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Daily Blog -03/09/09- 2:21 P.M.

Morning Bounce Fades Into Losses

Global markets were weak again as investors focused on a lack of solutions for the financial crisis and struggling banks. European markets fell to new twelve-year lows but managed to bounce while the Japanese NIKKEI index hit a new 26-year closing low. Billionaire investor Warren Buffett shared his opinion on CNBC before the opening bell that the U.S. economy had "fallen off a cliff."

Chinese Shanghai Index -3.3%
Hong Kong Hang Seng... -4.8%
Japanese NIKKEI Index. -1.2% (26-year closing low)

French CAC 40 Index -0.6%
German DAX Index... +0.7%
British FTSE Index. +0.3%

The surprise on Monday morning was strength in the banking sector. It was financials that helped lead global markets lower. Yet here at home the banking indices are bouncing. The BKX is up 5.9% and the BIX banking index is up 11.3%. A couple of news agencies pointed to the Monday morning meeting between Fed Chairman Ben Bernanke and President Obama at the White House today as some sort of comforting sign for the banks. Meanwhile Bank of America (BAC) CEO Ken Lewis was cheerleading again about how company was in fine shape and did not need to raise equity. Shares of BAC were up 19.4% at $3.75. Rival Citigroup (C) was up less than one percent at $1.04. Wells Fargo (WFC) was trying to keep pace with BAC as WFC's shares are up 18.8%. J.P.Morgan Chase (JPM) was up 4.3% to $16.62.

One of the big headlines today was drug giant Merck & Co (MRK) and their announcement to buy rival Schering-Plough (SGP) for $41.1 billion in cash and stock. Shares of MRK lost 8.8% falling under $21.00 while SGP jumped almost 16% to over $20.00. Analysts opinion on the merger seemed mixed. Normally a big M&A deal like this would help spur strength in the sector but the DRG drug index was down 0.9% and the BTK biotech index was off 3%.

Oil stocks were showing some strength today. Oil services stocks were the real leaders following a rally in crude oil futures of more than $2.00 to over $47.50 a barrel. The USO was up 2% near $28.50 but off its best levels of the day above $29.50. Technical traders might note that the USO has now broken out above short-term resistance at $28.00. The OSX oil services index was up 2.8%. Keep in mind that OPEC meets next on March 15th to discuss another round of production cuts to raise prices.

Gold bulls may be in trouble. Last week gold ended an eight-day losing strength with a bounce from the bottom of its bullish channel near its rising 50-dma. The two-day rebound is failing and gold has fallen almost 2.5% back toward the bottom of its channel again. A breakdown under its 50-dma would be very bearish.

Chart of the GLD:

Here are charts for the major indices:

Chart of the S&P 500:

Chart of the NASDAQ Composite:

Chart of the DJIA:

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