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MV Weather Report: Freeze Warning for S&P


Rain or shine, we review the day's biggest stock stories.


Yesterday was nothing more then an oversold bear-market rally. Traders came in this morning and saw futures down 2% on news that Moody's may cut the ratings of Wells Fargo (WFC) and JPMorgan (JPM).

This is bad news for the banking sector and the market as a whole. Just four months ago, Wells Fargo and JPMorgan where thought to be in the best shape of all the major banks. Today, Wells traded under $8 and JPMorgan is at $16. It should be noted that Citigroup (C) traded below $1 and there's now talk of it being removed from the Dow Jones Industrial Average.

The S&P closed today at 682 - a new closing low. Here's what professor Jeff Cooper had to say about it on the Buzz & Banter:

"Below 693, the S&P is in an air pocket. As I offered last week, it would be ironically fitting if the S&P drove down to 661ish (close enough to the mark of the beast for comfort perhaps), which represents a full 7 squares or cycles in price below the 1576 all-time high. Seven being the number of panic. The 2002 low at 768 being 6 cycles of 360 degrees below the 1576 high."

Risk remains high here, as there's chatter of a 1987-like scenario playing out. But some think this area may be getting close to a bottom. Here's what Bennet Sedacca had to say on the matter:

"I noted earlier that we may be in the final innings of this part of the game and setting up for a potential bottom. While I would most definitely defer to Professor Goepfort on this fact, I couldn't help but notice the new 25-year high in AAII Bear Index."

Click to enlarge

"It feels like the deck chairs slowly lining up. Maybe for just a trade, but hopefully one worth playing for. All eyes are on Beeks tomorrow. I am betting on a higher than expected consensus number."

By "Beeks" he means the February unemployment number, which current consensus has pegged at 7.9%. Keep in mind the market is extremely oversold, so traders may buy the initial report.

Also watch for Change in Nonfarm Payrolls, Change in Manufacturing Payrolls, Average Hourly Earnings and Average Weekly Earnings, all of which are out at 8:30.

As Mr. Practical says, risk remains high.

It's Thirsty Thursday, Minyans. Have a great night!

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