..complacency hurts

Sometimes it’s better to be a little early than late.   The premise at DJIM of ‘ bad news’, gag off come New Year and therefore establishing short positions paid off handsomely today,  despite a few days of nail biting, head scratching as this melt up continued without any real Bank stocks involvement.     As we said, it’s important to trade on facts and not emotional swings as in chasing the lot.    We had plenty of crucial facts to the markets fate for the day and alerted them into the open.    Fortunately, the market had the ‘sobriety’ test and it was even better than expected in the form of a meltdown of 3% across the broad indices as volumes start to come back.    Not only was SPX918 humbled, 900 a big mark came into focus and luckily held up at close for now.   We don’t think it will hold this week as more bad facts to be wake up to might be around the corner .  This is something we said at the end of last week, we don’t want!.  Surprises !.  Some will say today was profit taking...yeah, it was..... but it came with realization and fear once again that it simply sucks out there in the real world and therefore not just simple profit taking.

Coming into the trading day,  we highlighted/ underlined on site that we were seeing a tandem  at work with Oil seemingly hitting a 50 wall and weakness appearing in commodity equities into the previous days close.   Crude fell over 10% today and it took those equities/ commod`sectors...  Ships, coals etc. to the shed and will continue to if crude is becoming bearish once again.    As far as the broad market,  a frightening ADP number followed by the timely INTC news answered our journal title of where the next resistance is…..This is a tricky week as this is officially the start of the "earning warning" period.  We've had a bunch of small  tech names warn already this week, but the semi's/ hardware were probably best actors today.  So, it's the bigger names that we'll determine course.  This may become the resistance if a noteworthy co' reports one.

The reason we alerted the ADP, INTC (we don’t very often release such events) is we thought they were noteworthy because the market had become “COMPLACENT’ in thinking everything is priced into the market,  including economic and corporate news after the last Q.      Don’t forget INTC already cut from 10.1bln in November to 9.3 and now to 8.2.   That’s a big shift and we will see more of this, so those ignoring and becoming complacent are going to get hit down the road if they don’t smarten up.    This was a cold shower awakening that it could get even nastier.    Despite all the lowered guidance from co’s and analysts,  we still think the numbers may get worse than anyone thinks.

The only positive was MON and a huge squeeze as analysts had become quite bearish on the company lately.   We want to point out this has little to do with rest of sector and eventually the crude factor if bearish will knock the other Ag-chem stocks down.   Around 40c of the difference in estimates from the street were glyphosphate profits and MON biggest competitor is Dupont.   This report has little to do with how bad MOS’s really was.

Right now,  the focus has to be to close 900SPX+ for any bullish sentiment to remain short term.  The fear we had going into this weak has been put back in quite a few today that had become complacent.  The effects are they will now be waiting for more ‘bad news’ and this market may have a hard time fighting back beacuse of it…Obama inauguration or not.