Another change in character – it has been ages since I can remember a premarket that was significantly in the red without any specific news items. In fact we have 2 buyouts, which a month or two ago would have premarket screaming +1%. Yesterday the bulls made a last minute save, as the break of S&P 1034 led us down to S&P 1030… usually that sort of break of a previous day’s low would lead to a lot more downside but this is not your father’s market. We received a late day rally instead… .
So the line in the sand just got pushed down 4 points, from 1034 to 1030 (yesterday’s low). In premarket we look to be around S&P 1031… notwithstanding that strange buying yesterday, once we break to a new low the market should continue down. But that was the idea yesterday as well ;)
The bottom line is you have to change your thinking right now… before dips were to be bought, now rallies are being sold. Turn the charts upside down and pretend its a bull market… that is the easiest way to think about it. Caution continues to be the game plan and if we break below S&P 1030 I’ll put on some short term hedges predicting more downside action (didn’t work that well yesterday), and we’re still targeting S&P 1020.
Of course the dollar is strengthening so in our 1st grade logic market, all things not named the dollar must be sold. If not for the Fed meeting conclusion tomorrow and labor report Friday I’d be leaning relatively aggressively on the short side. I just hate the random lemming like action around these type of events.
Current “box”: 1030 on the bottom (down from 1034 yesterday), 1047 on the top – all white noise inside the box.
p.s. I know the “real economy” does not matter much to Wall Street, but Johnson & Johnson (JNJ) announced a new round of 7000 job cuts lagging indicators, and in Europe Nokia (NOK) announced 5700. As we know, that just leaves these people more time to shop (or else the terrorists have won) with money handed out by a bankrupt government. J&J’s profits go up, we cheer as speculators, 7000 people go out of work… we all win here. Green shoots. Our path to nirvana (a completely jobless economy where the only production is money printing) continues ;)
The cuts will shrink J&J’s workforce by 6 percent to 7 percent and save as much as $1.7 billion by 2011…. J&J rose 1.7 percent to $60.50 in trading before the opening of the New York Stock Exchange.