Morning Breath May 16

Good morning. Happy Wednesday.

The Asian/Pacific markets closed down across the board. Hong Kong and South Korea dropped more than 3%, Australia and Taiwan more than 2%, China, India, Indonesia, Malaysia, Japan and Singapore more than 1%. Europe is currently mostly down. France is up 1%, Belgium and Stockholm down more than 1%. Futures here in the States point towards a moderate gap up open for the cash market.
The dollar is flat. Oil and copper are down. So are gold and silver.
The market is in the midst of quite a trend. The dollar has moved up 12 straght days. Gold has moved down 9 of 11 days, oil 9 of 10 days, copper 8 of 10, the Dow 9 of 10, the S&P 8 of 10, the Nas 7 of 9 and the Russell 7 of 9. Every day the bulls are able to push prices a little higher, but overall it new low after new low. In fact the S&P has taken out it previous day’s low 9 of the last 10 days. Anyone who has remained bullish and hoped for one last bounce to exit positions is feeling a lot of pain right now.
In January, February and March, neither the technicals nor the news mattered. The market just went up and up and up regardless of what was thrown in its path. Now the opposite is taking place. Nothing matters. The market is going down and down and down.
The most bullish thing I can say about the market right now is that it’s been downright nasty, and the bears are coming out of the woodwords. Lots of people are predicting much lower prices. Sentiment is at a very low level – a condition for a surprise move up.
We’re going to get lot so housing data today before the open, and then we’ll get FOMC minutes this afternoon. The last Fed meeting was three weeks ago – well before the calendar flipped to May and the selling pressure began. Hence I don’t expect there’ll be much talk about QE3 – at least not any more than what has taken place the last couple months.
Yesterday Facebook increased the range of its IPO; today it’s increasing the size by 25%. Now they may raise upwards of $16 billion. That money has to come from somewhere. M&A activity is good for the market – it reduces the total float. IPOs are bad – they increase the float.www.leavittbrothers.com