Morning Notes: 13th March 2008

My Dearest MooMooCow,

After the massive, massive rally, the stocks in the US consolidated. Stocks can't do 2 in a row

• Stocks tumbled Wednesday, erasing gains at the end of an otherwise upbeat session, as record oil and gas prices countered an attempt to rally for a second session in a row.
  
  The Dow Jones industrial average (INDU) lost 0.4%, the broader Standard & Poor's 500 (SPX) index lost 0.9% and the Nasdaq composite (COMP) lost 0.5%.

Some optimism are noted

• "I think the market is handling itself pretty well, considering that it's managing to hold on to most of yesterday's gains while combating oil at $110 a barrel," said Peter Cardillo, chief market economist at Avalon Partners.

And of course the pessimists are calling one to beware the sucker's rally

On the technical side, here are some comments worth noting. From Trader Mike

• We can chalk today up as just a consolidation day. Volume contracted today, which is just what you’d expect from a consolidation day. However, the failed intraday rally has to be a bit of a disappointment to the bulls. That rally didn’t quite reach the March highs, so, on a daily basis, the market’s still making lower-highs. So it seems to me that the line in the sand is now right around the March highs. The bulls need to break those highs so that yesterday isn’t seen as just a one-day Fed induced buying panic.

Lower highs aren't a good indicator at all. Which is why Kirk is afraid that the S&P would continue its current trend of reverting back to the same old downtrend. Simple chart of S&P posted by Kirk says it all here.

However, Kirk points out the important issue that Uncle Bennie has another performance next week.

• The big question now is whether we'll see the "rally into Ben" trade that has worked so well in the past with the Fed meeting next week. As they say, let's take it one day at a time.

Last but not least, Financial Sense market commentator's piece, Housing Update: Houston, We Have Lift Off is worth a read.

rgds