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Thursday, November 13, 2008

2 Charts and News for Today

Yesterday we moved to the low end of the recent trading range, the 850 area of the S&P 500 (SPX) or 85 area of the SPY. Whether that constitutes a successful test of the area or not is an open question. Given that weekly oscillators reflect a deeply oversold condition, we may see a bounce attempt. From a technical standpoint, the risks seem equally balanced either way. A breakdown below the lows might well increase selling pressure and lead to much lower levels.
Members of Congress, taxpayers and investors urged the Federal Reserve to provide details of almost $2 trillion in emergency loans and the collateral it has accepted to protect against losses.

Total Fed lending topped $2 trillion for the first time last week and had risen by 140 percent, or $1.172 trillion, in the seven weeks since Fed governors relaxed the collateral standards on Sept. 14. The difference includes a $788 billion increase in loans to banks through the Fed and $474 billion in other lending, mostly through the central bank's purchase of Fannie Mae and Freddie Mac bonds.

XX Sean's note -- it's more like $2.3 trillion, but what's $300 billion between friends.

Trade Deficit Narrowed 4.4% in September on Declines in Crude-Oil Imports The U.S. trade deficit in September narrowed more than forecast as a record decline in the cost of foreign crude oil caused fuel imports to tumble.
XX Sean's note -- check out this chart of US crude oil imports. It's like Wile E. Coyote running off a cliff!

IEA Cuts Global Oil Demand Forecast the Most in 12 Years as Economies Slow The International Energy Agency, an adviser to 28 nations, cut its global oil demand forecast the most in 12 years as world economic growth deteriorates.

Oil Gains, Rebounding From 21-Month Low, on Proposal for Early OPEC Meet Crude oil rose, rebounding from its lowest in 21 months, after an OPEC delegate said that the group may hold a full meeting in Cairo this month before its scheduled December gathering.

Copper, Aluminum Rebound From Three-Year Lows in London as Dollar Drops Copper and aluminum rebounded from three-year lows in London as a drop in the dollar may help revive demand for industrial metals. Zinc and nickel also rose.

Australia Stocks Tumble to Four-Year Low, Led by Banks, Resource Companies Australian stocks plunged, led by banks and resource companies, after Commonwealth Bank of Australia said bad debts may double, the U.S. Treasury scrapped plans to buy mortgage assets, and metals prices dived.

Commodity prices, measured by the Standard & Poor's GSCI Index of 24 raw materials, have plunged by more than half from their record on July 3 as the global credit crisis threatens to push the world into a recession, reducing demand for raw materials. Crude oil has slumped 63 percent in four months.
China's 4 trillion yuan ($586 billion) stimulus package "puts a floor on Chinese growth of around 7 percent,'' said Roach. "That will provide some support and limit the correction of commodity prices from being absolutely catastrophic.''

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