The Market

• As the market grew skeptical that Fed actions would spur the economy the market rolled over.  The S&P broke through 800 to 802 but closed at 784.  800 is the line in the sand.
• Commodity, energy and fertilizer stocks all higher as inflation panic re-emerges. Gold up huge.   Financial stocks were crushed after a stupendous opening.
• TIP up about 1/2% as it digested the Fed moves.
• Was stopped out of new GE trade for minuscule profit.  The analyst day was heralded and the sweet talk coming out from that initially boosted the stock.  As reality settled-in traders took gains quickly.  Eastern European holdings continue to haunt the finance company.  And they gave no assurances the current dividend, already cut, would be maintained at this rate.
• Inflation and weak dollar are likely to move oil costs up.
• The dollar had it’s worst day since 1985, down more than 2%.
• Are we back to one-day-at-a-time?  Unless we can convincingly get over 800, and stay over, I am afraid that is how we trade.

Sidebar

• An OMG moment. My nephew, Michael, who lives in Medford, OR, confirms that Ayn Rand’s Atlas Shrugged is flying off the shelves (see yesterday).  He works at Barnes & Noble, so he should know.  From Wikipedia here is a brief recap of book demonstrating the fear factor of society gone nuts: (underlining mine) In the world of Atlas Shrugged, society stagnates when independent productive achievers began to be socially demonized and even punished for their accomplishments, even though society had been far more healthy and prosperous by allowing, encouraging and rewarding self-reliance and individual achievement. Independence and personal happiness flourished to the extent that people were free, and achievement was rewarded to the extent that individual ownership of private property was strictly respected. The hero, John Galt, lives a life of laissez-faire capitalism as the only way to live consistently with his beliefs.
• Both houses of Congress are spending days being consumed by $160 million of wayward AIG bonuses while Rome burns.
  
• I traded the 3X Financial Bear ETF, FAZ today.  This was about $112 last week and is now trading around $29, with a six point spread today.  To trade this you have to assume where it will trade before you put in a limit order.  By the time the order gets there, in seconds, the bid may have changed by twenty cents.  So, you wind up changing your limit order once or twice, never knowing if you are paying-up.  This is pure gambling. This vehicle and its counter-part, FAS, the 3X Bull Financial ETF, trades in huge volumes.  Speed traders hold either one for minutes, not hours and certainly not days since it has a poor track record of actually following any financial index. It is completely without economic merit.  This time it worked out OK for me as the market fell apart about the same time but I won’t go back anytime soon. This is terrifying to trade but like many bad-boy activities it can be addictive.

Took a beautiful bike ride up to the gym.  The day is 70-ish, little breeze, and birds, ducks and geese are going nuts.  At noon a huge white swan flew over our patio as I finished lunch.  Their wings make the craziest noise, like they need a shot of WD-40.

Have a great evening!