Stock Market Update -Apr 27th

We continue to see an upward trend in the market though we still haven't taken out the 1400 level in the S&P 500 -we closed the week slightly higher than the previous week.


Oil prices continue to rise, reaching almost $120, though I think we could see prices pull back a bit from this level. Airline shares continue to lose ground based on high fuel costs. We also saw a rise in the US Dollar, causing some commodities to pull back a bit, with Gold also closing below $900 per ounce. News of rice rationing raised some eyebrows too (chart). The 10 year Note and the 30 year Bond continue to pull back, giving up quite a bit of ground in the past two weeks (more signs of inflation). Revisiting an old story on the bond insurers, shares of Ambac and MBIA tumbled this week on bad earnings. Meanwhile Starbucks also continues its downhill slide (recession indicator?), and yet another airline shut down operations -that makes 5 so far!

Next week we have a few potential market moving events -the Fed meeting on Wednesday (.25 point rate cut expected), also 1st quarter GDP, and the monthly Jobs report on Friday. Earnings reports continue next week with names like Exxon, GM, Countrywide, and MasterCard reporting.

News stories:
Don't trust this market rally
Microsoft's profit forecast disappoints
Gasoline could hit $7 a gallon in four years: CIBC
Sales of new U.S. homes plunged in March
More Pain for Ambac
Do MBIA and Ambac need to raise more cash?
Mission Accomplished? Bank Stocks Surge on Hopes the Fed's Done
U.K. unveils a $100 billion credit crunch plan

Dow at nearly 4-month high
Why the worst may be over
Americans tightening their belts
U.S. consumer sentiment at 26-year low
U.S. stocks set to face a less-friendly Fed
Dollar cruises toward best month in 2-1/2 years
What happened to $1,000 gold?

Other stories:
Microsoft XP soon to be X’d out
Microsoft’s Vista Problem
Brazil Halts Rice Exports to Ensure Domestic Supply
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Stock Market Update -Apr 20th

Up one week, down one week, up the next week! Thats the kind of market we are in right now. The market rose this week in spite of higher oil prices, and more bad earnings and more writeoffs from the banks and brokers. On the bright side we did get good earnings from CAT, IBM, and GOOG (Google shot up $90 on Friday, while ISRG fell by $60!). We are seeing an uptrend develop from the March 17th lows, though the market is very volatile so you should use caution with any 'long' positions.



The inflation trend continues with Oil closing near $117, Natural Gas over $10, and Heating Oil (diesel) near $3.30. In the news, Delta and Northwest announced their intention to merge, Brazil announced a huge oil discovery, and Wall Street announced more job losses. The Euro climbed to a record high of just under $1.60 to the US Dollar.

Next week: We will continue to get more earnings reports, including MSFT. If the S&P 500 can break above the 1400 level like the DOW broke out last week, we could see the bullish sentiment continue for a while longer.

News stories:
Stocks rally on Citigroup, Google earnings results
Google gets big lift as market cheers report
Five signs the stock market has bottomed
Wall Street braces for tens of thousands of pink slips
Buying Brazil
Brazil Oil Find May Be World's 3rd Largest

Fears of long recession rising
Diesel weasels its way into costs, supply-chain strategy
Oil Rises to Record on Signs Stronger Economy May Boost Demand
Soybeans Rise as Record Oil Prices May Boost Demand for Biofuel
Rice Gains to Record on Concern Trade Curbs to Spread

Other stories:
Some Mutual Fund Numbers Look Great, but for Whom?
World's food crisis deepens
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Stock Market Update -Apr 13th

Well it looks like like the big April 1st rally was an April Fools rally after all! All the indexes are now lower than the breakout prices on that day. The market tumbled on Friday after a bad earnings report from GE, along with a drop in consumer sentiment to 1982 lows. Alcoa also reported an earnings shortfall. Also in the news, another airline bit the dust this week (we lost 3 last week), while Oil prices closed over $110 per barrel on Friday.


Next week: Earnings season kicks off with some of the big banks and brokers reporting (JPMorgan Chase, Merrill Lynch, Citigroup). If you are itching to buy financial stocks, wait until after the earnings reports -if the news is good you will have plenty of time to participate in the rebound (it's a long way back up), if there is more bad news we could see further selling. We will also get earnings from some big technology names (Intel, IBM, Google), and we get the CPI report on inflation as well so it should be a busy week. So far, the downtrend from October continues.

Now that the 1st quarter is over here is a snapshot of the S&P 500 compared to some other markets and sectors -Financials lead the way down (if you compress the chart to just the past 6 months, China actually leads the way down), while Brazil is the clear leader.

News stories:
Banks set to stumble again
Wachovia Is Said to Raise Billions Amid Credit Losses
Credit losses could approach $1 trillion: IMF
Central Banks Signal Deepening Concern as G-7 Meets
World's economic leaders look to avert crises
Paulson: Housing Is Still Biggest Threat to Economy
U.S. lenders freeze home equity credit lines

Fed auctions another $50 billion to cash-strapped banks
Lehman liquidates three funds
Frontier Airlines Files for Bankruptcy
Dollar Must Fall Further: Economic Bureau's Feldstein
Danger ahead for the mighty euro
Yuan hits milestone vs. dollar

Other stories:
Hollywood legend Charlton Heston dead at 84
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Stock Market Update -Apr 6th

The 2nd quarter started off with a bang on Tuesday with a big rally of almost 400 points in the DOW. What triggered it? Bad news of more writedowns from Swiss bank UBS, this time $19 billion, and news of Lehman raising $4 billion to help their balance sheet! So now bad news is now good news -go figure. The rest of the week was pretty much flat, in spite of a bad jobs report on Friday -again, bad news is good news? Have we broken the 6 month downtrend for now? You be the judge, but I would still be cautious (see chart below -click to enlarge).

I guess most everyone is now on the same page too, admitting that we are in a recession. Oil is still over $100 per barrel ($106), we continue to lose jobs every month, home prices keep falling, this week we found out there are 8,000 foreclosures per day, and the US Dollar continues to drop; 3 airlines also shut down this week. These are not signs of a 'good economy' that the talking heads and 'experts' keep telling us about!


In the news, RIMM was up a bit this week on strong sales and earnings. The financials (XLF) basically followed the the market up this week. Gold fell briefly below $900. We also saw some action in the commodities following the planting report on Monday.

This week the FXI (China ETF) also broke out of it's downtrend (mentioned last week) -lets see if it holds. AAPL, WMT, and GE also continuing an uptrend. FSLR was up with huge volume on Friday -is this a double top?

Next week: Earnings reports begin -we should start to get a better feel for market direction.

News stories:
Who Needs Jobs When You Have Stocks?
Overdue Consumer Debts Highest Since 1992, ABA Says
Employers in U.S. Cut 80,000 Jobs, More Than Estimated; Jobless Rate 5.1%
US Auto Sales Fall in March
Home Price Reversion to Trend
Stay Away From Long Bonds
Dollar Bottom Proves Elusive as G-7 Meets, Bearish Bets Double
Aloha Airlines halting passenger service

Other stories:
Leveraged ETFs: A Value Destruction Trap?
Two popular cholesterol drugs may not work
81 percent of Americans think country on "wrong track"
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Stock Market Update -Mar 30th

The week started off well with a strong rally on Monday following the rally on Friday, but then the market dropped every day for the rest of the week -this is what happens in a bear market. Note that the market has been down now for the last 2 quarters. (click image to enlarge)


There are lingering concerns about the credit markets, and the banks and brokerage houses. In the news, JP Morgan this week changed their buyout bid for Bear Stearns from $2 to $10 per share. Also Oil rebounded this week, while the US Dollar tumbled again after a brief rally the previous week when the FED dropped interest rates; the Fed also offered $100 Billion More to Commercial Banks on Friday (when will it end?).

In case you didn't notice, the markets in China have also lost considerable ground since last October. Other high fliers GOOG and AAPL have also lost considerable ground, while one of the few stocks that has been rising in this bear market has been WMT.

Next week: Monday we will hear the proposal for new regulations in the financial markets. Also Fed chairman Bernake will testify before the Joint Economic Committee on Wednesday, and on Friday we get the much anticipated jobs report. Expect more volatility -and remember, we are still in a downtrend.

News stories:
Paulson to propose financial market overhaul
Credit crunch 'at $1.2 trillion'
U.S. home prices plunge 10.7% in past year: S&P
NOT NEAR A BOTTOM
Ten Days That Changed Capitalism
US Death Toll in Iraq War Hits 4,000
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Stock Market Update -Mar 23rd

Another wild week in the markets. The Fed dropped interest rates on Tuesday causing the DOW to rally 420 points, but then it fell 293 points the following day, then it was back up 261 points the day after -extreme volatility! The chart pattern however is showing 'higher lows' since March 10th on the DOW so maybe this short-term uptrend will continue; the longer-term trendline however still shows a downtrend. Commodities also collapsed this week as the US Dollar rose. (click image to enlarge)


The news this week included the Bear Stearns collapse, the Visa IPO (largest IPO in US history, despite all the market turmoil), and the big brokerage firms reporting earnings with no major surprises. This week we also had a big selloff in the Commodity markets, with Oil dropping to around $101 and Gold dropping about $90 in two days!

Other news included more Fed attempts to fix the credit markets and the stock markets (is this a new function for the FED? seems like they react to every market move) -they helped engineer the Bear Stearns bailout on Sunday, they now allow securities firms to borrow from the Fed (formally available only to banks), they dropped interest rates .75 points on Tuesday, and they cut the discount rate by .25 points on Sunday -all this in one week, plus all the other panic moves they have done in recent weeks.

Regulators also cut the capital requirements for Fannie and Freddie from 30% to 20%, providing an additional $200 billion in purchasing power -these are the same firms that reported 'accounting errors' of over $11 billion in recent years! We also saw a big rise in the US Dollar after the Fed cut interest rates -normally the Dollar falls on a rate cut!

Meanwhile the 3 month Treasury yield dropped to almost ZERO (a 50 year low) -it's been an interesting week.

What will next week bring? I think we will continue to see more choppy action -remember we are still in a big downtrend that started last October, and that many have tried unsuccessfully so far to pick a bottom in this market, so be cautious.

News Stories:
Fed cutting. Stocks sinking. What gives?
Fed acts Sunday to prevent global bank run Monday
Is the worst over, or just beginning?
Their Bear Stearns, your money
Goldman, Lehman outlooks cut to "negative" by S&P
European Banks Try to Inject a Bit of Calm
Financial Market Turmoil Raises Worries
Treasury 3-Month Bill Rates Drop to Lowest Since At Least 1954

Fannie, Freddie Surplus Capital Requirement Is Eased
Rubin Calls for Urgent Government Action to Stem Foreclosures
Woes in Condo Market Build as New Supply Floods Cities
JPMorgan Chase makes $1B-plus on Visa IPO
Why Boom in Commodities Has Suddenly Cooled Off
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Weekly Market Update -Mar 16th

The markets continued to challenge investors this past week with more see-saw action and lots of news driven events.


On Monday the DOW fell about 150 points, on Tuesday it skyrocketed over 400 points after the Fed offered $200 billion to banks to help ease the credit crisis, then on Friday the DOW dropped almost 200 points again after news of an emergency bailout for Bear Sterns, the nation's 5th largest investment bank. We also got news of the collapse of Carlyle Capital after that fund defaulted on more than $16 billion in assets. Not helping matters was news of higher foreclosure rates in February, Oil prices hitting $110 per barrel, Gold topping $1000, and the US Dollar continuing to plunge. After all this volatility the week basically ended close to where it started !

Next week: The Fed meets again on Tuesday and it is widely expected that interest rates will be cut again by at least .50 points. This could trigger another selloff in the US Dollar. We will also get a slew of earnings reports from the brokerage firms including Bear Stearns, Goldman Sachs, Morgan Stanley, and Lehman Brothers -it will be an interesting week! The markets will be closed on Good Friday.

There is also talk of the world's Central Banks possibly intervening to stop the fall of the dollar.

Late breaking news: JP Morgan will buy Bear Stearns for $2 a share -how sad! This stock traded at around $170 per share early last year, and dropped from $57 to $30 on Friday.

News Stories:
*** JPMorgan to Buy Bear for $2 a Share
Bear Stearns' Big Bailout
Dollar Falls to 12-Year Low of 100 Yen on Carlyle Fund Failure
Fed to Lend $200 Billion, Accept Mortgage Securities
Fed takes boldest action since the Depression to rescue US mortgage industry
Fed set to slash U.S. rates as credit turmoil rages

Fannie May Fail - Barron's
US Foreclosure Activity Rose in February
Foreclosure rate doubles for Countrywide
Carlyle Capital in default, on brink of collapse
Financial markets' biggest test since 1930s
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Weekly Market Update -Mar 8

Lots of action in the markets this week. We broke out of the recent trading range to the downside as concerns about the economy continue to dog this market.


We got a worse than expected monthly 'jobs' number on Friday, Oil topped $106 per barrel, news of more mortgage lenders on the brink of failure (TMA, FMT -ugly charts!), a gloomy outlook from the Fed chairman, and continued concerns about the credit markets all contributed to the selloff this week.

Also the US Dollar continued to sink this week, helping to drive up the price of oil and gold. The 10yr Treasury Note shot up as well (flight to quality?) -I don't expect it to stay there very long!

Next week: I suspect we will see the indexes back at the low of Jan 23rd. With any luck, we will get a bounce up from that level. Many people are looking for a bounce from the financials -XLF is a good Exchange Traded Fund for that sector; so far it has not shown any sign of a rebound though (remember we got a rebound on Jan 22nd, only to give it all back!).

The big picture -where we are now in relation to the 2000 market top:


News stories:
Job losses: Worst in 5 years
OPEC president says U.S. to blame for oil price
Countrywide may face more credit woes
Thornburg says can't meet $610 mln of margin calls
Mortgage market needs $1 trillion, FBR estimates
Record foreclosures in fourth quarter (March 2007)
U.S. home foreclosures at record high last quarter (March 2008!)

HSBC in $17bn credit crisis loss
Citigroup CEO Starts To Shed Bank Branches
Fed boosts auction size in surprise action
New Spasm Jolts Credit Markets
Aversion to Risk Deepens Credit Woes
The World's Billionaires 2008
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.