, let me show you.



The bold numbers, by the way, represent either the high or low figure for that column. There are some larger numbers, but I don't know if this is statistically significant. You can figure that out if you are so inclined.

Also, one last chart. This shows the correlation between the Dow and the S&P 500. Nice isn't it. Seems pretty darn consistent.



Take what you want from this. My commentary may be way off, but the numbers don't lie (like Shakira's hips). If you're trying to ride the coat tails of the market, maybe picking a highly correlated stock will bring you along for the ride.

Format Change

In the near future, I plan on making a slight change to the format here. I plan on adding more value added data here in addition to my witty commentary. If anybody has any requests let me know.

Smoke and Mirrors (and why not throw in some magic)

Do you see this headline? What are they implying? Don't move a muscle, I'll take a swing at this question. I'm glad I read this article. I thought we might have ended lower because the market couldn't find enough money to throw into the fire since there wasn't enough news that the bulls could spin their way. I guess I was wrong. All that happened was "profit taking." That is reassuring I thought it had something to do with a slowing economy or the $2+ jump in oil! For record, I'm not a permabear or really even consider myself a bear.

With that said, I have been taking more short positions. I think the economy is slowing, but won't land into a recession. I don't think the Fed will have to raise rates because he can get the need effect where we are now without a cut or a raise. A raise will probably shock the economy too much and a cut will inflate inflation. Now what I don't understand is why the economy is slowing from a run to a walk, but the stock market is still running and sometimes sprinting. There seems to be a disconnect. An equity price is supposed to reflect future earnings and if these future earnings are lower, why pay more? Sure at some point down the road they will be higher, but how much are you willing to pay today to get higher earnings two years from now. I often hear that, on a P/E basis, the market isn't very expensive. That sounds great, but how will that argument work when prices rise and earnings shrink. Let me explain how math works, when you divide a larger number by a smaller number, the result gets larger. Now apply that to the P/E argument and things start to look more expensive. But, I'm just one man against the market.

U-turns Permitted

For a second, lets pretend that this market won't head up forever. If it happens to make a U-turn at some point, what stocks are ripe for a fall? At this point, you could pick a stock blindfolded and it would probably be at least a little overbought.

Pekin Elmer (PKI) looks to be ripe for a short. RSI and MACD are both showing divergences from the stock chart. Also, the retracements seem to be bouncing of their Fibonacci lines.


fundamentals such as less I'm a big time believe that Dell is going to take a fall soon. Apart from deteriorating market share and not SEC filings for the past year, we got a nice shooting star formed today. Beware for any new trades tomorrow since things could be volatile due to options expiration.



Gamestop looks to have another shooting star with a lift as of recent. I think it could drop a few points before it decides if it wants to change direct again.



That's all that I really have time for tonight. Plus with expiration tomorrow who knows what will happen. Even without that, the market has been tending to head up regardless of the news so that has made chart reading and being a bear difficult recently. I'd like to rant about gas prices (not the argument you might think), but I guess I'll have to save that for another day.

White Ninja

Pick the White Ninja:



Trick question. They are both white ninjas, however, Chris on the left may have been the more obvious choice. The white ninja on the right is the more sneaky ninja. The day started out with lukewarm overseas action and rather mixed data on the housing front. We moved sideways for most of the day and then something happened at around 1PM. We started to quietly drift north and then when the closing bell rang, we closed up a little over 100 points. Right now, the futures are just barely down. We get initial claims tomorrow morning.

The way the market has been heading lately, who knows where we'll go. Information gets twisted in so many ways (usually in favor of the bulls, I might add) it is hard to tell what way is up anymore. I don't really have much to say tonight since things were pretty boring today.

I just want to leave you with this article I read on SeekingAlpha.com regarding inflation and the CPI. Apparently, the author believes the CPI isn't really a true/good measure of inflation. It is an interesting article none the less. One point I definitely agree with him on is the fact that it is absurd that food and energy is always excluded when focusing on core inflation. What is the biggest problems that we face everyday? Food and energy. Never mind the fact that these two things are the biggest wallet thieves. If we exclude them we can feel better about price stability.

Ben Bernank-who?

Repeat after me, "Who is Ben"? Unfortunately there is only a small group of people that actually will say this along with me since it seems that everybody loooooves Mr Ben. I am starting to get frustrated by the markets obsession with getting a rate cut. Here is an extreme example. After we fall into a depression and are eating soup out of a dirty bowl, is that rate cut going to excite everyone? Probably not. I don't think we should be passing up current fundamentals in exchange for the hope of a rate cut down the road. We seem to be able to quickly forget about weak retail sales, housing problems, etc., but every time we get "benign" inflation data that is good for a 100 point bounce. Let's leave the word "benign" to the doctors treating tumors and start focusing on the underlying fundamentals of our economy. Too all of you who were disappointed to hear the housing news today, thank you for seeing the light. Everybody else, wake-up. Higher stock prices and lower earnings smells like overvalue.

Wish Upon a Shooting Star

It's been awhile since I've actually done a post. It's not my fault. I actually have a real job so I can support myself and it's been hectic over the past few months. If there has been one thing that has been consistent since my very first post, who knows what tomorrow will bring. However.....the difference now is that I am starting to see some bull wavering. Take a look at this chart. There a couple of things that strike me.

• Since the end up February the market is climbing at about 45 degrees. Clearly not a sustainable rate of change.
• The RSI is above the 70 mark so according to this technical indicator it is overbought and blah blah. As you can see we've hit this level two other times and we did see a hundred or two point drop. As anybody that knows anything about the RSI, being overbought doesn't mean it can't stay overbought and continue to climb. In short, it is overbought, but this doesn't exactly mean we should "go all" short.
• Recently we have been seeing some interesting candlesticks. First we have been seeing some small bodies indicating that the market pushed both up and down, but ended up about neutral. Given the incredible bull run we're in, any stall can be a good sign for the bears. Also, compared to the past few months, we have seen two days that high rather long upper shadows. Like before, this means that the bulls were shut down.
• Finally (and quickly), the MACD looks to be losing steam at a high level no less.

One other interesting trend I've noticed is that it looks like in the last, say third, of each month, we see a pause and a slight pullback. Interesting. I'm not sure it it can be profitably traded, but an interesting trend. Maybe related to options expiration?? Now after this analysis of the Dow, I would like to say, who cares about the Dow? Maybe 50 years ago or so it was a big deal, but now it doesn't mean much to be. It is 30 companies compared to the 500 in the S&P. It doesn't take a large stretch of the imagination to see how easy it is for a basket of huge companies to move together. It's like controlling a group of 30 kids compared to 500. Of course the group of 30 move more consistently with each other. But like they say, the bigger they are, the harder the fall. It maybe easier to move up, but it can fall down just as easy.

You are now leaving Dell

Well it has been awhile since we have an update for the stocks I said were "looking for love." I plan on giving you that update right now and then making an announcement.

Home Depot ---- Down .62%
Dell ---- Up 15.49%
Motorola ---- Down 4.32%

Considering all the buzz about this great bull run we are in, I don't exactly see these numbers buying me a new Bentley or even an old Bentley. But do you know what? I don't care. I don't expect these stocks to have landed anybody on easy street. These are long-term turnaround stocks. In each of them, management is going to have to work day and night to turn these companies around. If in a year from now, these stocks still aren't turning heads, I'll admit defeat.

Now on to more serious business, as I said up a few lines, I have an announcement to make. As the title of this post hints, I am saying goodbye to Dell. Ironically, the one stock that I am saying goodbye to, happens to be the only one that has worked itself into a gain position. But that is the way she goes sometimes. In further disclosure, I own puts on Dell.

After much thought, reading, etc., I have decided that Dell is a POS. Is Dell still a turnaround stock candidate? Of course, but I don't really want to be on their side at this point. From a speculative viewpoint, this is probably the best because it seems to be the biggest headache. From the early days of Dell, besides remember the tagline "Dude, it's a Dell," I remember the great customer service they were known for. Then for some reason, they decided to take one of their most valuable assets and ship it overseas to India. I have nothing against the people in India, but as popular opinion seems to state, outsourcing customer service/support functions is as frustrating as anything. I think this Motley Fool article speaks my point about poor customer service.

As for the other two, I have never owned a Motorola phone and i am disappointed/surprised that Icahn didn't make his way onto the board so I will be monitoring this. And for Home Depot, the place in had my first teenage job and spent a week in training, I hope that they aren't spending money on training anymore because it doesn't show. I also hope that they starting training again so that when I need help with something, I don't feel like I should be talking to the 2x4 in my hand. Only time with tell how these final two will pan out.

Never Judge a Book By Its Cover

First: As you might see from my previous post, I was expecting today to be a big day, but it wasn't. In all the market ended less than 2% down from where it opened on Monday. That leads me too....

They say that you should never judge a book by its cover. Well that might work for books, but I think that's it. (OK, might work for people too.) If this week had its own book cover, what would it look like? It show that the past two weeks have been rocky as the markets have been being tugged in every direction, but this week would provide some much needed data, and therefore, direction. Well, we stalled all week to get to PPI, then got stuck in a showdown until CPI, and then moved higher, lower, higher, and then lower before the final buzzer. So to tie back to the opening, a quick look at this weeks cover would have made you think that the market would end up with a swift move up or down. Now after flipping through the pages, it turns out to be a pretty boring book. Of course I'm sure market purists could find plenty of reasons why this was such an interesting week.

Sure, we may have received a bunch of data and reports, but nobody knows what to do with it. I guess the next step would be to see what the FOMC decides. Actually, unless you're missing half your head, we all know what is going to be decided. (Hint: Interest rates remain unchanged.) Why? Can't raise rates because the economy appears to be slowing and that would cool things off even further. Can't cut rates because inflation hasn't found a hole to hide in yet. So if you take a step forward and a step backwards, where do you end up? The same place you started! The words behind the words is what has the potential to move the market. Almost as if it is a different language, we will all wait to see what the Fed says. Will his words give a hint about possible future direction? Only his mouth knows for now. So until then we will see.

Land of the Rising Sun and Bouncing Yen

Just for the record, before our big day tomorrow we have S&P and Nasdaq futures down about 4-6 points, the Yen slightly south of 117, and the Nikkei down 155. Of course a lot can happen between bedtime and my alarm sounding in the morning. It will be interesting to see when the market finds itself going into the CPI release.

Who Shot the Sheriff?

Somebody must have shot the Sheriff because there isn't anybody watching over the market. I think it has gone off its meds because it is definitely developing multiple personalities. Of course the market usually have different moods, but on an intraday basis, it can start one way and end totally different. I think we have reached some kind of tipping points. There isn't a big enough crowd to move us one way or another. We have enough issues here at home. We have some economic data showing us that corporate earnings are slowing and that the economy might be starting to cool off, but then we still have some data showing that we might still have inflation worries. I guess that means that everything will be expensive and we'll all be unemployed. Well...probably not that bad, at least I hope not. However, it is something interesting.

I think that there is absolutely no way the Fed will change interest rates at the FOMC meeting next week. If for anything, because who in the heck knows where to move them too. We have inflation worries on one hand and housing issues in the other. Certainly, there is more than just those two issues, but I needed two for an example so there you are.

Actually, I think that we are at a transition point at the moment. We are in between a rapidly growing economy and a slowing one. I don't think we are going to continue to go gang busters, but I don't think we'll go into a recession either. We are seeing information that can lead us to either side, but I think the confusion simply means that we are starting a new of the cycle.

We seem to be rather range bound lately, but I think that will easily end when ever something comes along to give it a reason to move. A non-trending market is like a trending market, by way of it is what it is until it isn't. We have no idea where the economy is going from here and the market is equally confused.

Even with all of the stuff going on here, a lot of our ebb and flow seems to be dependent on the Yen. I heard a stat on CNBC that said that according to a study done by one of the big brokerage houses that our markets have had a 90% correlation with the Yen in the past week or two. Actually I think that was more last week since we have had a little more economic data this week.

Now for the final act, of the week, CPI. After the PPI was released everybody just stared at each other waiting for somebody to make a move and nobody did. So, everybody agreed that we would wait for the more important CPI before we make a move. So tomorrow will be a duel. I have no idea if this is accurate, I actually am skeptical, but they said that there has never been a down 3rd Friday of the month. Even without that "fact" tomorrow should be wildly interesting. Quick summary: volatile past two weeks + mixed economic data + range bound markets + carry trade + sub-prime + option expiration= ??? Some of these might not directly affect tomorrow, but they will all definitely be on the mind of traders. So find your trades, set your stops, and good luck.

Turnaround Report (Week 1)

Let's take a look at how my turnaround stocks are doing. First let's keep in mind that for such a volatile week, we don't have much, up or down, to show for it except for a little to the upside. So let's take a look at how these three stocks performed...

Home Depot (HD) (0.51%)
Dell (DELL) (0.44%)
Motorola (MOT) (0.16%)

For those of you that are unaware, parentheses mean negative. So, considering all the "stuff" that is going around, not a big deal. There has been a recent "flight to quality." Obviously, these turnaround stocks aren't going to qualify for that right now. So in all, the portfolio as a whole is only down .37%, which equals $112. Seems acceptable so far, as long as you weren't hoping for a day or swing trade. Let's see how these stock perform with all of the action that's going to hit the streets next week.

Help Wanted: Three Stocks Looking for Love

I'd like to propose three stocks. I have grown to prefer to be more of a trader than an investor. I am much too interested in the markets to just sit and watch day after day. However, every once in awhile I like to pick some stocks that I'd like to hold for the long-term. I have three stocks in particular that have really been slammed hard over the past few weeks.

Home Depot (HD)
First, we have Home Depot (HD). Falling behind Lowe's and having a handful of problems, HD's new CEO has plenty to improve upon. What began as the nation's top "Do-It-Yourself" store now has become a customer service nightmare. The darkening of the housing market has hit them too, but it's time to innovate or die.

Dell (DELL)
Next, Dell (DELL) is in a similar boat. With Michael Dell back at the helm, I believe he can bring his company back to glory. He (hopefully) knows that Dell's current business model isn't cutting it anymore. Lucky for investors, Michael started this thing from his garage and turned it into a leading desktop computer retailer. The question is can he put Dell back on top again?

Motorola (MOT)
Finally, we have Motorola. In mid-October the stock peaked at about $26 and now trades for $18.50. Margins have been squeezed and there have been some issues within top management. Considering every other person I see on the street is talking on a Razr, what happened here? They tried to swing for the fences again with a few successor models to the Razr, but none have gained the popularity they were hoping for. Like Superman without the tights, Icann has decided to start buying up shares. Men like Icann usually don't take large positions in companies if they don't plan to do something. So I guess we'll see if he can lean on upper management to improve margins and produce another winner like the Razr.

Buy Time
Considering how far these stocks have fallen in the past few weeks, months, etc., it would have been a good time to buy two weeks ago. Lucky for you we've had this "correction," "Shanghai Surprise," or whatever you want to call it. This has knocked another couple of percentage points of the price. These might not be an overnight sensation, but give it 6-months to a year. In order to quantify my recommendation, let's create a portfolio of these three stocks. Starting with $30k and an equal 1/3 investment in each let's see how these picks do week to week.

Stock Cost FMV(3/5/07) Gain/(Loss)
Home Depot (HD) $9,990 $9,990 -
Dell (DELL) $10,003 $10,003 -
Motorola (MOT) $9,990 $9,990 -

Details:
Purchases prices as of close on 3/06/2007:
257shs (HD) @ 38.87
444shs (DELL) @22.53
540shs (MOT) @ 18.5

It's a Whole New Ballgame

Wow! Another unpredictable day. It may be impossible to predict where the market will end up, but it's starting to become like deja vu waking up every morning. It seems like every morning I wake up to the same low futures prices. Today was no exception. Losses accelerated into the opening only to studder sideways and move to largely unchanged. Actually, soon before the non-manufacturing ISM numbers were reported, the market was marching into positive territory nicely. Unfortunately, the numbers were a little weaker than what the bulls were hoping for so the market started to retreat. For the rest of the day the market traded in a channel until seeing the bottom fall out into the close. (In case you missed it, the Dow ended down 64 points (.5%) with the Nasdaq and S&P 500 trimming about a percent.)

It's amazing how much the market mood seems to effect the way it interprets economic data. Until last Tuesday's free fall, the bulls seemed to be bullet-proof. They managed to plow right ever every bit of bearish data. Now the mood has definitely changed. Two weeks ago almost everybody acknowledged the economy was in great shape, but we were in need of a correction so that the indices can continue to shoot to the moon. Now the "greatest story never told" that CNBC's Kudlow can't seem to shutup about seems a little more vulnerable. Much to Bernanke's delight, the economy does seem to be cooling. We've seen the labor market loosening up and ISM reports lightening up to name two. GDP, even after its revision downward, is still strong and corporate profits are looking healthy as well.

Of course not everybody can get along. What a boring market that would make! Some argue that we will overshoot our "soft landing" and fall into a recession while others believe inflationary pressures are still running rampant. (At least crude dropped about $1 today. That should make you SUV drivers feel better.) Of course many of these problems seem like problems at the end of the tunnel. What should you be worried about now? Well, we have the Yen carry-trade. Who knows how much capital we have holding up our markets due to selling the Yen and buying higher yielding assets. The stronger the Yen gets, the less profitable this carry-trade becomes. In order to get out, these people, presumably hedge funds, are going to have to dump the assets they now own so that they can close out their short Yen positions. The strengthening of the Yen could be further exacerbated by the nearing fiscal year-end in which many Japanese companies will be bringing profits back to Japan.

Next, we also have the whole sub-prime issue. I would have said on the brink of becoming a major problem, but nobody, including myself, has any true idea if mortgage defaults will move up the chain. I wouldn't be surprised if it did though. You have to expect this sub-prime fiasco. Banks were loaning money to whoever asked for it without any due diligence. As far as defaults among higher qualified borrows, anything is possible. We have started to live on impulse buying and financing everything. Combine that with a negative savings rate and of course you'll have issues.

You know what, forget everything I just said. All that matters is what the market tells you that matters. Right now, the Asia market looks green and US futures are up. Will the market follow Asia up like it has followed it down? Only the market knows.

Daily Lineup for March 5-9

Tomorrow's Monday is a very different Monday than two weeks ago. The market environment has certainly changed. Before the "Shanghai Surprise" inflation was all the market was concerned about, but now, it's hard to tell what is going to be the biggest market driver. This week we have a lot of economic data due to be released. Let's take a look....

Monday
Monday will be a light economic day with just the non-Manufacturing ISM report being released at 10:00AM ET. Similar to the manufacturing ISM report, a reading above 50 indicates expansion and a reading below 50 indicated contraction. Last month a reading of 59 was reported. February's consensus is currently at 57.5. However, with markets being closed for the weekend and a recent turbulent world-wide market will ensure that money will probably be both volatile and unpredictable. Currently as I type, the Nikkei is down about 2% with Australia and New Zealand down about 1%.

Tuesday
Tuesday brings non-farm Productivity at 8:30AM ET and Factory Orders at 10:00AM ET. Non-farm Productivity is expected to be reported at 1.7% after a previous number of 3%. Factory Orders are expected to drop to -4% from 2.4% previously. While on their own, none of these numbers usually create much excitement in the market, however, combined with other factors, it should provide another layer of information that can be use to forecast the market's health.

Wednesday
Next, Crude Inventories from the previous week will be reported at 10:30AM ET. Then the Fed's Beige Book will be released at 2:00PM ET. Finally, Consumer Credit will be released at 3:00PM ET. Bottom line with this is that $6B in December and consensus says $7B in January. This report really has little effect since it usually doesn't report anything the market doesn't already know and tends to have dramatic swings.

Thursday
All Thursday has to offer, as far as economic news goes, are Initial Claims (8:30AM ET) for the prior week. According to concensus estimates, Initial Claims should be slightly lowered (335K) than the previous week (338K), however, over the past few weeks claims have been rising. This could be signs that the labor marketing is loosening. Part of this could be due to construction layoffs due to the colder weather. It will be interesting to see what last weeks number is at and how the market reacts.


This should hold you over for now. Check back again for Friday's economic releases.

Welcome

Welcome all! Hopefully this post will be the first of many. My goal here is to share my insights and opinions on current market events. With that said, I am no professional, however, as anyone that watches CNBC knows, even so-called professionals don't know the answers half the time. So on that note, I figure I have at least a 50-50 shot of being right. Bottom line is, you can agree or disagree with me, it's up to you. As far as format goes, I plan on posting daily, but given my busy schedule I can't promise anything. Now on to Prometheus' introduction...

Prometheus is an ancient Greek god whose name means "forethought." I guess that adds a bid of irony since everybody believes they can foresee what will happen with the market. Prometheus was also known for being intelligent and cunning, both important qualities in trading. So hopefully I'll be successful in "channeling" Prometheus' powers. He was also punished by Zeus, but never mind that.

That's all for now. Be sure to come back soon.

Prometheus at Rockefeller Center