Now the Hangover Begins

Our expected New Years rally was short lived. It continued for a couple of days but fizzled big time Friday on news of 524,000 US jobs lost December. (34,400 for Canada). Economically we are continuing in this downward spiral of job losses, reduced spending followed by more job losses. This ship is going to be hard to turn around.

Meanwhile as the US awaits the swearing in of the President elect, additional stimulus packages are being proposed and debated. We are still waiting for the balance ($350Billion) of the TARP funds to be released as a new bill is being devised. Tighter controls and restrictions are being proposed. Like for firms receiving government funds not being able to give bonuses to their top 25 earners. Suffice it to say this was met with opposition from the Financial Services Roundtable. (You mean we can't just take the money and keep it ourselves) It will make for some interesting reading in the future as the investigative journalists dig into how this $700 billion is really being spent.

As far as the market the rally we were hoping for seems to have given up. I was hoping for more, but the market is the master and we must obey.

As far as trading I did sell my calls on Tuesday. After a 5 day run I thought we were getting a little over extended plus we had MACD divergence on the hourly chart. Still holding the puts and I am hoping that we see continued downward pressure on Monday. If it breaks that channel the 4th wave may finally be over. I will also consider buying the calls back on Monday given the 50% retracement of the up move and the channel support.