Thursday, December 13, 2007

12.13.07 - Mixed News Day

So Lehman beats and retail sales look good, but wholesale inflation runs hot largely due to energy costs. Energy is a tough nut: it both drives inflation and yet can moderate economic growth of its own accord. That has got to put the Fed in a tough spot since it's not the type of inflation it can easily fight: market forces driving energy consumption are now at a global level. I'd therefore think the first-order concern would be the growth impact here, but hey, I'm no economist.

Price-wise we are retesting yesterday's lows, but without yesterday's strong trend action. Asia and Europe sure didn't get us off to a very good start. Speaking of which, overnight performance of the foreign markets is the very first thing I look at every day. A good practice.

Cumulative Tick isn't looking very good, I'd look for the slope to change and a break of the VWAP before I'd consider a long bet. We are essentially within the next level of retracement "support" in the SPY $146.50-$147.50 range.

1:20 PM UPDATE: Transports pulling hard starting about an hour ago. Money is either coming out of long-term bonds or a premium (edit: discount) is being paid... If the former, where is it going? Short-end? Would have expected a bigger equities pop otherwise. [OK -- Bit slow on the uptake on this one, it's an inflation repricing.]


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