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The S&P 500 Struggling To Maintain Gains As Financials Dip Below Key Support

|Includes:FAS, FAZ, SPDR S&P 500 Trust ETF (SPY), UDN, UUP, XLF

The S&P 500, SPDR (NYSE:SPY) has had an incredible run after gaining 3% in the past two days, especially given that is has been able to completely shrug off the negative fundamental data that has been pouring into the US markets. Expect the Financials Sector (NYSE:XLF) to take a haircut from recent gains, with Financials Bull 3X (NYSE:FAS) getting hit the hardest. A position in Financials Bear (NYSE:FAZ) could be a smart hedge against a potential fallout across the board in equities. There also seems to be a short covering rally in the US Dollar Index (NYSE:UUP), though it may be short lived if Bernanke & co. keep up the printing ponzi scheme, thus the US Dollar Short Index (NYSE:UDN) may benefit in the long-run.

Key Highlights:

  • Case-Shiller 20-city Index dropped to 0.59% from a forecast of 1.0% and 1.67% prior
  • Chicago PMI came in at 62.5 when it was expected to be 58, though most question the validity
  • Consumer Confidence hit 54.1 from a forecast of 52, experts believe this was simply due to the typical Christmas rally
  • MBA Mortgage Applications at -16.5%, this shows a drastic increase
  • ISM Index came in at a dismal 56.6 while it was fore-casted to be 57.2, yet the markets ignored it
  • Construction spending is up, though many speculate it is due to bailout money
  • Crude Inventories rose dramatically to 1.07M barrels, not surprisingly, as it expected to hit $100 soon, thus tumbling the economy futher downwards
  • Initial Claims up to 436K from forecast of 415K
  • Continuing Claims 4270K from a forecast of 4200K
  • Unemployment rate rose to 9.8% from a forecast of 9.7% and a prior 9.6% rate
  • Factory Orders down 0.9% while market expected 2%

http://finviz.com/chart.ashx?t=XLF&ty=c&ta=1&p=d&s=l

The negative cycle continues to send the markets’ fundamentals downward, yet the equity prices continue inflating due to the constant US Dollar and Euro manipulation. Seems like the only safe play nowadays is Gold.



Disclosure: No Positions
Stocks: SPY, FAZ, FAS, XLF, UUP, UDN