Just when I think I am going to have a profitable day/month, the market decided to crap on my parade:

AGQ: -1.62 to $62.95 (-2.51%, -2.51% overall)–bought at $64.57 today (as a short-term hold)
BAC: -0.14 to $7.97 (-1.73%, 0.25% overall)–bought at $7.95
EWY: 0.94 to $59.87 (1.60%, 2.48% overall)–bought at $58.42
GOOG: -0.14 to $618.25 (-0.02%, 6.18% overall)–bought at $582.26
NNVC: 0.00 to $0.70 (0.00%, -9.09% overall)–bought at $0.77
PALL: -2.07 to $69.20 (-2.90%, -2.86% overall)–bought at $71.24

OVERALL: -0.41%

“[There] are known knowns; there are things we know we know.
We also know there are known unknowns; that is to say we know there are some things we do not know.
But there are also unknown unknowns -– there are things we do not know we don’t know.”–former U.S. Secretary of Defense Donald Rumsfeld

If you ever watch the longer-term technicals, you may have noticed the S&P 500’s MACD moved into positive territory in mid-December, and has stayed there ever since. However, I doubt we will get any kind of serious correction today, since it is the last day of the month. The big boys have month-end reports to make pretty, so expect the market to hold it’s gains, at least for today.

If see a market drop, I would be surprised to see the S&P 500 go below 1360 (10 day moving average). On the other hand, we could see a challenge to the top of the Bollinger Bands at 1379. Regardless, don’t expect much movement: Since the last trading day of November (when the S&P went up 4.3%), last trading days have seen little movement.

There is good economic news this morning, as 4th quarter U.S. GDP got revised upwards to 3.0% growth (it was 2.8% on the first attempt). There is also bad economic news, as the GDP deflator (why do they call it a deflator when it is really more of an inflation gauge?) was up to 0.9%, from an initial estimate of 0.4%.

Bloomberg: Euro-Area Banks Tap ECB for Record Amount
http://www.bloomberg.com/news/2012-02-29/banks-in-europe-tap-ecb-for-more-three-year-cash-than-economists-estimated.html

This is great news for the European economy. No, everything isn’t fixed there yet, but this is a positive sign that liquidity isn’t an issue.

CNBC: Markets Start to Anticipate Obama Victory in November
http://www.cnbc.com/id/46556820

I am still waiting to hear a good reason why Mitt Romney, winner of the Michigan and Arizona primaries yesterday, can actually beat President Obama in November’s election. Calling Romney “electable” just means he is as exciting as Ben Stein on valium.

Say what you will about Obama, but we know what to expect from him, even if we don’t like it. Romney has more waffles than IHOP, so we have no clue what he will do. And don’t throw me the “at least he will overturn Obamacare” argument. Can you seriously tell me the governor who made the blueprint for Obamacare in Massachusetts won’t actually just tweak it around the edges? Judge a man by what he does, not what he says. By that measure, Romney is every bit as liberal as Obama.

The markets are starting to price in an Obama victory:

Obama’s chances of winning in November increased to above 60 percent on Tuesday, up from about 50 percent at the beginning of the year, according to the odds on prediction market Intrade.com.

On the bright side:

Intrade puts the Republicans’ chances of controlling the Senate and House after the November elections at 72 percent and 64 percent respectively.

That brings up another Wall Street maxim: “Market likes gridlock.” This way, a single party can’t mess it up.

Given the choice, I would rather see Republicans controlling the Congress, as opposed to Mitt Romney in the White House.

Bloomberg: Samsung’s Android Dominance Hits HTC, Motorola
http://www.bloomberg.com/news/2012-02-29/samsung-s-android-dominance-puts-squeeze-on-htc-and-motorola.html

If you want to understand why I have no problem with the fact that Samsung is over 20% of my EWY etf’s holdings, look no further than the article above. Samsung rocks!

CNBC: Dennis Gartman Sells Crude, Likes Natural Gas
http://www.cnbc.com/id/46563634

I like Dennis Gartman, and I respect Dennis Gartman, but I don’t always agree with him. I agree with his call to dump oil (obviously, since I did it yesterday), but I disagree with his call to get into natural gas. I don’t see a big enough increase in demand for nat gas to make it go up significantly.

BAC: 0.07 to $8.11 (0.87%, 2.01% overall)–bought at $7.95
EWY: 0.55 to $58.94 (0.94%, 0.89% overall)–bought at $58.42
GOOG: 9.08 to $618.39 (1.49%, 6.21% overall)–bought at $582.26
NNVC: -0.01 to $0.70 (-1.41%, -9.09% overall)–bought at $0.77
PALL: 0.00 to $71.24 (0.00%, 0.00% overall)–bought at $71.24 today

OVERALL: +0.49%

I am selling my oil position (UCO) in order to move into a different commodity: palladium, or more specifically ETFS Physical Palladium Shares (PALL).

Why palladium? From a lot of sources, there are reports that we will be having both platinum and palladium deficits in 2012, due to increasing demand as well as multiple mining issues. Most of the mining issues surround problems in South Africa and Zimbabwe, where most of the world’s platinum supply is mined. Between increased safety inspections/requirements, unionized miners, and power supply issues, platinum could be facing decreased production in a year with greater demand for cars (all cars use either platinum or palladium for their catalytic converters).

In addition, for years now, Russia has been dumping their stockpile (stored up during the Soviet era) of palladium on the world markets, keeping prices down. It has been rumored for several years that Russia’s stockpile was running out, although they still seem to be able to supply palladium. Even if the rumors aren’t true, deficits of palladium are projected for this year.

You see where this goes? With deficits of platinum and palladium, prices of both will go up, and since palladium is the cheaper of the two, it stands to go up the most.

I sold UCO at 47.70. The final line:
UCO: +0.21 today, +0.05 overall to $47.70 (+0.44% today, +0.10% overall)–bought at $47.65

I added PALL at $71.24.

The P&F chart for the S&P 500 has changed, with a new price target of 1700. P&F charts are longer-term charts, so take it for what it’s worth.

With the index futures weakening after the durable orders report disappointment, it is easy to expect a down opening. However, look for the pop later. I would look for 1358 (10 day moving average) as the lower resistance, with 1346 (20 day moving average) as an even lower resistance if we get a larger sell-off.

If we get a bounce up today, yesterday’s high of 1371 should be considered the upper resistance. But I wouldn’t assume any of these resistance levels are “solid”. We are still in the upper atmosphere of the markets.

Bloomberg: Durable Goods Orders in U.S. Slump 4%, Most in Three Years
http://www.bloomberg.com/news/2012-02-28/durable-goods-orders-in-u-s-drop-4-marking-worst-decline-in-three-years.html

The big economic report today:

Orders for U.S. durable goods fell in January by the most in three years, led by a slowdown in demand for commercial aircraft and business equipment.

Bookings (DGNOCHNG) for goods meant to last at least three years slumped 4 percent, more than forecast, after a revised 3.2 percent gain the prior month, data from the Commerce Department showed today in Washington. Economists projected a 1 percent decline, according to the median forecast in a Bloomberg News survey.

The expiration at the end of 2011 of a tax incentive allowing full depreciation on equipment purchases may have prompted a slowdown in investment at the start of this year.

Stock index futures have tanked since this news came out.

Politico: JOBS Act just what Obama ordered
http://www.politico.com/news/stories/0212/73338.html

I have to take exception to part of the above article, written by U.S. Representatives Eric Cantor and Steven Fincher (both Republicans):

Whether it’s due to the threat of higher taxes; or regulations that place higher costs on businesses and limits on who can invest, small businesses and entrepreneurs are frozen in their tracks.

For example, the Securities and Exchange Commission’s increasing regulation has made costs prohibitive for companies to go public — leading to a huge drop in small-scale initial public offerings over the past 15 years. This worrisome statistic highlights the need to reform costly regulations that are keeping companies from growing — particularly because, on average, 92 percent of business expansion and hiring occurs after it goes public.

The SEC being over-burdensome with regulations is NOT the problem (at least not on this matter). Many businesses are built and grow significantly before they ever go public. In fact, with most of the initial public offerings I have seen lately, they have been atrociously handled, with only a small percentage of shares being offered for outrageous sums.

Keep in mind, the equity markets are a means to obtain funding, much like going to the bank to get a loan. Being allowed to trade publicly is a means to an end. The fact that “92 percent of business expansion and hiring occurs after” going public is due to the large amount of money that companies obtain by going public. Whether companies deserve to go public or not is why we have the SEC overseeing the process. If anything, we need tighter regulation in this area, especially when you consider all the accounting fraud from Chinese ADR’s that listed in the U.S.

I have no problem with government easing up on it’s regulatory burden for new start-up businesses. But opening the vault doors to the equity markets is insanely stupid.

BAC: 0.17 to $8.05 (2.16%, 1.26% overall)–bought at $7.95
EWY: -0.80 to $58.44 (-1.35%, 0.03% overall)–bought at $58.42
GOOG: -0.59 to $609.31 (-0.10%, 4.65% overall)–bought at $582.26
NNVC: -0.01 to $0.71 (-1.39%, -7.79% overall)–bought at $0.77
UCO: -1.77 to $47.49 (-3.59%, -0.34% overall)–bought at $47.65

OVERALL: +0.09%

Sometimes, a little daytrading helps. I should add that my profitable UPRO trade (+1.3%) this morning was almost twice a normal position, but I felt good about it at the time, in contrast with my losing SPXU trade (-0.4%) this afternoon, which was only a quarter position.

Futures are showing a down opening for the markets today. Don’t bet that it will stay that way.

If the S&P 500 drops below 1344, the 20 day moving average, then I will worry. But there is nothing to push the markets down today. In fact, with oil dropping, it shows this is a dollar-strengthening move (the dollar is up against the euro today).

In the meantime, I would expect the S&P to remain in the 1360’s area, after possibly dipping below that at the open. The 1370 level remains the strong resistance for the time being, with the S&P showing reluctance every time it even gets close to it.

I added UPRO in the pre-market for $76.36, with an initial target sell price of $77.36.