Tuesday, December 18, 2007

Down again

Early this morning I turned on Bloomberg TV to find Dow was up 99 in pre-market trading, sounds like an up day. Not so far. Dow started with a nice gain but fell to down 54. Advancers are ahead of decliners about 3-2 & NAZ is down 12. The Treasury bond yield declined to 4.10% (defensive buying of Treasuries). Oil slipped back to 89, not much help for the stock market.

Big news items are European Central Bank will issue of $500B in bonds for help with the credit crunch plus profit gains at Goldman Sachs (GS) and Best Buy (BBY). Unfortunately Goldman Sachs is down 8 while Best Buy is down 1 (down 2 earlier). They're worried about the quality of Goldman earnings & Best Buy has a confusing picture about better results which are only so-so. Housing starts fell 4% to the lowest level in more than 16 years & building permits fell 1.5%. This news brings out sellers.

Tax loss selling is punishing stocks selling near their lows. Housing related, REIT's, junk bond funds, etc. keep slipping. MLPs are down from mid year highs, but have stayed in a narrow flat range for a few months (310-290). Now they're testing the low end of the range. Bank of America (BAC) is below 42, a level that had support for over 3 years. They may see more selling. Tough markets provide opportunities to buy beaten up stocks at attractive prices. Now is the time for homework

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