The Day that Was - September 13th 2007

Low volume was the primary indicator that stuck out like a sore thumb, but in this case not a swollen sore thumb but instead one which was chopped off. The moves the markets made today was on volume levels which are even lower than over the previous days of movements. When volume is low any move is exaggerated. One can not put faith into any movements in a stock or index when the volume in which is driving it is very low.

There was some early news which drove shorts (and there are a lot of them still) to cover some of their holdings. The biggest was in General Motors (GM). They announced early this morning that they may have a plan that will remove from their books billions of dollars in current and future debt by moving certain retire benefits over to a union run benefit package. This news of a potential debt reduction followed by an analyst upgrade this morning sent GM running as shorts were covering. As of the last update on short interest GM has 11% and that is a rather healthy amount considering the float structure of GM.

Also this morning there was a report that the LIBOR rate had stopped going up as has been the case over the past few sessions.

In addition to the above the initial claims data this morning gave added hope that the Feds will cut the fed funds rate next week. But as I said this morning it is not proof until it happens. The markets could very well be setting itself up for a hard fall. We still remain firm with our position and will advise of any changes, however at this time the market is moving solely on speculation and not fact. Everyone is guessing what will happen next week and unfortunately the market may be in for a big disappointment.

Today the DOW attempted to break resistance but it was unable to close and fell back to the resistance levels. This would give us a technical indication of a possible sell off tomorrow.