Also, the daily charts are beggining to show some signs of a reversal here. Keep an eye on it.

Well we did manage to reach the 50-day on the S&P, and it certainly does look as though this market could go a few more points higher before turning lower again:



The volume was decent today relatively speaking. We also seem to have set a higher-low. For those two reasons alone we are slightly bullish and we think a retest of 900 might be in the works. However, notice a that series of tighter ranges. Could we be in for a bigger move soon? Watch 823 as support, especially if that either that initial claims or GDP number is bad.



We’ve had a clear uptrend in place for the past two days. Let’s see if that if that uptrend can continue through the rest of the week.

Gold is also coming back nicely. Keep an eye on that for a possible long entry..

Good luck.

Evening all. Quickly recapping a few of last weeks headlines:

• Circuit City is being forced to liquidate.
• Bank of America is getting an extra $20 billion of liquidity.
• State Street Bank fell 59% last week on $10 billion in losses for Q4.
• United Airlines will cut 1,000 white-collar posts and American will ax 6.5% of its workforce.
• Microsoft missed estimates and is cutting 5000 jobs.
• The U.K. is now officially in a recession after GDP sank 1.5% in Q4

Just a few charts on tap for tonight:



Not much to look at here. Watch the 50-day for resistance if we ever make it up that far (doubtful). We still believe a retest of the November lows is in the cards.



From a daily chart, 800 looks to be the line in the sand. A break below that would almost guarantee a retest of the November lows, while a break above 823 would leave us a bit more bullish. The pattern of lower highs, as well a possible descending triangle formation leaves us leaning on the short side though.



Resistance at $9.36. Easy trade on the short side.



Apple reported its best earnings ever last quarter, but that wasn’t enough to propel the stock out of the downward wedge that has been forming since October. Volume was also unimpressive last week. This one looks like a good short.



Hopefully you caught our post last week talking up gold, because if you did, you sure are sitting pretty currently. Gold traded unbelievably well last Friday. There was a surge in February call buying, as well as a tremendous lift in volume. Watch that $90 level for resistance. Ideally, we would like to see a pull back to $86 before getting long again. One of the most bullish looking charts out there and definitely not one to be short!

Now, regarding John Thain, apparently he “stepped down” at Bank of America last week after Merrill Lynch lost $15 billion last quarter. However, it seems as though the recession isn’t affecting Thain all too much. Below is a list of items totalling $1.2 million that Thain used to decorate his office:

- $2,700 for six wall sconces.
- $5,000 for a mirror in his private dining room.
- $11,000 for fabric for a "Roman Shade.”
- $13,000 for a chandelier in the private dining room.
- $15,000 for a sofa.
- $16,000 for a "custom coffee table.”
- $18,000 for a “George IV Desk.”
- $25,000 for a "mahogany pedestal table.”
- $28,000 for four pairs of curtains.
- $35,000 for something called a "commode on legs.”
- $37,000 for six chairs in his private dining room.
- $68,000 for a "19th Century Credenza" in his office.
- $87,000 for a pair of guest chairs.
- $87,000 for an area rug in Thain's conference room and another area rug for $44,000.
- $230,000 to his driver for one year’s work.
- $800,000 to hire celebrity designer Michael Smith, who is currently redesigning the White House for the Obama family for just $100,000.

Not only was he completely clueless at Merrill Lynch with regards to the companies’ capital situation, but he is also unbelievably ignorant, a perfect example of another worthless CEO being paid millions for nothing.

On a sidenote, we are revamping the Required Reading section to include an Amazon store. It should be up within the next week or so.

We are going to take a real broad look at the markets tonight, so let’s get started:



We held 824 on the /ES last week as some buyers finally came back into the market and managed to rally up as far as 860 before closing right below 850. While the volume has increased as the market has moved higher, we do not expect this rally to see much more momentum to the upside, especially with that 50-day moving average beginning to roll over again. At the most, we could see a retest of the 50-day average before heading lower again. The news continues to be terrible. Don’t believe us? Check this article out for the latest bloodbath in the financials.

And for anyone that truly believes this so-called stimulus will work, you might need to step outside and look around. Thousands of people are being laid off every day and there is very little that our government can do to stop it. One only needs to read a bit of history on the Great Depression to know that. We recently stumbled on a very informative site that is updated on a daily basis with the most recent layoff numbers in the United States. You can check out Lay-Off Daily here.



The XLF finally broke down out of its descending triangle a few weeks ago and now looks to be headed for a retest/possible break of the November lows, with the latter looking more and more likely. Notice the heavy selling volume over the past few days.



BAC broke to a new low last week after the WSJ reported that the bank needed more capital to prop up the Merrill Lynch acquisition. The selling volume has been tremendously high.



Wells Fargo also broke to a new low on heavy selling.



And Citigroup is flirting with new lows as well as initial stages of a breakup begin to take place.

With all of these banks at or near new lows, we expect the XLF to break to new lows sooner rather than later.



The USO had a terrific run a few weeks ago, but failed to break out of a downtrend dating all the way back to mid-July. The 50-day was not even tested. This, coupled with the fact that the USO failed to make a higher high leaves us still bearish on oil. As people get laid off from work, they drive less, spend less money at the pump etc. The USO could retest lows here.



And now gold. This has been a fascinating chart as of late. The trade has been to the upside for about three months now, but we are beginning to reach some fairly big resistance levels that will leave traders with some big tug-of-war battles in both directions. However, the fact that the 50-day moving average has swung back to the upside leaves us somewhat bullish. We also have a nice uptrend dating back to late October that has been held three times as buyers came in on heavy volume. If we can see a break above $86, we could be in the early stages of another bull market in gold. And with the way things are going in regards to the global economy, the fundamentals certainly support this trade. Definitely one to keep an eye on.

And with Obama coming into the White House, George Bush is on his way out and he has certainly left quite a legacy. He may not have been the brightest president we’ve ever had, but at the end of the day, we have not had a single terrorist attack on our country since 9/11 and that is something we can all be thankful for. In closing, we leave you with some of George Bush’s more comic moments:



Haha, brilliant.

Good luck and congratulations to Obama once again.

We saw a nice reversal yesterday, falling all the way to 812 before rallying strongly into the close. Yesterday’s reversal also came on pretty decent volume, leading us to believe that we may see a retest of the 50-day moving average at the very least. 900 could be a possible target as well before the next leg down.

Here’s what were looking at:



The XLF actually managed to break out of its descending triangle to the downside today on higher volume leading us to believe that this rally may be over sooner than we had thought. Furthermore, that three month downtrend remains intact, thus giving us a somewhat bearish looking chart. Citigroup has been crushed the past few days, as has Wells Fargo, and the news of a possible breakup of Citigroup surely won’t help any argument for the bulls.

Sort of off topic, but didn’t Vikram Pandit, Citigroup’s CEO, promise not to sell Smith and Barney? Deja vue? Hardly, we saw a similar scenario with Merrill’s John Thain when he said that his firm was “well capitalized.” Regardless, we’re looking at $10.5 as next stop on the XLF and the November lows as a possible target on a broader timeframe.



In order to truly see a breakdown though, we need to see a breakdown of that 850 level on the ES, 860 on the S&P500, to confirm newer lows since late December. The XLF lead this market all last year, and we are looking for that to continue into the new year. A break back above 920 would be interesting from a bullish stance, but at this point, it seems rather unlikely. There are quite a few big name earnings out this week, so let’s see what happens.

And in case anyone forgot, Obama will be sworn into office on next Tuesday. He’s got quite a four years ahead of him, a job that I’m sure most of us won’t envy one bit.



Good luck to him.

Last week was some of the most bullish trading we’ve seen in awhile. The data continues to be bad, but it looks as though we may see a short-term rally into the early stages of 2009. Let’s not get crazy though, the longer-term trend is still down:



We finally broke above the 50-day moving average on the /ES. Volume is still relatively weak across the board, so the true test will come on Monday when we see more market participation. That 1000 level looks to be within reach, though.



The XLF also seems to be breaking out of a longer-term downtrend that began in early October. Keep an eye on that 50-day.



Finally, we have Goldman Sachs, one of the most bullish looking individual stocks that we’ve seen in awhile. GS broke out of it’s ascending triangle last Friday, on somewhat weak volume. We’ll see what Monday brings, but based on price action alone, GS could easily see a move to $96.



Also, check out Apple. AAPL has been in the process of forming a descending triangle for the past three months. Now as a company, there are few that can beat AAPL with regards to product and overall excellence. However, there have been a lot of rumors swirling around the Steve Jobs and whether or not he will remain at the company and some analysts believe that his presence as CEO is worth a good $10 to the stock. Keep an eye on $93.15 for overhead resistance.

Good luck.