Destination: Trouble

 | Sep 21, 2011 | 10:44 AM EDT
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We are in a weird world where coal shipments to China and the woes of French banks mean much more to this market than just about anything that has to do with excellent quarterly reports and outlooks from Oracle (ORCL), Adobe (ADBE) or General Mills (GIS).

The guide-downs by Walter Energy (WLT), which ships coal through CSX (CSX) and Alpha Natural (ANR), are causing ripples in the transports that would signal to most longtime observers that a recession is on the horizon, or they certainly amp up the chances.

This is discouraging because it puts a huge amount of emphasis on what one man will do, and that man is Ben Bernanke. HE can't control the coal exports to China, though. He can't save whichever French bank is the most insolvent. And he can't undo the political wrangling in the U.S. and Europe these last six or seven weeks that has everyone from Carnival (CCL) to Rio Tinto (RIO) worried.

Too many people remember 2008 right now. They remember the commodities rolling over and they remember the S&P 500 rolling over after it. They do not want history to repeat with them on board, and the transports are too much of a lead indicator for them to stick around. Plus, who knows if the French bailout plan is even real. Who knows what the heck is happening over there.

So, we have tech rallying off individual earnings but the transports selling off on the macro. When push comes to shove, unless Bernanke can change the macro, and I reiterate the macro issues are only peripherally here as our own economy isn't driving the bus right now, then I think we end up following the transports, not the Nasdaq.

Is all lost?

I don't know. Buyers come in on all but the commodity names every time we have a big selloff. That's because of yield and the yield support that so many stocks have except the banks.

That's been the support. That doesn't go away.

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