Morning in Arizona

Morning in Arizona
Rainbows over Canyonlands - Dave Stoker

The Headline Animator

Friday, February 05, 2010

Today's Market: Bargain Hunting or Short Covering at the Close?

At the close of trading Friday, the major averages recovered from being down throughout most of the session. Treasuries were higher (pricewise), the dollar gained strength, and gold and other commodities were lower. Was this price fluctuation or was it a meaningful trend change?

The close today was as chaotic and confusing as the jobs report released before the opening bell. Unemployment went down as more jobs were lost. As always, there was a conflict between the household survey and payroll data.

At 3:18 EST, the Federal Reserve Statistical Release, G.19 consumer Credit hit my inbox.

"Consumer credit decreased at an annual rate of 4-3/4 percent in the fourth quarter of 2009. Revolving credit decreased at an annual rate of 13 percent, and nonrevolving credit was unchanged on net. In December, consumer credit decreased at an annual rate of 3/4 percent."

The rate of decrease is slowing in consumer credit, although, this report was largely overlooked by the market, as frazzled traders focused on staying exposed this weekend, to the potential animal spirits picking up steam, over Europe's upcoming sovereign debt meltdown.

Bulls took comfort in the receding bad news from first itineration government reports as bears contemplated longer term (the end of February) issues like the Special Liquidity Facilities expiring this month, dubious fluctuation employment data, and the eventual ending of Quantitative Easing. A trade war with China, could be brewing. I think this is another leg down in the market and Friday's close was the last rally, into which, one can sell.

This game continues Monday, after the Sunday's Super Bowl telecast.

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