Grab on to your shorts, this looks like a rough day ahead
Steve Cook on Disciplined Investing

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Economics

   This Week’s Data

    November retail sales fell 1.8% versus estimates of a 2.0% decline; ex autos, the number was off 1.6% versus expectations of down 2.0%.
    http://calculatedrisk.blogspot.com/2008/12/retail-sales-off-sharply-in-november.html

    The November producer price index (PPI) dropped 2.2% versus forecasts of a decrease of 2.0%; the core PPI rose .1% in line with estimates.

   Other

    More on the auto bail out.  I think the author is right on with regard to management; but I disagree on the ‘car czar’.  At least as the concept has been presented, this ‘czar’ would simply be the non bankruptcy equivalent of a bankruptcy judge. 
    http://www.realclearmarkets.com/articles/2008/12/auto_bailout_is_the_death_of_t.html

    The Federal Open Market Committee meets next week.  Here’s a summary of the key economic data they will be reviewing:
    http://www.american.com/archive/2008/december-12-08/what-will-the-fed-do-now

    The SEC’s role in the financial crisis:
    http://www.ritholtz.com/blog/2008/12/bailout-bull/

Politics

  Domestic

  International War Against Radical Islam

The Market
    
    Technical

    My optimism regarding stock prices holding that short term November to present uptrend proved ill founded as the indices sold off yesterday (DJIA 8565, S&P 873).  Given the breakdown in the bail out talks and the news of extensive fraud in the Bernard Madoff case, stocks are looking down big on the open.  Indeed, they may test the next support levels (DJIA 8133, S&P 839) in the first hour. 

One of the things that has made me more optimistic of late has been the Market’s ability to absorb bad news and still trend higher.  That proposition will be sorely tested today.  We may have a buying opportunity; although after being too optimistic on Wednesday, caution is my mantra today.
 
    A not very optimistic analysis from TraderFeed:
    http://traderfeed.blogspot.com/2008/12/making-breakout-trade-co-ordinating.html

   Fundamental

    The auto bail out scenario is very reminiscent of the financial bail out.  Congress unable to come to an agreement on a workable solution fails on its first try, goes to the brink, then finds an acceptable answer on its second try.  I am not predicting that this will happen; I am just saying that it sounds familiar.

    The Madoff case could be potentially more destructive from an investment stand point if it proves to be the last nail in the coffin of investor confidence in the financial system.  I am not saying that will happen either; but I am concerned about the impact of its consequences on investor psychology.  And this ignores the damage that could be done if the Blagojevich imbroglio ensnares some big names on the national political scene.  Stay tuned.
http://econompicdata.blogspot.com/2008/12/50-billion-ponzi-scheme-weve-hit-new.html


    Another not very optimistic assessment from the fundamental point of view:
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http://paul.kedrosky.com/archives/2008/12/12/what_is_the_new.html

   








Posted 12-12-2008 8:24 AM by Steve Cook