Last week’s market recap: For the week, the Dow Jones Industrial Average was down33.55 at 11388.44.
The Nasdaq Composite was up 12.63 at 2273.90 and the S & P 500 Index was
Up 3.38 at 1255.08.
Factors helping the market up were:
1.
US dollar index was down by 1.65% from last week’s to close at 77.67 for the week. Euro and British Pound are up 1.77% and 2.31% respectively against the dollar.
2.
Gold was up 13.1% to $864.70 for the week. Wednesday gold price was up by $70 and made a record for the biggest single day move. Last record was up $63 on 1/29/1980.
3.
Oil price was up 3% to $104.55 for the week. 93% of the oil production setups in the Gulf of Mexico are still closed after Hurricane Ike.
4.
Corporate news: LEH filed for bankruptcy, Bank of America bought Merrill Lynch, US government loaned $85 billion dollars to AIG in exchange of 79.9% of its stock. AIG stock dropped to 23 year low $3.75. It was down 68% to close at $3.85 for the week.
5.
The Securities and Exchange Commission announced halting short selling 799 financial stocks until October 2, 2008. US Treasury proposed to buy all illiquid mortgage assets.
6.
Investors cashed out $40 billion dollars of The Reserve Primary Fund .The value of the money market fund dropped below $1. This caused custodian banks such as STT and BK to drop sharply.
The week ahead: Economic data releases:
Monday: None
Tuesday: None
Wednesday: Existing Home Sales, Crude Oil Inventory
Thursday: Durable Good Order
Friday: GDP, Consumer Sentiment
Key Earning Reports:
Monday: COMS, AZO, KMX
Tuesday: LEN, WOR
Wednesday: BBBY, NKE, PAYX, RHT
Thursday: FINL, RIMM, TIBX, RAD
Friday: JBL, KBH, AM
Market Comments:
The Dow Jones Industrial Average dropped sharply by 926 points in 4 days last week. However, shortly after a down open Thursday, it rallied strongly for two days. The 3 factors for the rally are: 1. Morgan Stanley may merge with Wachovia and Washington Mutual is actively looking for buyers. 2. The Securities and Exchange Commission announced to halt short selling on 799 financial stocks. 3. The US Treasury proposed to buy all illiquid mortgage assets.
Technically, the volatility index VIX rose to 5 year high of 42.16. Every time the VIX move above 35, the stock market rallied. There were 3 occasions of VIX reaching 35 between 2007 and 2008 and the stock market rose by two to nine weeks afterward. The high VIX reflects the extreme pessimism towards the market by investors. It is a good time to buy into the market according to Contrarian Theory. Therefore the market is likely to be up in the short term. For the market to bottom for the long term, the Dow needs to recover above both the 11800 and 12220 resistant levels. Hence these two price levels for the Dow are the short and intermediate term targets.
Note: The above information is provided only for purposes of analysis, and are NOT recommendations or solicitations to buy or sell any securities. MarkeTrade and White Pacific do not guarantee the accuracy of this information, and their employees and/or affiliates may hold positions in the stocks mentioned. Investors should do their own independent analysis before making any investment decisions.
For the week, the Dow Jones Industrial Average was down33.55 at 11388.44.
The Nasdaq Composite was up 12.63 at 2273.90 and the S & P 500 Index was
Up 3.38 at 1255.08.
Factors helping the market up were:
The week ahead:
Economic data releases:
- Monday: None
- Tuesday: None
- Wednesday: Existing Home Sales, Crude Oil Inventory
- Thursday: Durable Good Order
- Friday: GDP, Consumer Sentiment
Key Earning Reports:- Monday: COMS, AZO, KMX
- Tuesday: LEN, WOR
- Wednesday: BBBY, NKE, PAYX, RHT
- Thursday: FINL, RIMM, TIBX, RAD
- Friday: JBL, KBH, AM
Market Comments:Technically, the volatility index VIX rose to 5 year high of 42.16. Every time the VIX move above 35, the stock market rallied. There were 3 occasions of VIX reaching 35 between 2007 and 2008 and the stock market rose by two to nine weeks afterward. The high VIX reflects the extreme pessimism towards the market by investors. It is a good time to buy into the market according to Contrarian Theory. Therefore the market is likely to be up in the short term. For the market to bottom for the long term, the Dow needs to recover above both the 11800 and 12220 resistant levels. Hence these two price levels for the Dow are the short and intermediate term targets.
Strong sectors: Real Estate (EQR, HCP, PCL, PSA), Home Builders (HOV, PHM, LEG, TOL)
Technically Strong Stocks: GLD, SLV, SNDK, FXE, FXB
Note: The above information is provided only for purposes of analysis, and are NOT recommendations or solicitations to buy or sell any securities. MarkeTrade and White Pacific do not guarantee the accuracy of this information, and their employees and/or affiliates may hold positions in the stocks mentioned. Investors should do their own independent analysis before making any investment decisions.