As predicted, after being up 150 the Dow gave back some of that gain. It was up 60, but not a bad 4 days. It recovered almost half the decline from it's October record. This has been a rough month after it started near it's highs. The recent rally is betting the FED will cut interest rates in a couple of weeks and continue rate cuts hoping that will solve all problems. Maybe, maybe not. Housing continues very weak. Housing oversupply won't correct quickly.
As badly as banks performed, technology did a little worse in November. Tech is still playing defense, investors are losing interest after it's rapid runup. The best performing group was non discretionary (i.e. P&G (PG) and Altria (MO) which makes Philip Morris). Away from sexy techs into boring necessities which should weather a slowdown better. The VIX is around 23, down a bit. Over 20 suggests high volatility. Be ready for more bumps in the road.
Friday, November 30, 2007
Up, Up & Away
Looks like it's up, up & away for the markets. Dow is up 600 since the low a couple of days ago. Today it's up "only" 55, pulling back from a plus 100 gain. They're betting on another interest rate cut in Dec. Advance/decline ratio is 3-1, not bad. In the PM, traders may sell to lock in gains before the weekend making for a very good week. I think the next move should be down, but it looks like it wants to test 14K.
Some groups have not participated, selling near recent lows. MLPs (master limited partnerships) have been in a 290-310 range for a few months. Today they're up 2 to 297. REITs (real estate) have been hit hard, many offering high yields of 6-10% or more. Junk bond funds investing in speculative quality bonds have been hit hard in the current credit situation. Traditionally their yields are 4 points (400 basis points) above the treasury rate. Now it's easy to find 11% yields, a good 7 points above the 1o year Treasury rate. The last 2 groups especially will be under tax loss selling pressure in the coming weeks. But those yields are getting very nice for those willing to accept the extra risk.
Some groups have not participated, selling near recent lows. MLPs (master limited partnerships) have been in a 290-310 range for a few months. Today they're up 2 to 297. REITs (real estate) have been hit hard, many offering high yields of 6-10% or more. Junk bond funds investing in speculative quality bonds have been hit hard in the current credit situation. Traditionally their yields are 4 points (400 basis points) above the treasury rate. Now it's easy to find 11% yields, a good 7 points above the 1o year Treasury rate. The last 2 groups especially will be under tax loss selling pressure in the coming weeks. But those yields are getting very nice for those willing to accept the extra risk.
Thursday, November 29, 2007
Bernanke hints rate cut
Asian markets are up except for Shanghai which is down about 1%.
Federal Reserve Chairman Bernanke tonight hinted another interest rate cut may be needed to bolster the economy. That may add a couple hundred points to the Dow tomorrow. However Dell (DELL) reported earnings after the market close that disappointed investors, causing the stock to sell off 10%. I think tomorrow will be another up day after the hint about a rate cut. Dow futures are already up 75 in overnight (for us) trading. High volatility will continue.
Federal Reserve Chairman Bernanke tonight hinted another interest rate cut may be needed to bolster the economy. That may add a couple hundred points to the Dow tomorrow. However Dell (DELL) reported earnings after the market close that disappointed investors, causing the stock to sell off 10%. I think tomorrow will be another up day after the hint about a rate cut. Dow futures are already up 75 in overnight (for us) trading. High volatility will continue.
digesting gains
The market digested gains today with little change. Decliners were a little ahead of advancers on NYSE, but nothing dramatic. The head of the FED speaks tonight, maybe his speech will influence tomorrow's markets.
One interesting news item was an oil spill from a pipeline run by Enbridge, one of the master limited partnerships. The MLP index measuring the group fell back 2 to 295, it's flirting with the recent low. That news affected many in the group not to mention helping push oil prices up after the recent pullback.
One interesting news item was an oil spill from a pipeline run by Enbridge, one of the master limited partnerships. The MLP index measuring the group fell back 2 to 295, it's flirting with the recent low. That news affected many in the group not to mention helping push oil prices up after the recent pullback.
mixed day
Wall Street started out down, but recovered & is barely heading up. Oil rose partly because of a fire in a US pipeline. Sears (SHLD) declined 15 after reporting lower 3rd quarter profits. Dow is up 13 while advancers about equal decliners. NAZ is flat.
Wednesday, November 28, 2007
rally continues tonight
Here's what the AP said about today's move:
Wednesday's jump was also the biggest one-day percentage gain for the Dow since April 2, 2003. The broader Standard & Poor's 500 index climbed 40.79, or 2.86 percent, to 1,469.02, logging its best two-day point gain since April 19, 2001. The Nasdaq composite index shot up 82.11, or 3.18 percent, to 2,662.91, giving the technology-dominated index its largest two-day point gain since March 4, 2002.
Asian markets are following through, up 1-3% tonight. The dollar strengthened, the yen rose to "only" 110 while the Euro slipped slightly to 1.48+. Dollar's strength probably follows the strong market. Oil fell to around 90, jut a couple weeks ago it was pushing 100. Of course, this remains a high price for our economy to digest.
The market is now overbought, short term buyers who made money will sell to lock in profits. In addition, short sellers may have bought stock back to cover their short sales. Such purchases will not last. This is how volatility works. Stand by for more big swings in the rest of this week.
Wednesday's jump was also the biggest one-day percentage gain for the Dow since April 2, 2003. The broader Standard & Poor's 500 index climbed 40.79, or 2.86 percent, to 1,469.02, logging its best two-day point gain since April 19, 2001. The Nasdaq composite index shot up 82.11, or 3.18 percent, to 2,662.91, giving the technology-dominated index its largest two-day point gain since March 4, 2002.
Asian markets are following through, up 1-3% tonight. The dollar strengthened, the yen rose to "only" 110 while the Euro slipped slightly to 1.48+. Dollar's strength probably follows the strong market. Oil fell to around 90, jut a couple weeks ago it was pushing 100. Of course, this remains a high price for our economy to digest.
The market is now overbought, short term buyers who made money will sell to lock in profits. In addition, short sellers may have bought stock back to cover their short sales. Such purchases will not last. This is how volatility works. Stand by for more big swings in the rest of this week.
Dow soars
Dow soars on encouragement that the FED will continue lowering interest rates. The 2 day rally of almost 600 points recovers over 40% of the recent decline from its high above 14K. That's some kind of rally. Asian markets were weak last night, but the European ones had strong gains. Can you spell "volatility?" The long treasury declined a little to a rate of 4.03%, not really a major flight away from safety. Housing reported it's still weak. Banking problems continue. We'll see what tomorrow brings in a market that is clearly "overbought."
Another big up day
Sorry for the delay, computer problems. Maybe they're resolved. Meanwhile the stock market is up 2%, that's big like the Asian markets move in a day. Advance/decline is about 6X, wow. They are betting on a rate cut which is assumed will solve all problems. I don't think so. Home sales fell for the eighth straight month, Wells Fargo projects an 1.4B loss, etc. This has been highly volatile this week. Let's see how it plays out.
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