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Phil's 9:49 Alert to Members

|Includes: UNG, Financial Select Sector SPDR ETF (XLF)
PhilSeptember 8th, 2010 at 9:49 am |

Good morning! 

I'm being lazy today and just copying yesterday's levels as there is no change (which is a good sign as we were prepared for worse):

We’re still watching the same levels and using the 3 of 5 rule to guide our short-term trading so not too bullish until )(if) we pop the Dow AND the Nas, who were close but no cigar on Friday:

  • Up 2.5% (we hope): Dow 10,455, S&P 1,100, Nas 2,255, NYSE 7,000 and Russell 650
  • Middle Range (MUST hold): Dow 10,200, S&P 1,070, Nas 2,200, NYSE 6,800, and Russell 635.
  • Down 2.5%: Dow 9,945, S&P 1,043, Nas 2,145, NYSE 6,630 and Russell 619

The big difference is that yesterday, the S&P and NYSE were greeen at the +2.5% lines - those MUST be taken back for us to be at all serious about a rally and NYSE should be the first to take the hill or to fall to the bearish guns this morining and, if NYSE is over, the S&P will need to confirm if the Dow is going to have any chance of adding 100 back today. 

In addition to the Beige Book at 2pm we have the ever-contracting Consumer Credit Report at 3pm but I think that's about over and could provide us with a big finish if the Fed manages to cheer us up with their notes on the economy.  That means I like looking for some upside and Nat gas was kind enough to pull back again so UNG Jan $5s at $1.62 are looking like a good play with just .20 in premium.

I mentioned in the morning post I like XLF at $14.25 as a straight play or the Oct $13/14 bull call spread at .72, selling the Dec $13 puts for .45 for net .27 on the $1 spread and banks would have to be very hurting for XLF to hit $13.

Volume yesterday was nothing so the move down was pretty meaningless but only if it is actually reversed sooner than later.

At the open: Dow +0.09% to 10350. S&P +0.08% to 1093. Nasdaq +0.33% to 2216.
Treasurys: 30-year -0.35%. 10-yr -0.21%. 5-yr -0.15%.
Commodities: Crude +0.12% to $74.18. Gold -0.03% to $1258.90.
Currencies: Euro +0.15% vs. dollar. Yen -0.19%. Pound +0.58%.

MBA Mortgage Applications: -1.5% vs. +2.7% last week. Thirty-year fixed mortgage rate increased to 4.50% from 4.43%.

ICSC Retail Store Sales: -0.4% W/W, vs. +0.1% last week. +1.8% Y/Y, vs. +2.8% last week. The lowest Y/Y rate since May was due to weather which curbed demand for buy-and-wear fall apparel but report sees the full-month pace coming in at +3% Y/Y.

Redbook Chain Store Sales: +3% Y/Y in-line with last week. Report sees M/M sales coming in -0.2% which is a negative indication for the ex-auto ex-gas category.

Greece's Q2 GDP is revised down to -1.8% Q/Q, worse than the initial estimate of a 1.5% decline. NBG senior economist Nick Magginas: "In H2 we expect GDP to contract at a similar rate as fiscal austerity takes its toll. We foresee a bottom-out for Greek GDP midway through 2011 when we should start to see a recovery as confidence improves."

And so it begins:  Investors sent indebted European countries a stern warning today: We'll lend you cash, but you're going to have to pay a hefty interest rate. Portugal successfully sold €1.039B ($1.32B) in government bonds but at a record-high yield spread over German bunds. The cost of insuring Irish sovereign debt hit a new all-time high.

The Bank of Canada raises its target overnight interest rate a quarter-point to 1% and expects strong growth in consumption and business investment. It was the bank's third quarter-point rate increase since June 1 and was expected by currency markets

Disclosure: Positions as indicated but subject to change