Thursday, January 15, 2009
The Fear Is Back
Wednesday was not good for the markets with Citigroup (C) and economic news sending the markets down. The Dow lost 248.42 points to close at 8,200.14. The SPX gave up a whopping 29.17 points to finish the session at 842.62. We are in the green and looking good. I am glad we never got any puts!!
You had a sense that things were going to be bad once we saw the retail sales report. Economists were expecting retail sales to fall in December, somewhere between 1 percent and 2 percent. However, the actual decline was much worse at 2.7 percent with sales excluding autos off 3.1 percent. The only solace in the report was that the decline in retails sales excluding autos and gasoline was a less scary 1.5 percent, but still weak nonetheless.
Shares of Citi plummeted on the session, down a huge 23.22 percent to a price of $4.53. The company confirmed a deal with Morgan Stanley (MS) to merge their broker businesses. MS will buy 51 percent of Smith Barney from Citi for $2.7 billion. However, it might have been Citi’s announcement that they have moved up their earnings announcement to Friday that scared traders. Citi shares are still above their 52-week low at $3.05, but have seen huge declines from their 52-week high at $29.73.
The major market indices are now sitting right at support hit in December. It will be interesting to see if the selling has run its course on expectations of weak earnings. If support is broken, the Dow could be in for a decline of nearly another 1,000 points.
The bad news for the markets is good news for us though. Today is the last day of the January cycle with SPX settlement prices being determined by the opening prices print from all the 500 stocks in the S&P index on Friday. That 990 short strike seems a long way off!!!
Until next time.
You had a sense that things were going to be bad once we saw the retail sales report. Economists were expecting retail sales to fall in December, somewhere between 1 percent and 2 percent. However, the actual decline was much worse at 2.7 percent with sales excluding autos off 3.1 percent. The only solace in the report was that the decline in retails sales excluding autos and gasoline was a less scary 1.5 percent, but still weak nonetheless.
Shares of Citi plummeted on the session, down a huge 23.22 percent to a price of $4.53. The company confirmed a deal with Morgan Stanley (MS) to merge their broker businesses. MS will buy 51 percent of Smith Barney from Citi for $2.7 billion. However, it might have been Citi’s announcement that they have moved up their earnings announcement to Friday that scared traders. Citi shares are still above their 52-week low at $3.05, but have seen huge declines from their 52-week high at $29.73.
The major market indices are now sitting right at support hit in December. It will be interesting to see if the selling has run its course on expectations of weak earnings. If support is broken, the Dow could be in for a decline of nearly another 1,000 points.
The bad news for the markets is good news for us though. Today is the last day of the January cycle with SPX settlement prices being determined by the opening prices print from all the 500 stocks in the S&P index on Friday. That 990 short strike seems a long way off!!!
Until next time.
# posted by Paul @ 1:04 PM 
