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 )

Week's winners

FAZ

Shorting financials into the close.

Here comes the squeeze, out for now and on the side lines.

Strong financials make it difficult to have a real sell-off, a squeeze make stop me out from SDS.

Good economic news presents a classic profit-taking opportunity, continue to short the market.

SDS continue to short the market, long RTK

Trading Radar

BPOP, MBI, ABK, FIG, FUQI, SIGA, RTK

RTK

Rentech's synthetic jet fuel certified for commercial aviation.

CIT Picture Perfect

Financials XLF continue to outperform broader-market weakness.

SDS

SPY short-term countertrend resistance (100.03) for the time being. Continue to short.

SDS

The 38% retracement off the October 2007 high is near 1014. If the SPX doesn't rally another 9 points higher, the upward momentum can stall near 1007. I will consider a short position once I see a price rejection of the 1000 area in the SPX.

XLF

Relative Strength in Finance with the XLF setting a fresh eight month high

91% of the S&P 500 stocks, or 455 of them, are currently trading above their respective 50 and 200 day simple moving averages. These extreme numbers are usually not maintained for long and warn of a correction to come.

STEC beats by $0.08, beats on revs and guides higher, trading 9% down post-market.

S&P 500 trading above 1,000 for the first time since November after the ISM manufacturing Index results and a surprise increase in construction spending for June. The weaker dollar is helping oil prices climb back past the $70 mark.

• Broad-based buying continues to lift stocks despite continued calls for a pullback.
• ISM Manufacturing Index for July and construction spending data for June both exceed expectations and improve from previous month.
• Commodity stocks are trading higher as the dollar continues to trend lower. Gold higher, Oil higher.
  

Trading up: ANDS +65%, OFIX +24.8%, ABAX +21.8%, SSRX +15.5%, NVTL +15.2%, DSCM +14.8%, GGC +13.1%, ISLN +12.5%, GXDX +12.2%, POWI +12.1%, LAD +11.1%, BEC +10%, REXX +9.3%, SGY +8.4%, RST +8%, SRZ +7.3%, IRE +6.9%, OMX +6.6%, VCI +6.2%, THO +6%... Trading down: SYNA -26.5%, PIR -20.2%, GPRO -12.8%, PKI -12.8%, HTCH -12.4%, DNB -11.9%, ESLR -11.3%, PBI -10.9%, LVS -10.5%, FSLR -9.9%, AGP -9.3%, MPWR -8.5%, FVE -7.9%, INFN -7.1%, CAST -6.9%, VPRT -6.6%, E -6.2%.

MSFT

Microsoft's earnings miss can bring the market back to reality.

Miami Herald

McClatchy, MNI - continuing higher today following Q2 results and comments by the CFO yesterday. The stock jumped nearly 40% yesterday on the news.

Colombia (Empresas Publicas de Medellin) To Sell $500M, 10-Yr Bonds; Yld Around 8%

Commercial RE

Moody's has reported that the downward spiral in commercial real estate market fundamentals has accelerated as the recession persists. For the first time in six years, none of the seven property types tracked by Moody's has a "green" or strong score, while four of the property types are at levels of weakness unmatched in the almost 10-year history of the study.

First Solar FSLR, SunTech Power STP, and JA Solar JASO are all trading with significant gains after the China Ministry of Finance provided additional details about solar PV subsidies.

Store Sales

Released on 7/21/2009 8:55:00 AM For wk7/18, 2009 Prior Actual Store Sales Y/Y change -5.7 % -5.8 %

Highlights Redbook continues to report extreme rates of deterioration in same-store retail sales: minus 5.8 percent year-on-year in the July 18 week for a minus 1.7 percent plunge from June. The year-on-year rate is a new low but not the month-on-month drop, which is modest compared to the 4.3 percent catastrophe Redbook indicated for June. Redbook hasn't been commenting on why its readings are so extreme though the sweep lower began when Wal-Mart was removed from the sample. In any case, weekly retail reports and nearly all company news out of the sector point to still severe contraction in the retail sector.

Earnings

Of the 59 S&P 500 companies who have reported, 69% beat estimates, 8% were in-line, and 22% were below estimates.

Market

A third month of strong gains in leading indicators would increase talk of recovery and could increase demand for risk. This market is moving up a little bit too fast, I am skeptical, but again I've been wrong too often lately.

Retail Sales

As reported, retail sales posted their largest gain in five months in June. But if you read the report you will find out that most of the higher prices, came from higher gasoline prices.

What was the report showing without gasoline prices? When gasoline and the give-away incentives for the car makers is not counted, retail sales dropped for the 4th consecutive month.

The Redbook data that shows US Retail Sales: Down 1.7% for the first week of July and down 5.7% for the week ending July 11th, both vs. a year ago. "Redbook keeps reporting sharp declines with same-store sales at a year-on-year minus 5.7 percent in the July 11 week. Month-to-date, sales are down 1.7 percent vs. June."

Released on 7/14/2009 8:30:00 AM For June, 2009

	Prior	Consensus	Consensus Range	Actual
Retail Sales - M/M change	0.5 %	0.5 %	0.1 % to 1.0 %	0.6 %
Retail Sales less autos - M/M change	0.5 %	0.6 %	0.2 % to 1.5 %	0.3 %

Released on 7/14/2009 8:55:00 AM For wk7/11, 2009

Prior Actual Store Sales Y/Y change -4.2 % -5.7 %

Meredith Whitney, (the last analyst on Wall Street that has any credibility), told CNBC she liked the banks...SHORT-term. She said they were fantastic long-term buys and that they would never, ever, have a problem again. She also said, "Unemployment is likely to rise to 13% or higher and will weigh on the economy for several years, countering government efforts to stabilize the banking industry..."

PPD

Bullish flag.

Tech

The computer maker tumbled 8.1% to 11.97 after DELL executives said the U.S. Personal Computer market has hit its low point but the timing of a tech turnaround remains anyone's guess. Chief Executive, Michael Dell said at a meeting with analysts that customers aren't replacing their PCs, but he sees more replacements in '10 as Microsoft MSFT launches Windows 7. CFO Brian Gladden said U.S. sales are "finding a bottom" but are "not necessarily getting a lot better." On Mon., Dell predicted lower gross margins in Q2 but a slight sales gain vs. Q1.

Intel (INTC) on Tuesday reported second-quarter results that beat views by a wide margin, helped by strong sales of its Atom chip.

Calendar

Economics:
8:30am ET

• CPI for June - Street expects 0.6%
  
• Empire Manufacturing for July - Street expects -5

9:15am ET

• Capacity Utilization for June - Street expects 67.9%
  
• Industrial Production for June - Street expects -0.6%

10:30am ET

• Crude Inventories for the week of 7/10

2pm ET

• FOMC Minutes for June 24 Meeting

CPST

Capstone Turbine Corporation (Nasdaq: CPST) Capstone products are eligible for reimbursement from a $3 billion fund created through the American Recovery and Reinvestment Act (Recovery Act).

Before Market Opens:
Economics:
8:30am ET

• PPI for June - Street expects 1%, compared to 0.2% in May
  
• Retail Sales for June - Street expects 0.4%, or 0.5% ex-autos

Earnings:
Goldman Sachs (NYSE: GS) - consensus EPS $3.48

NFLX

Sony Electronics to add Netflix to Bravia Internet Video Platform.

SPY Daily Pivot Table

SP 500 Critical Moment

I'll wait for a close below 875 before shorting, I suspect intervention.

E-Mini S&P 500 trading at 870, $TRIN 2.25 - NYSE Advances 854 - NYSE Declines 1938 - VIX 30.14. Time to get short.

Watching from a distance

After staging an early reversal off their lows, the major averages have retreated from their morning highs in the wake of a worse than expected preliminary Michigan Sentiment reading for July, which came in at 64.6, below the 70.0 consensus. A dangerous trading environment today, the bulls are fighting back or is it the black hand of the government?

RIGL

Rigel Pharma in play after results of Rheumatoid Arthritis drug trial.

SPY Daily Pivot Table

GE $2 stock ?

Managing director of Newport Value Investors and long-time bear, Charles Ortel, is out with a bold call on General Electric (NYSE: GE) this morning. Appearing on Yahoo!'s Tech Ticker show, the researcher called GE a $2 stock. GE only had $2.8 billion of tangible common equity while at the same time holding about $470 billion in debt.

Relative Strength

POT, MOS, AGU, TRA

Sectors

Trading sideways as stocks struggle to find clear path; not a definite buying or selling effort.

Energy XLE, materials XLB , and financials XLF are all trading with gains, which are the best of the 10 major sectors in the S&P 500.

Health care XLV trading down, worse than any other major sector.

S&P 500, NYSE, NASDAQ heading higher at outset. NYSE breadth 18-6 positive, NASDAQ breadth 14-5 positive.

SPY Daily Pivot Table

PCS

PVTM and Morning Star, a 3 day candle stick bullish reversal.

Sectors

Government Intervention

Today's wild action confirms what Larry Levin said on CNBC, "this market continues to be propped up by government intervention and manipulation, disregarding the underlying currrent..."

An excerpt from the pit:

"As the market dropped below 882.00, it became more volatile. In fact, as called by our auctioneer service (Paul specifically) of PitNoise.com, things got a little wild. Near 882.00 a large order came into the pit to buy 400 contracts, which has a notional value of $100-million! At first these contracts were not taken out by the locals in the pit and Paul even told us locals began bidding in front of this large order. When the market finally reached our 875.00/873.00 MOB (Make or Break) level, it got crazier. Paul called another 400-lot order, and another, and another…and yet another. The final order was never filled. What happened? The locals in the pit who trade their own accounts got the picture: whoever was buying was not going to stop" Someone was determined to have the SP 500 close above 875.

Markets

After testing and holding session lows near 870, the stock market has bounced back. Still, losses remain broad-based as decliners outnumber advancing issues by 4-to-1 in the S&P 500. It feels like someone is trying to steer a controlled correction.

Market Breather

Long-end Treasurys catch a strong bid after solid $19B, 10-year note auction results: High Yield 3.36% vs. 3.4% expected. Bid/cover 3.28 vs. average of 2.42. Indirect Bidders 43.9% vs. average of 27.8%. 30-year futures +1.06% to 120-22. 10-year+0.95% to 118-12. 5-year +0.52%. 2-year +0.09%.

The major indices have all extended their recent downturn to trade at session lows with significant losses. Health care stocks continue to hold up, though. The sector is up as biotech BBH shows strength following strong drug trial results from Amgen AMGN.
I Continue to short the market.

SPY 875 about to be taken

$TRIn 1.64 - NYSE Advances 767 - NYSE Declines 2060 - VIX 31.57

$TRIN 1.02- NYSE Advance 1291 - NYSE DEclines 1432 - VIX 30.71

Sectors

Sector strength: Biotech–BBH; Regional Banks- KRE; Biotech-IBB; Basic Materials–XLB; Coal–KOL.
Sector weakness: Silver– SLV; Heating Oil– UHN

SPY Daily Pivot Table

The CRB Commodity Index closed 1.5% lower. Crude oil prices saw the most selling pressure. They finished lower for the fifth straight session as they dropped 1.8% to $62.90

XLV

Health Care XLV remains the only major sector trading with gains today following this mornings article in the The Washington Post which stated that hospitals have agreed to contribute $155 billion over 10 years toward the cost of insuring those without health care coverage.

LM

5 day pull back, uptrend.

CI

HMO's higher on report hospitals reach a deal with Obama administration.

JAZZ

Jazz Pharmaceuticals completes $7 million private placement.

IVN

4 day PVTM

MKSI

Relative strength

SPY Daily Pivot Table

GWSC

GWS Technologies, Inc., is engaged in providing wind turbines and other wind and solar products and alternative energy solutions to the government and consumer markets.

Sectors

EQIX

3 day pull back - PVTM

XLU

The utility sector, is getting another look as markets turn increasingly defensive in re-evaluating the economic recovery in anticipation of Q2 earnings.

IVN

Ivanhoe Mines, 3 days PVTM

CSII

Cardiovascular Systems Inc. added to Russell 3000. The Company's major offering is the Diamondback 360° Orbital Atherectomy System. The device is designed to remove calcium and other tough plaque morphologies, while minimizing the risk of perforation, dissection1, and barotrauma2.

Top 10 - After 10:00

DDSS, ERY, DUG, GERN, S, SMN, UAUA, DNDN, TZA, RF.

Stocks to Watch

Companies whose shares are expected to actively trade in Monday's session are LDK Solar Co., Spectrum Pharmaceuticals Inc. SPPI and ATS Medical Inc. ATSI.

SPY Daily Pivot Table

CETV

Central Euromedia receives $100M investment.

US Debt

Next week, four debt auctions: $19B of 10-year notes, $35B of 3-year notes, $11B of 30-year bonds, and $8B in TIPS. It's the first time since the Treasury started issuing securities regularly in 1976 that it's auctioned four in one week.