Stock Market Update -Jul 27th

We are finally showing signs of breaking out from the most recent downtrend. The proposed government bailout of Fannie and Freddie, along with new rules preventing naked short sales of certain financial stocks gave a big boost to the financial sector.

Oil prices also dropped, helping to boost the stock market; the uptrend in oil has been broken (see chart below). Commodity prices also dropped as the US Dollar rallied. It's too early though to tell whether the stock market rally of the past two weeks will hold -only professional traders should try to trade these moves at this point.

Earnings reports continue to roll in, with many of the financial companies reporting this past week; as expected, the numbers were not good; (also, two more banks were shut down by regulators this week). We also got horrible numbers from Crox -so much for fads. Foreclosures doubled, and existing home sales fell to a 10 year low.

Next week we get the GDP report and the monthly Jobs report. Also earnings from the big oil companies.


News stories:
U.S. Shuts California, Nevada Banks as Failures Rise
WaMu Has $3.3 Billion Quarterly Loss on Delinquencies
Wachovia and Washington Mutual post billions in mortgage losses
Wachovia reports $9 billion loss
Problem banks: What you need to know

U.S. Foreclosures Double as House Prices Decline
The slump persists: Home sales tumble across US
House OKs rescue for homeowners, Freddie, Fannie
Roubini: More Than $1 Trillion Needed to Solve Housing Crisis
2.2 million vacant homes for sale
Durable goods orders in surprise rise

Last week: (sorry, there was no post last week; I was out of town)
Consumer Prices Take Biggest Jump in 26 Years
More banks may fail after IndyMac
WaMu and National City plummet
Should You Be Worried About Bank Failures?
Fannie-Freddie lifeline puts taxpayers on the hook
Dollar slides to fresh low against euro
Oil prices tumble in biggest weekly drop ever
Have commodities peaked?

Other stories:
Zimbabwe's $100bn note
Cancer center warns on cell phone use
Pakistani investors attack bourses after share collapse
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Stock Market Update -Jul 13th

The selling continues (where have you heard that before!). The market sold off again with continued concerns over the financial sector and the financial health of Fannie & Freddie, who together hold or guarantee over $5 trillion in mortgage assets, while their stock valuation has dropped to less than $20 billion! Crude Oil also hit a new all-time high of around $147 on Friday, Gold continues to move higher, and the Euro exchange rate is about to top $1.60. Batten down the hatches!


On Friday after the market closed, regulators reported that they seized IndyMac Bank, making it the third biggest U.S. bank failure ever, and the fifth bank to fail this year! Meanwhile Lehman shares continue to plummet, along with most other financial companies.

Next week could be a volatile week! More earnings reports due (including Citi, Merrill, JP Morgan, CIT, Microsoft, Google, Coke, and some airlines), Options expiration on Friday, and more credit crisis issues (Fannie, Freddie, and others...), along with a few economic reports -be prepared.

The DOW has lost a little over 3000 points since the market slide started last October. We are now officially in a bear market, with the market being down 20% from the peak (of course you didn't have to wait for the official 20% number before pulling out of the market -if you followed this blog you would have known long before!). Some investors are still waiting to find out if we are 'officially' in a recession too!

News Stories:
The $5 trillion mess
Crisis Deepens as Big Bank Fails
U.S. Weighs Takeover of Two Mortgage Giants
Failure Is Not an Option For Fannie and Freddie
Fannie, Freddie insolvent, Poole tells Bloomberg
Lehman shares plunge again
Merrill raids its rainy-day fund
Citi sells German retail banking for $7.7 billion
Stocks face financial fears and a wall of earnings

US foreclosure filings surge 53 percent in June
Six months, 343,000 lost homes
Massive Debt Fueling What Looks Like a Long Recession
Memo to Washington: Let GM Fail
Dow Jones in Euros -Almost 50% off from 2001
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

In other news:
Beijing takes dog off the menu for Olympics

Here's an interesting excerpt from stockandnews.com:
"Luft adds that Brazil is already there in terms of energy independence. 90% of new cars sold this year in Brazil will be flex-fuel vehicles that cost an extra $100 to make but can run on any combination of gasoline and ethanol. [Brazil, as you know, being a proponent of sugar-based ethanol.]

Luft: “Lest anyone think that can’t be done in the United States, many of those new cars are being made by General Motors and Ford.”

Of course you won’t find any natural-gas vehicles on the road here, and Brazilian sugar-cane ethanol is impeded by a 54-cent-per-gallon import tariff, thanks to ethanol’s protectionists in Congress. "

Stock Market Update -Jul 6th

The selling continued this past week, as we saw more job losses and high oil prices. Maybe we'll get some support at this level from buyers, but it's still risky at this point so be sure to protect your positions.


Remember my post about Starbucks being a recession indicator back in April -well this week they announced 600 store closings and 12,000 job cuts.

Next week begins a new earnings season -we could see some market reaction to the downside if we continue to get bad news. Looking at the charts above, you can see the S&P 500 is at a critical level that it touched in January and again in March. It could go either way from here, but the DOW has already broken down through this level (chart on the right).

News stories:
Employers cut 62,000 jobs in June, 438,000 this year
Starbucks to cut up to 12,000 jobs, close 600 stores
American Airlines set to cut 7,000 jobs
Oil soars to high near $146, then eases as dollar strengthens
Waiting for stocks to rally? Don't hold your breath
The Bear's Back

Investors’ new worry: Second-quarter earnings
Corporate earnings on track for fourth straight quarterly drop
Morgan Stanley analysts: Credit crisis to extend to 2009
GM needs $15 billion to avoid bankruptcy, Merrill analyst says
Banks: Everything must go!
The buck doesn't stop here; it just keeps falling
Vulture real estate investors swoop in
G-8 meets as economy storm clouds thicken
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Oregon man completes lawn-chair flight
It pays to go in an Indian public toilet