Will the Market follow through today on the downside?
Steve Cook on Disciplined Investing

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Economics

   This Week’s Data

    I found this chart on the NY State manufacturing index (reported here yesterday) which brings a somewhat different perspective than simply the one month data point:
    http://mjperry.blogspot.com/2009/06/empire-state-survey-suggests-recession.html

    The International Council of Shopping Centers reported weekly sales of major retailers down 0.6 % versus the prior week and down 1.5% on a year over year basis; Redbook Research reported month to date retail chain store sales down a whopping 4.5% versus the comparable period in May and down 4.8% versus the similar time frame in 2008.

    May housing starts rebounded sharply: 17.2%; that is against expectations of a 2.5% increase; building permits also rose more than anticipated: 4.9%; estimates were for +2.4%.

    The May producer price index (PPI) fell 0.2% versus estimates of a rise of 0.6%; core PPI dropped 0.1% versus expectations of an increase of 0.1%.

   Other

    Tuesday morning humor:
    http://www.ritholtz.com/blog/2009/06/executive-compensation-committees/

    The monetary policy dilemma:
    http://www.capitalspectator.com/archives/2009/06/anticipating_th.html

    What’s happening in the credit card world:
    http://www.calculatedriskblog.com/2009/06/credit-card-debt-line-has-been-crossed.html

    And commercial real estate:
    http://www.calculatedriskblog.com/2009/06/fitch-us-cmbs-delinquencies-past-2.html

    LA port traffic in May:
    http://www.calculatedriskblog.com/2009/06/la-area-port-traffic-in-may.html

Politics

  Domestic

More from George Will on GM:
http://jewishworldreview.com/cols/will061409.php3

  International War Against Radical Islam

    Christopher Hitchens on Iran’s elections:
    http://www.slate.com/id/2220520/

    This article and a second one to be published tomorrow trace the history of the Miranda rights and the consequences of granting those rights globally:
    http://article.nationalreview.com/?q=MDNiNDVhMmRkY2Y3MzBkYTJhZTVjMGM5ZTYwNTAxMGU=

The Market
     
    Technical

    The indices (DJIA 8612, S&P 923) finally showed their hand, closing below their uptrend off their March lows (8673, 941).  The VIX soared but volume wasn’t even stronger enough to be termed anemic.  So if one wanted to doubt that yesterday was a break, there is a glimmer of hope.  As you know, I like to wait a day or so before declaring a trend over just to be sure that any ‘break’ doesn’t turn out to be merely a ‘test’.  However, the pin action looked pretty decisive to me; plus a disturbing number of our stocks broke their own up trends off the March lows.  Barring a dramatic recovery today, we probably are now looking at a trading range with the January high resistance level as the upper boundary (9078, 947).  The big question is, how low it will go and hence where are we going to define the lower boundary?

    Thoughts on yesterday’s pin action from TraderFeed:
    http://traderfeed.blogspot.com/2009/06/ten-day-high-followed-by-ten-day-low.html
    http://traderfeed.blogspot.com/2009/06/indicator-update-for-june-16th.html

    And from Trader Mike:
    http://tradermike.net/2009/06/june_15_2009_stock_market_recap

   Fundamental
    
      Headlines:

(1)    Obama spoke to American Medical Association and tried to sell the notion that His healthcare plan won’t lead to a single payer [government] system.  My inclination is to watch what He does, not what He says.  Apparently most investors agreed because this seems to be what got stocks in general and healthcare in particular headed south.

Here’s what he should have said:
http://www.american.com/archive/2009/june/the-problem-with-the-biggest-tax-break-in-america

(2)    Geithner spoke about regulatory reform of the financial system.  Some of what he said made sense: (1) the regulation of derivatives, (2) underwriters will be required to set aside reserves for losses on any securitized issues.  On the other hand, the Fed will become the uber supervisor for systematic risk.  One more czar with more regulatory power; one more example of concentration of power in the federal bureaucracy.  What we need are fewer czars and regulators but more bureaucrats and regulators who do their job.
http://www.ritholtz.com/blog/2009/06/wheres-volcker-part-ii/
http://www.nakedcapitalism.com/2009/06/do-treasury-proposals-on-securitization.html

Here’s what we get when the government has more power to interfere with commerce:
http://online.wsj.com/article/john_fund_on_the_trail.html





Posted 06-16-2009 8:23 AM by Steve Cook