There was a lot of underlying strength but no major moves, which suits us just fine as consolidating at these levels gives us a better chance of having a proper breakout.
All our indices held their levels except the SOX, which fell half a point below our 465 danger zone but made a nice recovery from a brief test of 460 so we will give it a pass.
Oil "rallied" into the close to finish positive on the day but we’ve seen this movie before as they forgot to pump the back months which all slipped lower except April (147M), which gained a nickel and 7M of the 10M barrels that were rolled out of March (336M). May (62M) picked up 2M barrels but fell 9 cents and the rest of the contracts, all the way out to 2012 were a sea of red.
Zman urges continued caution as we still haven’t broken his $60 mark ($59.99 yesterday), so we will watch tomorrow’s inventory action with great interest. Also contributing to oil’s strength, President Bush put our money where his mouth is, pursuing his goal of having the country use 35Bn gallons of ethanol by 2017 by allocating $250M for the coming fiscal year. That should be just enough to print and distribute 1M copies of a report telling us what a great job they are doing making America energy independent (as long as we don’t use fancy ink or good paper).
"We have long ago given up relying on this president to act boldly to break the nation’s addiction to oil," said Rep. Ed Markey (D., Mass.), a senior member of the House Energy and Commerce Committee. "His rhetoric looks to the future, but his budget proposals are mired in the past."
The dollar fell below 85 for the day as you could see our currency drop further and further with each turn of the budget page as foreign investors gave our fiscal plan a vote of no-confidence. Gold tested $660 again but stopped just short of it while copper bounced back to just under $250 again.
Bernanke gave a speech on the "wealth gap," something I’ve mentioned here often as a concern to much derision (by the wealthy) but it’s now so out of control that it even rated a passing mention in the State of the Union address.
Steve Jobs called on the music industry to remove DRM protection and set the music free. It may sound crazy, but he is their biggest single vendor and if he thinks it makes long-term sense to open up the system, then perhaps they should do more than just brush it off…
ISE (2/2) flew up on us and our Jan $45s shot up to $8.50, which netted us a 62% gain so far as we took advantage of the excitement this morning to sell the Mar $45s for $3.40 (now $2.20).
We stopped out of our LVS $100 puts (2/2) for a $3.45 average (up 73%).