Feelin' Blue (as Stocks Go Red)

Well it sure feels pretty ugly doesn’t it. We may only be down 1.7% but it feels like more…and when you look at some of the downside moves we’ve had today (Autos, Miners, TomTom, SAP), you’ve be forgiven for thinking we’d be down more. Earnings were poor today and we’ve also had Bill Gross calling the end of the rally. “Out, out, brief candle” he says, quoting the Bard of Avon.

But that’s not all we’ve had contributing to today’s poor price action. The durables number was ok but had negative revisions to last month's. New home sales were bad too and Goldman guru, Jan Hatzius has also tweaked tomorrow’s GDP forecast from 3% down to 2.7%. Conspiracy theorists would contend Pimco and GS share a bed with the Government; now whether you believe this or not, when they come out with calls, markets tend to move.

With the lurch down in markets over the past few days we’ve seen some of the old correlations start to kick in again, bonds have rallied, the $ has too although not as much as it would have back in the days of Q1. The commodity stocks and currencies have taken a beating (in spite of a higher Aussie CPI, I might add) and oil has moved down too, again though, not like it would’ve in the darker days.

Anecdotally I’m hearing of funds that were looking for new investment ideas only a couple of weeks ago having shelved that plan and are now just gonna take the money and run. When you look at names that were huge beta beneficiaries of the rally, which had no right making the gains they did, like say, Fannie and Freddie, the Irish banks, oh and how about this one, Lehman Bros, they’ve given up about 50% of their gains. Yes, Lehman still trades, I don’t know how or why, but it does, LEHMQ US on bloomberg. Are these names showing us the way down as they did the way up?
This all leaves equities finely perched on the 50 day MAV in the SPX, a level it previously bounced off at the beginning of the month. Whether this level proves supportive or insignificant remains to be seen but market participants do seem to be more worried this time than previously.