The Fed cut interest rates by .75 points on Tuesday morning after world markets tumbled on Monday. The Fed is expected to cut rates again next week at their regularly scheduled meeting. The market moved higher on Wednesday after the rate cut, but didn't show much follow through for the rest of the week (sorry for the brief market update this week -out of town).
News stories:
Bush and House in Accord for $150 Billion Stimulus
Home Prices Fell in ’07 for First Time in Decades
Mortgage bond insurers 'need $200bn boost'
Gold, Platinum Rise to Records as Mines Close
Rogue trader to cost SocGen $7B
Weekly Market Update -Jan 19th
More volatility in the markets this week -the market has been dropping non-stop since December 26th. with the DOW losing over 1500 points. After what looked like a good start on Monday, the DOW was down big on Tuesday and another 307 points on Thursday, mostly on bad news from the Financial sector.
Citigroup, Merrill Lynch, and Washington Mutual all reported bad quarterly numbers as expected, and now the bond insurers (MBIA and Ambac) are getting everyone's attention! MBIA, the world's biggest bond insurer, raised a billion dollars with a note offering last week but had to pay 14% interest, and shortly thereafter the note value dropped to less than .90c on the dollar! Ambac cut it's dividend this week and is looking to raise a billion dollars as well. Look at the stock charts for these two companies -both have lost about 80% of their value (MBIA video).
It is widely expected that the Fed will cut rates again at the end of the month by .50 points, and some even think they will cut by .75 points. (Of course this won't really fix the problems.)
Oil continues to pull back from it's $100 high, as Gold also retreated from it's $900+ level, while the Dollar showed some strength this week.
Next week we can expect more of the same volatile action as earnings reports continue to come in. Don't try to be a hero and pick a bottom in this market; there are no signs that this market wants to go back up at this point. Any up-trend we get will probably be short lived.
News Stories
Citigroup Posts Record Loss on $18 Billion Writedown
Merrill Posts Record Loss on $16.7 Billion Writedown
WaMu takes a big hit
MBIA, Ambac Tumble, Default Risk Soars After Losses
Ambac troubles deepen
The next banking crisis on the way
Inflation Rate Is Worst in 17 Years
Sorry -not much good news to report!
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.
Citigroup, Merrill Lynch, and Washington Mutual all reported bad quarterly numbers as expected, and now the bond insurers (MBIA and Ambac) are getting everyone's attention! MBIA, the world's biggest bond insurer, raised a billion dollars with a note offering last week but had to pay 14% interest, and shortly thereafter the note value dropped to less than .90c on the dollar! Ambac cut it's dividend this week and is looking to raise a billion dollars as well. Look at the stock charts for these two companies -both have lost about 80% of their value (MBIA video).
It is widely expected that the Fed will cut rates again at the end of the month by .50 points, and some even think they will cut by .75 points. (Of course this won't really fix the problems.)
Oil continues to pull back from it's $100 high, as Gold also retreated from it's $900+ level, while the Dollar showed some strength this week.
Next week we can expect more of the same volatile action as earnings reports continue to come in. Don't try to be a hero and pick a bottom in this market; there are no signs that this market wants to go back up at this point. Any up-trend we get will probably be short lived.
News Stories
Citigroup Posts Record Loss on $18 Billion Writedown
Merrill Posts Record Loss on $16.7 Billion Writedown
WaMu takes a big hit
MBIA, Ambac Tumble, Default Risk Soars After Losses
Ambac troubles deepen
The next banking crisis on the way
Inflation Rate Is Worst in 17 Years
Sorry -not much good news to report!
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.
Weekly Market Update -Jan 12th
We had another rocky week in the markets with the major averages all losing ground again. Sub-prime and Credit news continue to dog the market. We'll see if earnings next week from Citigroup and Merrill have any impact on the market -more writedowns are expected.
Big news this week -Bank of America bails out Countrywide (see below), Gold hits $900, and food commodities continue to rise. Oil lost more ground on recession fears and closed out the week around $93. The market is expecting more interest rate cuts later this month which could send the US Dollar down and raise gold prices even further.
Next week we have earnings announcements from key companies like: C, MER, JPM, WM, GE, IBM, INTC. Market direction is still uncertain at this point, though there is good support for the S&P 500 here in the 1400 range; the Nasdaq could still go down to test the March 2007 lows of around 2350, likewise for the DOW. The Financials are anybody's guess!
Links: S&P Sector performance -it helps to be in the right sectors.
Market News:
U.S. Stocks Drop for Third Week
..share prices posted their worst opening five days since the 1930s
U.S. stocks to face earnings, data tests next week
Bank of America to buy Countrywide Financial
Merrill may write down $15 billion
Citi, Merrill on hunt for more capital
In case of emergency, slash rates
U.S. gold futures hit record $900/oz on funds
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.
Big news this week -Bank of America bails out Countrywide (see below), Gold hits $900, and food commodities continue to rise. Oil lost more ground on recession fears and closed out the week around $93. The market is expecting more interest rate cuts later this month which could send the US Dollar down and raise gold prices even further.
Next week we have earnings announcements from key companies like: C, MER, JPM, WM, GE, IBM, INTC. Market direction is still uncertain at this point, though there is good support for the S&P 500 here in the 1400 range; the Nasdaq could still go down to test the March 2007 lows of around 2350, likewise for the DOW. The Financials are anybody's guess!
Links: S&P Sector performance -it helps to be in the right sectors.
Market News:
U.S. Stocks Drop for Third Week
..share prices posted their worst opening five days since the 1930s
U.S. stocks to face earnings, data tests next week
Bank of America to buy Countrywide Financial
Merrill may write down $15 billion
Citi, Merrill on hunt for more capital
In case of emergency, slash rates
U.S. gold futures hit record $900/oz on funds
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.
Weekly Market Update -Jan 5 New Year
Happy New Year! Enjoy it while you can. The markets started off the year on a sour note, with one of the worst starts for the DOW in over 70 years! (see link below) Everything was on sale this week (stocks, that is) -maybe it was an after Christmas sale.
The holiday season was terrible for retailers too. Meanwhile, not to sound like a broken record, but the sub-prime problem is still lurking in the background, with rumors of more big writedowns coming.
Oil prices rose again, finally hitting $100 per barrel before retreating back to around $98. Gold and gold stocks also continued higher, along with other food related commodities like Wheat, Corn, and Soybeans.
The week ahead kicks off earnings reports for the first quarter with Alcoa leading the pack on Tuesday. Most of the large companies don't report till the following week though. The market might bounce back a little from the recent non-stop selling, since it is at a support level here, though it it could also just keep going down some more. There is no clear short term direction at this point.
If you are wondering whether we are heading into a recession, just take a look at some of these stocks (type the appropriate symbol after viewing the first one):
Starbucks(SBUX) Sears(SHLD) Bed Bath & Beyond(BBBY) Target(TGT) Ford(F) AutoNation(AN) American Express(AXP) Pulte Homes(PHM) Home Depot(HD) Fedex(FDX) Semiconductor Index (SMH) Real Estate Index(RTH) Consumer Discretionary Index(XLY)
Also, take a look at some of the sub-prime casualties: Citigroup Merrill Lynch Bear Sterns Countyrwide Financial Fannie Mae Washington Mutual E*Trade MBI
On the bright side take a look at some of the winners for 2007:
AAPL RIMM GOOG BIDU GME AMZN JEC ISRG
The red line at the bottom of the chart shows the performance comparison to the S&P500 index, a good proxy for the overall market -as the chart shows, it pays to pick winners!
What are some of the 'experts' predicting for 2008? More interest rate cuts (which would imply a lower US Dollar), a possible recession, a weak stock market, and higher energy and commodity prices.
Notable events this year -US Presidential election, The Olympics in China.
New Year resolution for traders and investors: Draw a 'trend line' and exit your position when the trend is broken! You don't need to be a rocket scientist to draw a simple trendline on a graph either (see examples). This works for both short term and long term time frames.
Also don't try to pick up some of these battered Bank and Financial stocks yet -you have to wait until the 'down trendline' is clearly broken and the stock is showing signs of strength to the 'upside' (see example).
Lastly, if you still believe in buy and hold, note that Citigroup gave back 5 years worth of gains in just a few months last year, as did many other stocks, and that after 7 years the Nasdaq is still showing a 50% loss! Meanwhile other stocks and sectors have experienced well over 100% growth since 2000, some even showing over 1000% growth, so stop 'holding' and get out of what's not working and get into something that is working.
News stories this week:
10 best-performing Fortune 500 stocks
Best and worst stocks of 2007
'Fast Money' Recap: Worst Start since 1932
Brutal selloff on Wall Street
Oil prices fall back from $100 barrel
Goldman's Double Take
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.
The holiday season was terrible for retailers too. Meanwhile, not to sound like a broken record, but the sub-prime problem is still lurking in the background, with rumors of more big writedowns coming.
Oil prices rose again, finally hitting $100 per barrel before retreating back to around $98. Gold and gold stocks also continued higher, along with other food related commodities like Wheat, Corn, and Soybeans.
The week ahead kicks off earnings reports for the first quarter with Alcoa leading the pack on Tuesday. Most of the large companies don't report till the following week though. The market might bounce back a little from the recent non-stop selling, since it is at a support level here, though it it could also just keep going down some more. There is no clear short term direction at this point.
If you are wondering whether we are heading into a recession, just take a look at some of these stocks (type the appropriate symbol after viewing the first one):
Starbucks(SBUX) Sears(SHLD) Bed Bath & Beyond(BBBY) Target(TGT) Ford(F) AutoNation(AN) American Express(AXP) Pulte Homes(PHM) Home Depot(HD) Fedex(FDX) Semiconductor Index (SMH) Real Estate Index(RTH) Consumer Discretionary Index(XLY)
Also, take a look at some of the sub-prime casualties: Citigroup Merrill Lynch Bear Sterns Countyrwide Financial Fannie Mae Washington Mutual E*Trade MBI
On the bright side take a look at some of the winners for 2007:
AAPL RIMM GOOG BIDU GME AMZN JEC ISRG
The red line at the bottom of the chart shows the performance comparison to the S&P500 index, a good proxy for the overall market -as the chart shows, it pays to pick winners!
What are some of the 'experts' predicting for 2008? More interest rate cuts (which would imply a lower US Dollar), a possible recession, a weak stock market, and higher energy and commodity prices.
Notable events this year -US Presidential election, The Olympics in China.
New Year resolution for traders and investors: Draw a 'trend line' and exit your position when the trend is broken! You don't need to be a rocket scientist to draw a simple trendline on a graph either (see examples). This works for both short term and long term time frames.
Also don't try to pick up some of these battered Bank and Financial stocks yet -you have to wait until the 'down trendline' is clearly broken and the stock is showing signs of strength to the 'upside' (see example).
Lastly, if you still believe in buy and hold, note that Citigroup gave back 5 years worth of gains in just a few months last year, as did many other stocks, and that after 7 years the Nasdaq is still showing a 50% loss! Meanwhile other stocks and sectors have experienced well over 100% growth since 2000, some even showing over 1000% growth, so stop 'holding' and get out of what's not working and get into something that is working.
News stories this week:
10 best-performing Fortune 500 stocks
Best and worst stocks of 2007
'Fast Money' Recap: Worst Start since 1932
Brutal selloff on Wall Street
Oil prices fall back from $100 barrel
Goldman's Double Take
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.
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