(JPM) are technically weak and looking as if they are struggling under the 200 and 50 day moving averages. This does not bode well for the market. Adding to the list of negatives, Friday, 14 Democrats from the US House of Representatives proposed a bill that would raise taxes on carried interest.
This would double the tax rate for this type of income as well as take billions away from private equity chiefs. While everyone cheered the $4.1 bln (BX), on Friday, Andrew Barry ponders in if it could be a high water mark for the private equity business.
He is concerned with higher rates, more conservative lending standards, tax changes and increased competition for the buyout business. In the week coming up we will be focused on the FOMC meeting starting Wednesday and looking for any hints as to direction in interest rates. The bulls are hoping they will remove that annoying inflation language, but I doubt it.
Friday will report the core personal consumption expenditure deflater which is an inflation gauge the Fed likes to watch. The consensus is for an advance of 0.2%.
Speaking of inflation, was forced to raise its prices on its favorite American food due to a 55% increase in the price of cheese. The signs are everywhere and I am afraid that producers cannot contain price increases; it is popping up in the food you buy and at the places you dine. Now, when you go to order your large cheese pie, they will charge what it used to cost to purchase a large cheese and pepperoni pizza, but you won t get the pepperoni.
It will be interesting to see what (CAG) and (GIS) have to say about commodity prices when they report earnings this week. The week is full of economic reports with Friday as the most active day. Traders will be watching oil prices, subprime news, hedge fund fall outs, and interest rate wording from the FOMC meeting.
Technicians will be paying attention to the 50-day moving average, the percentage of stocks above their 50-day moving average, and the number of new highs at the (which has been constricting lately). We will also be monitoring volume, which was large on this last downdraft. In market profile terms, 1528.
00 is an important level. If we are unable to capture that number early, the market should stay on the defensive. Trades that worked well last week were shorting opportunities, as failures at the previous day s value area low were rewarding.
Once the market failed there, it was typically a fast run down. This morning we are coming in with the off 3.7 % and most commodities down with off $4.
00. (JPM) are technically weak and looking as if they are struggling under the 200 and 50 day moving averages.
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