Some After Hours Comments

Sorry folks, this will be brief... have just been plagued this month with not feeling well. My wife and I have often talked about moving to a warmer climate to avoid my winter health woes and maybe this time we will seriously look at that option in 2007; it's just been too much this winter, which hasn't been much of a winter to begin with. Property taxes here of almost $25k a year are also a pain in the neck too, but that's NY for you and this is a nice neighborhood.

First let's talk about Mr. Softee.

It's been a great run for the stock, and that's part of the problem. Even with the 3c/shr beat tonight at 26c and revenue $500 mln above expectations, the company will be in show me mode for the rest of the year. Q4 is mostly old, though factors in a pretty healthy business adoption of Vista, but by 'show me', I mean that with Vista consumer and sales of companion Office software going live, why shouldn't the street want to wait for further numbers in the quarters ahead after the run in the stock? Anyway, MSFT only down a 10 or 11 cents.

The stock market got hammered back. As noted yesterday, I acknowledged the rally yesterday, but also said that I wasn't planning on doing anything in the stock market short term (eg buying SPY calls, lighting up a big fat Romeo and Julieta Churchill, taking out a HELOC to buy a basket of internet stocks). If you've read my blog for a while, you know that I don't like what's going on in the world (dangerous place) and that with the bull market as old as it is (long term secular and even the bounce from 2002 lows) these all time high levels just make me uncomfortable. So tonight we're back in the miserable range with the S&P cash at 1423. The bulls can count their blessings that Mr. Softee beat by enough to keep it and the market for going into a Friday freefall. But who knows what other news lurks between now and 9:30 Friday morning. The bears have been prepping the wrecking ball for sometime just waiting for a reason to drive it out.

One thing that I've kept a wary eye is bond market yields. Lately the treasury market has been doing some work for the Fed. Last night when I looked at 10 yr yields and hadn't thought we'd move above the 200 day moving avg today... well we did:

IF this keeps up, this will surely put extra pressure on the stock market. Bonds actually fell after the NAR report showed a decline in inventories of homes for sale and a stabilization in prices. Treasurys also were being pressured by unusually large corporate supply and fund repositioning. Whatever the reason, it's a negative for stocks.

The bond yield rise has only lent a minor degree of support to the dollar, with EuroFX at just under $1.30 and the dollar index at 85.12 still far enough from its 200 dma given the rate increase talk in Japan and stronger eco data in Euroland.

My trading in gold was sloppy. I was up early enough to catch the rise from just under $646 right up to $654 and should have booked profits up in that range. But this ongoing malaise prompted me to put it on auto pilot and sure enough, I ended up being stopped out at $649 profiting on only about $3 of the gain and then shorting too late in the day after an extended nap to grab only $1.10 of the decline. Still profitable, but on a $10 trading range again today catching only 40% of the action shows that putting it on auto pilot is not the way to go.

More on energy later or in the morning.