Morning Breath May 17

Good morning. Happy Thursday.

The Asian/Pacific markets closed mostly up. China and Taiwan rallied more than 1%. Europe is currently mostly down. Germany, France, London and Greece are down more than 1%. Futures here in the States point towards a down open for the cash market.
The dollar is up slightly. Oil is up, copper is flat. Gold and silver are up.
Is this losing streak going to continue? The S&P has dropped 9 of 11 days and many of those days the close was in the bottom third of the intraday range. It’s almost getting comical. The market just keeps going down, but the bulls havn’t hit the panic button yet. What do you think is more likely – we get a surprise rally (the biggest 1-day wonders do, after all, occur within downtrends) or the bulls throw in the towel and the floor gets pulled out?
We began the week with several breadth indicators pointing down but not yet in oversold territory…now most are. The trend is down. The path of least resistance is down. But it’s getting late to short. Even though lower prices are likely over time, in the near term the risk/rewards aren’t very favorable.
News is JP Morgan’s $2B loss has climbed to $3B. This is what happens when you announce a position that you can’t easily unwind. Every hedge fund on the planet piles on and makes matters worse. There is no mercy when it comes to trading.
Spain has officially entered a recession. What metric do they use to determine this? I’d like to see the concept explained to the 25% unemployeed that the country just now entered a recession. Customers of the Spanish bank Bankia have withdrawn $1.3B in the last week. If there’s a run on the banks, kiss Spain goodbye. They won’t have enough money to cover the demand.
Walmart posted good numbers. The stock is up 3% before the open.
My S&P target remains 1275-1300. It could happen today if the bulls push the panic button, or it may not happen until next week if the market wants to bounce. In either case, I’d be shocked if it didn’t eventually happen.www.leavittbrothers.com