25 Basis Points and Unwinding Ag Trade

We may be entering the curve toward lower inflation. Today the Fed lowered 25 basis points and the market dropped from 120 up to finish in negative territory.

With Microsoft on the brink of a meeting to discuss a hostile takeover of Yahoo, is the money leaving the Commodity trade and going into Technology for a 180 degree sector rotation?

It could happen with companies such as Potash, Monsanto, and Agrium displaying bubble characteristics and Technology being down for so long. DRYS looks to be on the brink of a pullback due to Commodities and possible increased currency valuation as the Fed slows their interest rate cuts.

Starbucks hit their earnings estimate today after hours. 15cents per share is what they were expecting.

You might want to ask yourself, how far will the Commodity pullback spread? It has hit Oil, Sugar, and now Fertilizer. Will it hit mining companies? Possibly, but as long as certain countries continue to(fight inflation due to growth, such as India and China) expand, building will continue.

The VIX is still within 1 point of 20. Still modest compared to the 3 month average of 23.

Keep your eye on the 13500 level on the Dow. and then a retracement to stay within the range of 12600.

Good Fortune from Trade Equity!!!

Post earnings economic news

Post earnings(after the last 2 weeks), we have some major economic news this week.


http://www.forexfactory.com/calendar.php?s=e345cf3539596b6721372a13770e55bd

Is the Fed going to lower rates by 25 basis points?

I am not sure what is going to happen, but whatever does happen, I would think that you might see the Financials move in one direction or another. Currently, the market feels as if it wants to keep floating upward toward the 13500 Dow marker. The VIX remains under 20, and the waters feel calm. Commodities look as if they are still heading South, with the exception of Oil and the energy.

If Oil stays under 120 per barrel, the Equity markets might have a chance for what might be a Bear Market rally or a short term Bull Market. Call this whatever makes you feel comfortable, but remember that the DOW has a high probability of trading in a range for until we are either out of the economic recessionary woods(and then the Dow will breakout) or into a solid recession(where the Dow might see 10500).

Keep an eye on the Jobs report this week also.

Good Fortune from Trade Equity!!!

Friday, April 18th 2008

Yes, you read it correctly. We broke through 12700 today, and headed North on the news of both Citi and Google earnings within the first hour of todays market opening.

Oil continued higher to close at $116.69(clk8) which in turn, helped Natural Gas to keep heading upward. The commodities, fertilizers, and energies can start to look expensive at some level. And when they break(POT), it will be a fast elevator to the basement or support. Whichever word you prefer.

But for now, it looks like we might be headed toward 13,500 on the long end or 13,000 on the short end before we test support. Remember the song, home on the range and think of Q2 and Q3, and maybe Q4 of 2008.

Good Fortune from Trade Equity!!!

This Weeks Earnings and Financials

Friday the 11th of April showed us we can still see 250 point down days as the VIX
started to head North from the basement level.  Up 6.73% on Friday, the VIX starts
to show us volatility is back at least in the short term.
As the DOW looks as if it might be trading in a range between 12700 and 11700
(Yet it may hold support at 11971 in this current 

This week will be prove to be a large test.
Earnings will be reported this week for many of the Financials.

For exposure to a long equity position this week, you might take a look at
the ETFs SKF and KBW.

The Investment Banks and the Regional Banks might see a large hit in the next
10 days if the earnings they report shock the Marketplace.  This type of shock
might be enough to turn the Bear Market rally that we have seen
lately, into a Southbound rock that crushes all positive momentum. 
If you are long currently, protection might be your insurance.

Keep an eye on LDK(due to the rise in Oil and Gas), DRYS(due to the increase in
Commodity prices), UNG (Potential Natural Gas increase), and DBS (Potential increase
in Silver).



Silver
http://finance.yahoo.com/q/bc?s=DBS&t=6m

Natural Gas
http://finance.yahoo.com/q?s=ung

LDK
http://finance.yahoo.com/q?s=ldk

DRYS
http://finance.yahoo.com/q?s=drys

Good Fortune from Trade Equity!!!

April Fools...........maybe in 30-60 days!

No, we are not out of the woods. Yet closing up 390 on the DOW is fantastic!

But if we can make it past the Jobs Report tomorrow, we might be able to sustain a 1-2 month rally before Commodities take center stage again. Loving equities can break your heart while this Market trades in a range or channel.

Don't give up. Over the next 30-60 days we might see(due to the amount of resistance we have around 12,700) a Bear market rally and we start to change momentum. UBS is reporting record breaking write down numbers, while Lehman Brothers floats 4 billion more in stock.

The song keeps playing, and the Market keeps calling it "close to the bottom". The bottom is irrelevant, but perception lives on. As long as people believe the Fed is behind this Market and will not let it fail(and keep the printing press turned on), while they act is if they believe in "hands off", the world will continue to devalue our dollar over the long term. Although, for the last 2 days, the dollar has felt wanted.


The momentum is wild right now, and we look for more higher highs in the next 30-60 days, while the Fed keeps inventing anti-recessionary tools to re-install the enthusiasm and refresh the perception of the Investor that has left the Marketplace.

Good Fortune from Trade Equity!!!