Consumer credit contracts by record amount in July

Consumer credit contracted $21.6 billion in July, a very severe reading and the largest on record. The consumer is still in defensive mode and will be cautious about spending.

Everyone keeps looking for a correction to develop, the market continues to catch a bid going up 5 days in a row and in fresh bull high territory. I will not be chasing strength on a swing basis up at these elevated levels,. I will continue playing small cap momentum stocks. Even the strongest of markets has to have a limit somewhere.

Very limited results by fading the gap, bailed out at 10:00am reversal time. Trading momentum stocks for now.

TMR

Meridian Resources - Bullish Flag

Extensive 3-D seismic data.
Aggressively acquiring acreage in exploration areas.
Operational control, quality, cost, timing.

ENER

ENER calls are seeing interest following AMAT-for-ENER chatter with 11.5k total calls trading vs 610 puts

SDS & SSO

My plan today is to fade the opening gap up and then go with the trend that develops after the first hour, higher or lower.

Gold

ANDS

ThinkEquity upgrades ANDS to Buy from Accumulate and raises their tgt to $4.

ANDS announced the final data sets from the proof-of-concept study with ANA-773. The data demonstrates that the oral immunomodulator ANA-773 is active and effective as an all-oral HCV regimen.

RTK

Once again, this alternative energy company in play.

PPHM

Interim Phase II Data Presented at XIV World Congress of Neurological Surgery Supports Potential of Peregrine's Cotara(R) for Treatment of Brain Cancer.

Vonage (VG), its mobile-phone app for the iPhone (AAPL) and iPod Touch devices is approved.

Global investors are finally questioning China's ability to drive global growth

Asset bubbles are forming in the stock and property markets. Companies are stockpiling commodities.
China's boom is more a credit-driven bubble. China's economic expansion is in doubt, given the slow growth in the US, Europe and Japan.

More Regulation, Less Profits

Finra says it will increase margin requirements for leveraged ETFs "by a factor commensurate with their leverage" (.pdf).

/ES & SPY breaking as buyers still not present

Consumer-less recovery

SPY -- Rally -- Volume ??

Short accumulation

This morning action provided an opportunity for profit taking on my short positions. From now until the close, I will re-enter FAZ, ERY, TYP which are close to a 52-week low, it looks like we are going to hit 1050 in the SPX.

AIG momentum impacts low-quality financial stocks CIT, ABK, MBI, PMI, HIG, BPOP

These squeezes in distressed names often punctuate the final stages of a near/intermediate-term rally. At-risk Financials rallies often signal the beginning of end of a bull market, one of those red flags that investors should be mindful of.

Select shippers moving higher

DRYS, TBSI, DSX, SBLK, EXM, EGLE, FREE, NM, ULTR, SB, DAC, GNK, PRGN, ESEA and FRO.

DBLE

Double Eagle Petroleum Co. - Tgt $7.65

ADLR

Adolor: Publication of Pharmacoeconomic analysis confirms Entereg's strong value proposition - Brean Murray, Buy rating and $4 tgt.

Consumer is not participating in jobless recovery

Perspective

Bullish

• Reduced labor costs & productivity increase
• Widespread stimulus & low interest rates
• Low inflation

Bearish

• Unemployment at 9.7%
• Consumers under pressure & increase in savings rate
• Continued weakness in the credit markets
• Possibility of higher taxes for individuals & businesses
• Federal budget deficit, poses a high risk for the economy
  

Great action today, market allowed me to build a decent short position, I am expecting the SPX to reach 1050 next week.

SPX

Shooting star formation (60 minutes chart); continue to add to my short positions, incrementally with a target of 1050 for the SPX.

FAZ

Excellent opportunity to continue building my short swing positions - FAZ - ERY - TYP

Encima Global is predicting that unemployment in the US will exceed 10% and that the economy will lose strength by the end of the year as the Obama's job creation scheme "isn't working right now"

RTK

Stopped out from a very profitable trade. exit $2.75

Overseas

Asian markets declined Wednesday, led by a 4.3% drop in Chinese stocks. The Shanghai market is now down around 20% over the last two weeks, signaling what could be the start of another bear market.

The dollar is losing its status as a reserve currency and could come under new selling pressure because of massive US government stimulus spending, according to mutual fund Pimco.

Commentary

As professional smart money continues to chase the market, the opportunity to trade some high volatility-weak fundamental stocks that move with momentum trading has been fantastic. The near term economic growth will likely be supported by inventory liquidation and the ongoing fiscal stimulus, but a sustained recovery will need jobs creation. The equity market resilience, (disconnect) from disappointing economic news has been impressive, but a real economic recovery will be a requirement for the equity markets to continue to move higher. Team Obama-been-lying, will provide plenty of headwinds to the financial markets in the form of more regulation and higher taxes; for now I am accumulating short positions in financials and energy. (FAZ, ERY)

Selling 50% position RTK (taking profits), continue long.

RTK

$2.20 target might be reached today.

Adding to my swing short position on financials. FAZ

The Economy

• Housing starts fell in July, according to the Commerce Department. Housing starts fell 1% compared to June, while building permits sank by 1.8%. Economists had expected both numbers to climb.
• Lower prices in the energy sector and drops vegetables, eggs, and other food dragged down producer prices in July. The producer-price index for finished goods fell 0.9%. The core index, which strips out food and energy prices, declined 0.1%.

SP 500 - McClaren Target

FAZ

continue to short financials.

QQQQ

/NQ leading to the downside re-testing its session low.

Overseas Selling

Nikkei...10268.61...-328.70...-3.10%. HangSeng...20137.65...-755.70...-3.60%....FTSE...4635.12...-78.90...-1.70%. DAX...5214.74...-94.40...-1.80%.

RTK - continue long

KG

King Pharms announces FDA approves EMBEDA for management of moderate to severe chronic pain.

30 Yr Bond Auction

Demand was strong for the 30-year bond auction, winding up an overall solid reception to the Treasury's record size $75 billion quarterly refunding. Today's $15 billion bond auction, despite its large size, posted a strong bid-to-cover ratio of 2.54. The high yield of 4.541 percent was several basis points better than early expectations. Demand from buyside accounts was especially strong.

Market disconnect

US Economy: Sales Unexpectedly Decrease as Job Losses Mount. (Bloomberg)

FAZ - exit $28.20

FAZ

Back into FAZ at $27.60

RTK - Exit $1.34

FAZ - Exit $27.50

FAZ

Back shorting financials.

FNM

Momentum players behind FNM & FRE.

HGSI

Human Genome, Leerink Swann raises their tgt to $30 from $16 saying their statistical power analysis confirms an ~85% likelihood of success for BLISS-76 data in November.

Commentary

Equity markets have moved up higher but lower-quality names have been outperforming defensive and high-quality stocks. It is difficult, for data to continue to surprise on the upside,which calls into question the strength of the recent rally. Cost cutting measures cannot continue indefinitely. The government engineered rally, fueled primarily by all of the monetary and fiscal stimulus that has been enacted over the past year, created conditions that also cannot remain permanent. The market has already passed the 1,000 mark, but, we could see some corrective action, which could take the S&P back down to the 850 and 950 levels.

MPG

Maguire Properties on Conference Call: Says comfortable with liquidity position for the next 12 months

The stock market keeps momentum, frustrating the short sellers. Up 15% in just four weeks, the market is due for a corrective period. It is and it will experience one. The questions are: when and how much?

RTK - continue long

Rentech reports Q3 earnings of $0.22 vs ($0.05) in yr ago period; revs $91.4 mln vs $60.4 mln in yr ago period (0.62 )