This week should show where the market intends to go. Housing data was so-so and job reports on Friday could be a huge factor. Consumer confidence did come in higher than expected which has many economists scratching their heads. The fact is growth in GDP cannot be obtained at the current level of unemployment. The argument today is should the housing market be left alone to fail? My answer is no because the foreclosure rate will skyrocket as more job are lost. The problem is some economists have not lived on the other side of the tracks in years. What we need is for people to get their head out of the books for a second and join the rest of the world. We are still in a recession guys!!!!!

People are jumping on the band wagon today because unemployment numbers came in better than expected. This is short lived and the support levels I discussed seem to be on track. 1035 is lowest this market can go without causing panic. The S&P could trade between 1045-1065 over the next few weeks. The DOW is trading properly and should be around the low 10,000 level. With stocks getting beat up expect more announcements for M&A. It was mentioned earlier this week that M&A has picked up from a 2 year drought. Typically after a recession companies get swallowed up or go out of business. The thing is did we ever leave the first recession?

This week it is apparent we are seeing traders test the market. There is support around the 1050.00 level on the S&P. Foreclosures and employment are still on the minds of consumers. Are we looking at a double dip recession? Or did we just not get out of the first one? Sometimes statistics are incorrect and maybe GDP needs a new equation or maybe other indicators should be used. The next few months might be defensive buying so do not be fooled into believing there is a bull market. Consumers are scared and more retail outlets will be going out of business.

Let’s break this down real quick! GM is going to create an IPO and consumers can only be involved if they are a hedge fund. Basically rich investors or hedge funds that give large commissions to brokers will be allowed to get this IPO before it comes to market. Now, this is normal but didn’t we the consumer bail out GM? Didn’t we give them oxygen when the government bailed them out? Throw investors a bone once in a while; especially after tax dollars were used for the financial bailout. The government needs to do the right thing here and people should be lobbying or being aggressive about this. In all seriousness the government is part owner of GM! They need to speak up. Any thoughts?

Oil has been having a very tough time of breaking this $82.50 resistance level as the market has come down to $81 after the weak jobs report Friday.  Ben Bernanke speaking tomorrow will be huge to this market and it is either a big rally or big drop for the black Gold.  If traders like what he has to say Oil will for sure test the $82.50 level, but if not the market can quickly get liquidated to below $80.  It is a very interesting day tomorrow.

The Precious metals sector has been climbing back in recent weeks after Gold stumbled to $1,157 as the Euro has now climbed to a 3 month high against the USD trading at $1.3300.  Gold is now back above $1,200 but there is still some resistance here at the $1,210-$1,215 level.  Silver is now back above $18 as well and looks to head to the tough resistnace of $19.  The market will get some key news tomorrow as Ben Bernanke speaks and this will have a big effect on the Gold price.  It feels like the Gold market wants to retest the highs again, so for now its just wait and see.

Unemployment numbers were negative and retail sales were basically flat. Why does everyone seems surprised by this? The market does not shoot straight up because we are out of a recession. There are adjustments being made by the government, by companies, and most importantly by the consumer. Consumers are weary of the market but do not seem fearful. Supposedly there is 5-6 trillion dollars of consumer money on the sidelines. There is no panic selling but there is no ambitious buying either. The S&P is backing off a little but could still jump to 1145.00 levels. This is simply a technical level without any economic data or news as variables. Technology could be how this market moves forward as banking is expected to slump over the next few quarters.

The Soft markets have been moving around. Coffee really has been. In my thirty years I’ve never seen it like this. Its so choppy. If you don’t see a price you like, just wait a few minutes and you will….

But seriously, options are too quiet. Here we have a market that is moving around a lot and options are eerily quiet. Now, of course a lot of traders are on vacation this week, and likely next, but with moves like we have been experiencing you’d think option volume would be certainly more than what we have. Why?

Perhaps the wide zone of noise is an answer. You see between 160, (maybe 15850) and the recent highs say 172.50, (176.50) movement is unable to stimulate business. I know several of my regular players are standing aside. They seem to feel that even with premiums at high levels the comfort level of holding positions isn’t there. I cannot blame them. High margins may be another reason.

Bottom line in my eye, electronic trading is also to blame. The majority of option business still gets executed on the floor, but much of the extreme moves occur when the option pit is closed.

Anyway, needed to offer some thoughts. Enjoy the long weekend….

http://www.youtube.com/watch?v=TXlC7gvvJZw&feature=related

This is what happens when crops and crude oil mix.

There is a whole mess of stuff going on out there! Oil is still being spilled out in the Gulf, the Yuan will start to move helping trade, BNP Paribus has been downgraded, and the housing market is down. Please do not forget that jobs are still rare to find and that many cannot afford their mortgages. This trader mentioned a double dip recession months ago and many said it was impossible. Now these geniuses are saying it is a possibility but is unlikely. Are you kidding stick with your comments! I am tired of double talk. You are either right or wrong. There is no in between when it comes to the markets. Once Congress sets the new reform for Wall Street we could see a large amount of sellers come out of the woodworks. Do not get sucked into this market as traders are testing the waters with play money.