Market Gets Quiet Near Support

Market Futures are down pre-market, but off the wost levels on a slightly better than expected Retail Sales report. My first check of the week ahead, last week, was focused on the heavy slew of earnings hitting the market. But this is also a heavy week for economic reports. We have 3 key reports (including Retail Sales), and 3-4 semi-important reports. Retail Sales ex-auto was in-line with expectations, which didn't move the market much early on. We also get PPI Tuesday, CPI (more important) on Wednesday, and some lesser, but important reports Wednesday (Housing Starts/Building Permits and Industrial Production/Capacity Utilization, along with Oil Inventories), and Thursday (Fed's Beige Book, Initial Claims, and Philly Fed). I won't be micro-analyzing every single report, however, I am aware of the heavy economic week, which will only add to a potentially volatile ride we are in for the next few days. Trade softly and carry a big stick to ward off the news blows we are going to get hit with.

APOL broke ST support at 46.50 - 47.00. It took a quick dump to 45.00. I am starting the scaling out process now. I sold a little of the trade for a 23% gain, I'm watching to see if it will break down below 45 and then I'll look to sell more.

I nibbled on some XLI puts when it was around 36.70. The May 38 put was pretty cheap, with a high delta. The stock looks like it may have one more day to the downside.

I started a baby nibble on MEE calls. The coal stocks don't announce earnings for 4-5 days, and MEE is holding up. I don't want a lot of anything this week, so I'm not doing much, just nibbling and getting out of current positions. I may time stop MRK today, and be out of half of APOL as well. So far a dull day, it even looks like traders are playing on the 30m charts at the high-end of the time frames, which will make it a dull day. Maybe we will Doji around these support areas until INTC.

Energy and some Commodity stocks are propping the market, sound familiar?.....Toss HES of the bearish list. Here are the Energy and Commodity stocks making noise today: HES, AGU, CNQ, DO (breakout), BG (bounce), NE (bounce), CNX, RIG (bounce), MUR (bounce), CF, MOS, PXD (bounce), CLF (bounce), CAM, (bounce), APA (bounce), DVN (bounce), WFT (bounce), and RRC (bounce). There are more, but those are the strongest. There is a real desperation by Institutions to get into any bullish stocks, and so much money trying to push and squeeze through the same door. It's a very crowded trade. Still, I may take one or two Energy stocks before the end of the day - on the current intra-day consolidation, we shall see. Since Energy is consolidating intra-day, the market has no props, and predictably is fading to the lows.

I did nibble a little on MUR and RIG calls. I took MUR around 88.65 and RIG about 151.00. There is so much freneticism in Energy and Commodities, that this trade might carry through for another day or two.

The market finished fairly quiet, with the Naz underperforming, and the Dow throwing a Doji. There is not much to take away. Once again, Energy and Commodities propped the market and kept indexes from reaching support levels. And once again, any bullishness was fairly narrow based, and concentrated in those two sectors.

Earnings Season still stands front and center as the key driver for the Intermediate Term posture. But Inflation is going to come more and more into focus as we keep hitting new highs on Commodity and Energy prices. Food prices were up 4% in 2007, and are projected to be up 4.5% in 2008:

http://biz.yahoo.com/ap/080414/inflation_squeeze.html

That means PPI tomorrow, and especially CPI on Wednesday, become more of a potential market driver this week. If inflation is up, traders will most likely be very unnerved, as it takes away the Fed's ability to keep aggressively cutting rates. I know I keep beating this drum, but we could have a pretty volatile week, one way or the other.

For those of you who are still trying to understand the Financial sector mess, and how the Banks, Brokers, Insurance companies, Bond Insurers, and other institutions gambled foolishly on the subprime real-estate market, here is a nice article. Think of it as a microcosm for all that was wrong with what many company's did:

http://seattletimes.nwsource.com/html/businesstechnology/2004347122_wamu14.html