Good, Bad, it's all Ugly

                We started the day on some really bad numbers that were spun as “not that bad”.  Let’s put it in perspective. 3Qt GDP came in at 2%, that’s .5% below expectations.  Doesn’t sound that bad, right?  But when you look at it in percentage miss terms it was a miss of 20%.  That’s right, 3Qt GDP missed expectations by 20%!  No matter how you spin that it was a bad number.

                Then we hear news from the IMF (the international monetary fund) that it is preparing to assist in the bailout of the Eurozone.  Good news right? Not if you’re an American.  First, the IMF was a fund set up to aid emerging and third world economies not bail out a continent.  Second, the IMF is partially funded by the American tax payer.  Not to mention that any one of the PIIGS needs over a trillion euros and the IMF only has about $400 billion on its balance sheet.

                Further on, we got the FOMC minuets.  Not good, but not bad either.  The general spin on this was that economic conditions may warrant farther easing by the FED.  Yep, they seem to think that the mere mention of QE3 would be enough to cause a rally.  No such luck.  Markets moved more on the IMF news and that wasn’t even enough to push things higher.

                We also should take note that the 5yr U.S. Treasury bond auction finished out with record low yields.  For those who don’t know, bond prices and yield move in an inverse relationship.  That being said, I pose a question for anyone who remembers econ 101.  What factors might cause an increase in price?  Two answers right, either a decrease in supply or an increase in demand?  As supply is clearly not a consideration when you have a reserve bank that is willing to print at the drop of a hat we must consider an increase in demand.  As demand for treasury bonds increase we generally see a flight from equities (stocks) and into cash.  All this considered we could expect more downside in the markets to come.

                When it all comes down to it you have to ask yourself, “do I really want to go into a 3.5 day weekend in a long position?”  I sure as hell don’t.  Especially considering that the 10 period EMA had crossed the 20 yesterday and crossed the 50 today, a rather bearish sign considering that price, the 10EMA, 20EMA, and 50EMA are all below the 200EMA.