Tuesday, June 10, 2008

Mixed signals, mixed markets

Mixed signals produced mixed markets today. Everybody is talking about Bernanke's comments about (maybe) raising interest rates. Also there are important meetings in Europe where they will try go figure out what central banks should do next to help troubled financial markets. The averages ended mixed today but decliners led advancers 2-1, again on only 1.3B volume. Financials rallied from an oversold position (2 up days in the last 8). The volume is above the low numbers from earlier this year, but remains below average. Oil pulled back 3 to 131 as they are trying to price in reduced demand from the extremely high prices. Adding to oil price weakness, the dollar has been very strong in recent days with the yen going to 107 (from the low 100s) & the Euro falling to 1.54½. This might be good for the stock markets, although influence on individual companies will vary. The gov raised its forecast for higher oil prices in 2008. The Alerian MLP index pulled back 3, to test the 290 support level. It's been in a sideways 290-300 band all year (except for 2 quick spikes down). If 290 doesn't hold, there could be another spike down. However, the MLPs I follow closely having been doing well this year.

High oil prices & credit crunch issues are expected to be major drivers for the stock markets in the next few months. Whatever is decided in Europe this week, these problems will drag on for some time. Expect a bumpy, if not down, ride ahead for stocks.

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