News yesterday suggested Libya's Gaddafi (I have seen his name spelled several different ways) was shot, and that rumor triggered a decline in Oil prices, which in turn strengthened the markets. This morning, it appears he is still alive, but oil is trading flat from the close. Gold is off 9 at 1406 and Silver is off, trading at 32.77. The Euro is taking a breather, trading at 1.374 and the Dollar has a nice bounce, trading at 77.30. This sucker needs to find a bottom! The 10 Year Note is up, trading at 3.436% and the long Bond is trading higher at 4.529%.
4th Quarter GDP's second revision has printed at 2.8%, vs expectations of 3.3....Biggest contributors were a decline in Personal Expenditures, falling from 3.04 to 2.88 and imports, falling from 2.4 to 2.17
It appears oil production from Libya has declined by at least 800,000 bpd from the normal production levels around 1.5 million bpd. There is concern it may fall further, and the are reports that Gaddafi has threatened to destroy the oil fields if he is forced out.. The Sauds have responded to pressure from the consuming nations to ramp up production, which they have agreed to do, increasing production by 8% to over 9 million bpd. The news probably explains why oil has not retaken the recent highs.
There had been talk in the media about the impact on the economy of the spike in oil prices, and most commentators pointed to $4 per gallon gasoline. Now, the metric is $5 per gallon gasoline. The impact of the increased oil price is much debated, but there is an interesting story at ZeroHedge that is useful. The chart posted, Courtesy of John Lohman describes a scenario that oil prices at current levels with cost the typical family $700 over the next 12 months, which in turn will cost the 0.5% in GDP. Very well worth the time to visit.
The Market are higher this morning, with all indexes on the plus side. The Dow is up 40 and the SPX is higher, trading up 7.88 at 1313.88. We got stopped out of the FAZ, QID, TWM and the TZA this morning, with small profits in each. This is certainly not what I was looking for, but a gain is a gain, and the stop loss orders have again prevented a trade from turning into a loss. The remaining trades are still open as of this post.
The Proprietary Momentum Change indicators are still on Sell, and I will be looking for another entry point. It may be that we get a rally today and early next week, before Mr Market tries to correct again.
Best To Your Trading
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