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.