Subprime sinks 2 China Banks.

Two large banks - Industrial & Commercial Bank of China and Bank of China - posted higher fourth-quarter profits on Tuesday, buoyed by the country's surging economy. But the state lenders were hurt by holdings in subprime-related securities in the United States.

Bank of China, hardest-hit among the country's big banks by subprime exposure, said it held $5 billion in asset-backed securities at the end of 2007, or 2.13 percent of its investment securities, and booked $1.58 billion in provisions and markdowns on the holdings.

The lender said, however, that it believed that it had booked sufficient provisions and did not expect to incur further losses if it unloads its subprime-related holdings.

Industrial & Commercial Bank said it held subprime-backed securities worth $1.23 billion at the end of December 2007 and booked $400 million as an allowance for potential losses on that portfolio.

Both banks said they expect comparatively muted loan growth this year, while Bank of China said it planned to step up overseas acquisition activity following a year when mainland Chinese financial institutions made several landmark investments abroad.

Tracking the Dow on Wednesday,02/07/08

9:30am--Small Gap-Up 50.0 points,

Mortgage applications for the week ending June 27 increased 3.6% versus a 9.3% decline last week. The ADP Employment Change report showed a loss of 79,000 jobs in June, compared with an expected loss of 20,000 jobs. Notably, the government's June unemployment rate will be released tomorrow.

10:30am--The bearish graveyard spin.

Factory orders for May climbed 0.6%, which is better than the 0.5% increase economists forecast. The Bullish gap-up being filled.Sudden spike up on the news.

11:30am--The bears strike.

The stock market continues to chop along, but has fallen lower as crude prices have moved higher. Each of the major indices are trading at their worst levels of the session.

12:30pm--The Dragonfly Doji.

Will retrace to the morning MAV.In a speech, U.S. Treasury Secretary Henry Paulson stated high oil prices are likely to prolong the current economic slump in the U.S.

1:30pm--Inverted Hammer.

Gold closed its session $1.90 higher at $946.40 per ounce. Gold, which is considered a store of value, often attracts buyers amid inflationary threats.

2;30pm--The Descend after touching the MAV.

Merrill Lynch downgraded shares of General Motors (GM 9.98, -1.77) and lowered the firm’s price target amid cash concerns. The assessment was released just a day after GM announced better-than-feared monthly sales results, which provided a spark during yesterday’s action.

3:30pm--Main candlestick is bearish inverted hammer.

Rising oil prices also continue to weigh on investors’ mood.

4:00pm--A full blown bear.

It's near the shaven bottom.Good sign of a spike up.

Stocks have dipped below their lowest closing prices of the year, they're still above their all-time lows of the year

The June labor report on Thursaday will be the decider of the next session.

Speculative Oil!

Oil prices broke the US$140 level for the first time this week, with August crude surging near US$143 a barrel on both New York Mercantile Exchange (NYMEX) and ICE Futures Exchange in London.
A report the US Congress released Monday showed that, in January 2000, 37 percent of the NYMEX crude futures contracts were held by speculative traders; but in April 2008, the number has soared to 71 percent. Meanwhile, the proportion of contracts held by commercial traders greatly declined.
The US Commodity Futures Trading Committee (CFTC) revealed in May that it began investigating potential price manipulations in the oil trading market in December 2007. The early findings show that since the sub-prime mortgage crisis large amount of speculation fund has turned to buy commodities like crude as a hedge against inflation.
Speculation theory was also echoed by the Wall Street. Hedge fund manager Michael Master testified on May 20 that his pals in the Wall Street are pushing up world oil prices through speculative investment in futures market. Moreover, he pointed out at the hearing held by CFTC acting Chairman Walter Lukken on Monday that with greater regulation oil prices could drop to the level of 60 dollars a barrel within about 30 days.
Three days later, just after the oil prices surpassed US$140 point, the US Congress approved a bill with a 402:19 vote that directs the CFTC to use its authority to curb speculation in the energy futures market.
However, some argue that "calling it speculation is way too simplistic"; or instead, speculation is more the consequence than the cause of a tight market.
When testifying before a US Congress panel on June 3, billionaire Soros admitted that there are "strong fundamental factors" while labeling the oil prices hike as a bubble largely made by investment institutions through index fund.
Tracking the Dow on Tuesday,01/07/08

9:30am--Gap Down nearly 100.0 points.
Stocks suffered as oil rose above $143 per barrel, a move blamed on rising tensions in the Middle East. Traders also cited an International Energy Agency report Tuesday that said the supply of crude oil is expected to remain tight.
10:30am--Full Gap recovering.
Buy-long position,a morning star.Main Candlestick,a shaven bearish top.
11:30am--Bearish harami earlier.
Sell-close position since it's abovethe MAV and a Triple top.
12:30pm--Morning star at 1st session low.
Open-long position again.
1:30pm--An inverted hammer seen.
Look to close at MAV since main candlestick is still in the black.
2:30pm--Breakout of MAV.
Close position.Too many bearish spin hoovering around.
3:30pm--Sudden spike up.
The U.S. ISM manufacturing index rose to 50.2 in June, a surprise increase from 49.6 in May.U.S. construction spending fell 0.4% in May, less than economists were expecting, after a 0.1% decline in April.
4:00pm--Bullish recovery.
The Dow dropped 14.4% in the first half of 2008; the S&P 500 plunged 12.8%; and the Nasdaq fell 13.6%. While June is often a quiet month, last month was one of the worst Junes on record, with the Dow's decline the biggest in percentage terms since 1930.
The spinning bottom should pave the way for stabiliztion unless otherwise another geo-political tension arises.