Market in a Foul Mood
Research for Online Investors

by John Dalt

10/16/09

It is options expiration day, and the market seems to be in a foul mood.  GE and BAC came out with earnings that stunk up the trading floor.  IBM disappointed with lowered contracts and forecast.  Bad Earnings, options expiration, and Friday, a toxic mix.  We may see buyers come out today, as POT is trading up right out of the gate.  You can use GS and POT as predictors, it works more than not.  GS is down but they are ‘sell the news’ and downgraded.  We have a draw on our indicators, but I think the buyers come out.

Kenneth Feinberg, White House Pay Czar, sent a letter to Bank of America (BAC) suggesting that CEO Ken Lewis should not get a bonus in 2009.  Ken Lewis was slated to receive $1.5 million is salary; he has decided to pay back monies received and forgo any bonus, stating it was not in the bank’s interest “to get into a dispute with the paymaster.”  Wow, good thing Feinman has no power; otherwise, he would have to be confirmed by the Senate.  USA Today has the story, “BofA’s Ken Lewis to get no ’09 Salary, Bonus.”  Lewis is still entitled to his retirement package when he retires, valued up to $60 million.

Crude Oil has been on a tear lately, primarily in U.S. dollars.  As the dollar declines, world commodities go up in price when priced in dollar terms.  There is also interest in crude oil going higher as the economy recovers and usage increases.

Last week’s inventory grew 400,000 barrels, but refinery inputs were down 500,000 barrels.  Gasoline inventories shrunk 5.2 million barrels; this was the largest weekly decrease in recent history, bringing gasoline inventories to only 8% higher than one year ago.

Distillate stocks (diesel, kerosene, heating oil) continue to be off the chart.  Inventory shrunk by 1.1 million barrels, but still is 40% over year ago levels.  Heating oil prices are 22% lower than this time last year.

We have a position in Crude Oil (USO) in the Swing Trader service and will look to exit if any of the following happen:

• Dollar strengthens
• Inventory builds
• Equities market corrects lower.

It would be axiomatic that oil would fall if questions about the economic recovery gained significant traction.

The Department of Homeland Security (DHS) is trying to walk a fine line.  They want to give the appearance of enforcing immigration laws but not upset their liberal wing by actually doing anything about illegal’s in this country.

DHS is changing the program that deputizes state and local law enforcement to catch illegal aliens.  They want the agencies to concentrate on violent criminals and drug dealers, and checking the status of jail inmates for illegal aliens.  This fits nicely with democratic plans, since conviction of a felony means they would never be able to vote anyway.

Civil libertarians are upset about traffic stops, and neighborhood sweeps that result in arrests of illegal aliens.  DHS specifically does not like Maricopa County Sheriff Joe Arpaio’s efforts to capture illegal aliens.  He has captured more illegals than any other agency, accounting for more than 20% of the nationwide total.  Sheriff Joe has vowed to continue arrests, ‘if ICE refuses to take them, we will take them to the next closest federal agency, probably the U.S. Border Patrol at the Mexican Border.’  The Washington Post has the story, “DHS Reshapes Its Immigration Enforcement.”

"I can't understand why they are bullying this law enforcement agency for political reasons when we've been so successful," Arpaio said in an interview. "We're going to go out again [Friday] -- the same way we've been doing it."  You gotta love Sheriff Arpaio.

These guys know the results of lax border security.

With 10% unemployment, you don’t hear much about illegals doing jobs Americans won’t take.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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