NYSE

Taking A Break

The market ended the year and began the the new year on a positive note - but - all the averages are still stuck in the 4th quarter trading range.

The Market BeBop will be taking a break of undetermined length to focus on writing his novel. Comments may be posted now and again if I notice a major change in the market or something else of significance.

Quiet Week

It's going to be another quiet week and I will be quiet this week as well. I hope everyone had a great Christmas, Hanukkah or whatever holiday you did or did not celebrate.

A Systemic Orgy

Bloomberg has a good article on (eulogy for?) the history of the Chicago School of Economics.

“When Friedman’s Platonic ideas of free-market virtues are put into practice, they have too often generated a systemic orgy of competitive greed -- whose remedies, ironically, entail countermeasures of nationalization,” Marshall Sahlins, an emeritus professor of anthropology, said during the debate, speaking in a room adorned with murals of female students parading through the campus in medieval gowns.

Drifting - Snow and Otherwise

It's a slow week. Little volume and price will probably drift around. It's a good week to take off and maybe next week as well.

Quote of the Year

This has to be the quote of the year, maybe the decade, from the New York Times yesterday:

“The Bush administration took a lot of pride that home ownership had reached historic highs,” Mr. Snow said in an interview. “But what we forgot in the process was that it has to be done in the context of people being able to afford their house. We now realize there was a high cost.”

Duh!

Madoff - The Good News

The good news about Madoff is that it was all fake. There were no counter-parties to take down unlike the now quaint failure of LTCM.

Market Comment: Happy Winter

It's winter in New York with a wind chill of -5F. The best news is that the days (amount of daylight) start getting longer which is enough reason to start feeling good.

Last Friday, I was technically correct in thinking the market would end down. However, the internals (A/D and volume) were positive. The averages are below their 50MA but in the climb from their lows of 11/20, lower lows have not been made. This is good. A lower low would be a close below 851 for the S&P (I like to use the intra-day lows - it's a more decisive statement) and 8347 for the Dow.

Today Will Be Interesting

All the major averages failed to close above their December high and closed below the 50MA. Short-term, this is not a good sign and normally I would say that the November lows look like a good target. However, over the past few months down days have been HUGH down days particularly when looking at the advance/decline line. Yesterday, the A/D was only modestly negative. It was not a blow out everyone-to-the-exits negative like we have been seeing. Also, as of right this moment, we are waiting to hear what Bush has to say about a possible auto bailout. I'm sure they will be doing something but I have no idea what. Yesterday he said something about a managed or prepackaged bankruptcy. All that said, I think the market will end down for the day.

Indecision

Yesterday was completely indecisive. The averages are still above the 50MA, did not break the December high and closed down a bit. The advance/decline lines were slightly positive but more neutral than anything. The biggest movement was the dollar which continued its fall which can be good for exports if anyone is buying. The economy may suck but there is a lot of money sitting in cash and historically low-yield treasuries. Someday that money will be looking for higher returns and head to the stock market.

Saved by Zero

I guess there is some irony in the Fed using a jingle from a Toyota commercial to save the economy. The market clearly liked it. See the above chart for the Dow. We closed above the 50MA but neither the Dow nor the S&P could eek out a close above the December highs (See B.) This is the next resistance level and after that, a good chance we go to the November highs (See A.)

A bit more about the Feds actions: The New York Times printed this sub-head today on the front page, "Agency Vows to Print as Much Money as Needed ..." Obviously, the long term risk here is runaway inflation. On the other hand, from a deficit point of view, the government is borrowing money at 0% and will pay back that debt with highly inflated dollars.

Waiting

Yesterday was rather indecisive. The Fed makes a move today and it should be a non-issue. Still waiting to see if the 50MA can be broken to the upside.

Southern Cars

Call it the revenge of the south. Eight foreign automakers have established major presences in the American south and have transformed the local economies. Daniel Gross writes about this in Slate. As you read this article it should come as no surprise to you that the Senators that lead the anti-bailout brigade were all from these same southern states. Were they making a stand on principal or self-interest?

Ponzi Schemes

Henry Blodget outlines why Bernie Madoff had just about the perfect Ponzi scheme. This raises questions: Does every Ponzi scheme eventually get discovered? Are some so successful that they keep going on and on? Has anyone successfully wound down a Ponzi scheme?

Market Up or Down?

Friday was a resilient day for the market. It sank on news of the failed Congressional bailout of the auto industry and then managed to eek out a gain for the day. This chart is of the S&P for the past few months. The overall trend of the market is obviously down (green arrow). However, short term, the market is attempting a small rally (white arrow). The 50 MA is still resistance for the market. The Dow looks the same. If the 50 MA fails again then the down trend will likely continue. If not, them we could see a more sustained up trend, maybe to S&P 1000 or Dow 9600-9700.