Where is the Recession ? plus a late Update

This is the CNBC refrain the past few days.  To us the answer is, have patience, things take time and in fact todays employment numbers point to it being closer than many believe.  Yesterday we saw a stock market buyer panic unfold and Cramer on his Mad Money show gave a lecture on why investors should not be missing all these buying opportunities. ????

The bottom line to us, remain with a defensive strategy, the overnight high on the S&P, 1411, was a good rebound high towards the earler 1437 bounce high.  1419 would be the optimum sell area today, but the break down through the 1395 short-term pivot point this morning makes that the resistance level for now .

 We have to rethink the oil issue for the moment as the market has rallied back to the level where we advocated short positions.  Probably best to watch rather than play this for now, we blew it by not taking our profits after the Tuesday night election results.  The wild card is the Israel – Iran issue, ie Israel being the lead in an attack on Iran for the US.  That is back on the table as Obama has beat Clinton for the nomination and the Lieberman contingent wants the US to make a hit now as the Republicans will probably be out of power after the elections.  Macro world oil demand has already peaked and economy of China will feel the effect more than the US of any recession.

For the week, Bernanke’s comments on holding rates and even mentioning Paul Volkers name are probably the biggest Macro news.  In our opinion he finally realizes the importance of containing inflation.

9:25 AM CDT

Late Oil Comment

When does one sell the oil market? The short energy ETF , “DUG” symbol, which has a more sophisticated trader following than the regular oil ETF’s, and because of its short position, trades inverse to oil, is interestingly trading about unchanged at this time today.  This would suggest to me that the reason that oils is 135 rather than 90, is primarily because of the Iranian factor.  So when does one sell oil, probably on the day Israel attacks because the effect is alreay built in the market.

12:10 PM CDT

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