Tuesday, September 20, 2011

Italy downgraded!

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!   

      Yesterday, after the markets closed S&P downgraded Italian debt from Triple A to A+ rating citing a heavy debt load and weak growth and a dysfunctional political environment.  Hmm, sounds familiar?  Amazing they didn't cut it before.  S&P are real idiots and probably should be arrested for causing so much havoc in the financial markets.  How can you cut the US debt before you cut Italian debt, it makes no sense unless you have an agenda!  Not saying that the US debt deserves a triple A rating but the bond market sure thinks so with 10 years below 2 percent!!  Italian debt is junk and it's a travesty that S& P is only now getting around to downgrading Italy! Put them out of business, they are worthless!  Now there is word that the SEC is investigating insider trading by hedge funds ahead of the US debt downgrade.  S&P are crooks, lock them up and throw away the key!

     The Italian debt downgrade seems to have had a limited impact on the markets so far as futures dropped about 80 pts on the news but have since recovered and moved into positive territory.  Markets opened with a 40 pt gain but quickly sold off into negative territory before recovering.  Gold and oil are both up even with a stronger dollar and the euro is down. 

     European stocks are solidly in the green at 7:18 AM PST with the FTSE up 1% and the DAX up 1.5%.  The Hang Seng index finished up 100 pts while the Japanese Nikkei played catchup from yesterday and fell 140 pts.

     The markets seem to be trading fairly well ahead of the 2 day FOMC meeting where it is widely expected the Fed will do another bond buying operation called Operation Twist.  This is where they will try to extend the duration of their portfolio of bonds by selling shorter duration bonds and buying longer duration bonds.  The size of their balance sheet will remain the same but their mix of bonds will change.  I don't see how this is going to help things because the 30 yr is already around 3.2%.  How low do they want it to go?

Stocks I'm watching
     AAPL-  Apple is making another new all time high in early going as the breakout continues.  Fast Money traders speculated that AAPL is becoming a safe haven and I had been saying that for awhile now.  AAPL has hit an all time high of 419.87 just below the magical level of 420.  OK AAPL has just hit 420 for a new all time high, so to speak.

     MCD-  McDonalds is trading very well again today up about 1% outperforming the overall market.

     IAU-  Gold is bouncing back nicely after yesterday's selloff as the chop continues.  IAU is up 1.3 pct in the early going.

     NFLX-  Netflix is down another 8% today as investors are piling out of the stock after yesterdays perplexing move by CEO Reed Hastings to split the company in two.  Netflix is the cool name, nobody gives a hoot about Qwikster!

     EEM-  Emerging markets have been underperforming US markets pretty significantly recently.  I'm not sure what's causing this.  It could be the stronger US dollar and lower commodity prices or perhaps investors fear a slowdown in the global economy.  Whatever the reasons, it is definitely worth monitoring.
One month chart of SPY(SNP 500 in yellow) vs EEM(in blue) the emerging markets index.  As you can see EM's have underperformed by about 7% coinciding with a rise in the US dollar.

Final recap
     Markets sold off in the final hour of trading today.  This was not a good finish for the bulls.  We are near the top of the range and had a big intraday reversal going from up 150 to up 10 at the bell.  I suppose it is a small victory that we did not go negative.  I got caught up in the selloff as I got stopped out of my AAPL today for about 413.63.  I had been raising my stop as I went along and AAPL got hit hard in the late day selloff and my stop was triggered.  It was still a very nice trade as I made 5% in about 5 days.  AAPL looks like it has topped for now but I will be looking to get back into AAPL at some point.

     The Dow finished up 10 pts and the SNP 500 was down by about 2 pts but the NASDAQ was down almost 1%.  NASDAQ had been outperforming recently but got hit hard in the late day selloff. Gold was up 30 bucks and oil was up a buck to 86 and change.

     This could be the top of this recent rally and we might start heading back down again.  Small caps performed very poorly today as well.  The wild card is the FOMC meeting going on.  Whatever the Fed says in the next few days will move the markets.

PS  Hey everybody, if you are interested in trading, I want you to check out a friend's blog.  It's called the Chartographer's Map Room.  This guy really knows his stuff and he's definitely a better trader than me!  So check it out if you are interested, especially if you are starting out looking to get into it, he has a lot of good advice.



  1. Aw damnit. Now Italy are in trouble too? This is getting worrying, I swear the EuroZone isn't going to take long to collapse now it really isn't. This is bad news.

  2. Ugh, I've been barely able to update my blog let alone watch my stocks...

    I need more time in the day to do things....

  3. That disclaimer could save someone some money. You should probably embed it into the posts at the bottom though.

  4. Italy was already in trouble, this was just obvious.

  5. So which countries aren't in troubles?

  6. I have a feeling Italy isn't going to be the last. But I'm not a pro or anything.

  7. @My 2 Pesos

    Brazil, China, India not in trouble


  8. The "emergent" economies ...
    Thanks for sharing

  9. wow, very insightful. Thanks for the info, much luck to our friends in Italy.

  10. It's scary to see these crises in these countries.

  11. Ugh, that motherfcking Super Mario will start working for less money and if there's something i don't need is cheaper competition. Brb, i need to contact a guy to handle this thing.

  12. I'm a little worried, but at the same time giddy, I enjoy a little terror and chaos.

  13. poor italy. I do feel sorry for them. Hope no other EU contries follow.

  14. @Hasidic Plumber

    hahaha don't forget about Luigi!

  15. well im not surprised at all...

    things that ive heard about the south of that country would blow your mind...

    also its totally controlled by the mafia

  16. I'd love to buy some MCD stocks, looks like a solid investment.

  17. Everybody loves MCD.