MV Weather Report: Sunny Day for Crude
Rain or shine, we review the day's biggest stock stories.
The newly unveiled plan will allow the US Treasury to convert its preferred shares into common stock, supposedly to enable banks to survive a worse-than-expected downturn.
The Treasury also said the "stress test" will show how a bank will operate during extreme economic conditions. Banks would be given 6 months to raise capital before the government issues a capital buffer.
All of the Big 4 money centers participated --Wells Fargo (WFC), Bank of America (BAC), and JPMorgan (JPM) -- accept for Citigroup (C). Unfortunately for the bulls, it wasn't enough to get the market up.
Todd used to say, "As go the piggies, so goes the poke." That doesn't hold up any more. Oil stocks now have a much higher weighting in the S&P 500; when Exxon Mobil (XOM) reversed (along with rest of the oils), so did the market.
Despite the strange sell-off in the oil stocks (due to tax increases?), crude oil had a strong day. Today on the Buzz, Professor Cooper mentioned the breakout in the USO.
"A daily chart shows USO is verging on an Angular Rule of 4 breakout - a breakout over a 3-point short-term declining trendline. The 50 dma at 30 beckons.
"This is interesting in light of the weekly chart of oil which indicated a possible square out near 33, 33 weeks down from last July's peak. And mid Feb is 180 degrees or opposite the July 2008 peak."
If the oil breakout is true, readers could consider adding oil exposure to their portfolios. Professor Cooper went on to say that Transocean (RIG) is holding above its 50 DMA and appears to be strong. Transocean is a name I held for almost 2 years during the oil bull market. For a trade, it looks attractive. But setting a stop at $52 would be wise.
Tomorrow traders will be waiting on Durable Goods Orders, Initial Jobless Claims and Continuing Claims, all due out at 8:30 a.m.
After the bell, all eyes will be on Dell (DELL) as it reports earnings. I wouldn't expect to hear anything spectacular out of that company. Honestly - who's thinking of buying a computer in this economy?
Have a good night, Minyans!
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