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Daily Blog -02/17/09- 1:59 P.M.

Global Markets Slide

U.S. markets re-open to big declines as global markets sink against a wide range of concerns. The major European markets were plunging on fears that Western European banks may have too much exposure to struggling Eastern European debt and credit. Eastern Europe is seeing a massive slowdown as the global recession picks up strength. Major exporters like Japan and China are also seeing their markets decline.

French CAC 40... -2.9%
German DAX ..... -3.4%
British FTSE ... -2.4%

Japan's NIKKEI.. -1.3%
China's Shanghai -2.9%
Hong Kong Hang Seng -3.8%

Dow Jones Industrials -3.6%
S&P 500 index ....... -4.4%
NASDAQ Composite..... -4.0%

The S&P 500 index is breaking down under support at the 800 level for the first time in months. This breakdown under support is forecasting a test of the November 2008 lows near 741. The Dow Jones Industrial Average is off 280 points under 7,570 and quickly approaching what should be support near 7,500. The November 2008 intraday low was 7,449 and its closing low was 7,552. Meanwhile the NASDAQ is down 4% under the 1,500 level. The NASDAQ had been showing relative strength this month but if it's going to catch up to the S&P then it will have much farther to fall. The November 2008 lows for the NASDAQ are near 1,295.

Chart of the S&P 500:

Chart of the NASDAQ:

Chart of the Dow Industrials:

Investors are piling their money into gold as a "safe haven" trade. Gold futures are up more than 3% to more than $970 an ounce. These are the highest levels since last July and gold appears to be on a collision course with its 2008 highs near $1,003/ounce. The GLD gold ETF is up 2.8% at $95.20.

Chart of the Gold (GLD) ETF:

Chart of the U.S. Dollar ETF (UUP):

The U.S. dollar is also in rally mode with the UUP dollar ETF gapping higher and posting a 2% gain, which is a big move for the UUP. A rising dollar is putting downward pressure on other commodities like oil. Oil futures are plunging with the front March month contract down more than 7% to under $35.00 a barrel. The April contracts are also down about 7% to under $39.00 a barrel. Ongoing concerns about falling demand as the U.S. and the world slips deeper into recession will an anchor on oil for the moment.

Retail stocks were in focus as the world's largest retailer Wal-Mart (WMT) reported earnings this morning. The results were better than expected with WMT beating estimates by 4 cents but the company missed analysts' revenue targets. The company guided inline for the first quarter of 2009 but their guidance was toward the lower-end of the previous range. WMT management said they were cutting back on capex spending and would restart their stock buy back program. The stock is bouncing with a 2.9% gain to $47.90.

It may be hard to believe but the homebuilder's confidence survey actually bounced today. The latest reading put the homebuilder's sentiment index at a 9, up from an all-time low of 8 last month. Overall the outlook remains dire and it's hardly something to get excited about but this is the first gain in the index since last September. Currently investors are expecting the Obama administration to shed more details tomorrow on their housing plan and how they might tackle the home mortgage problem in the U.S. Today President Obama is in Denver to sign the recently passed stimulus bill.

FYI: ... Within the last hour CNBC is reporting that the SEC is charging Stanford Financial in Houston with an $8 billion fraud. It is being reported that federal agents have raided Stanford's Houston headquarters.

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