Stock Market Update -May 25th

Looks like the caution I expressed last week was well warranted -the market pulled back hard this past week, and broke the recent uptrend from the March 17th low, taking us back below the 1400 level on the S&P 500! (see green trend line on the chart). Oil prices surged to $135, causing investors to pull back; airline, automobile, and financial stocks took a big hit, along with the US Dollar. We also got more bad housing numbers this week.


Next week the markets are closed for Memorial Day on Monday. On the calendar, we get 1st quarter GDP numbers, along with more housing data.

It looks like we may be starting a new down-trend, maybe a continuation of the bigger downtrend that started last October, which could take us below 1250 on the S&P 500.

News stories:
Bear Market Rally Fizzles Without Further Fed Boosts
Buffett sees "long, deep" U.S. recession
Four reasons big buildup in home inventories is ominous
Not (yet) the worst housing downturn
Bank failures to surge in coming years
China's newest export: Inflation
Booming Brazil: The new China
Latin America Going Strong

Moody's computer glitch led to incorrect rating of CPDO derivatives
When A Computer Glitch Mucks Up Bond Ratings
After Credit Computer Glitch, Credit-Rating Company Has Its Credit Rating Cut By Bigger Credit Rating Company
Moody's Faces Scrutiny of Error, Possible `Cover-Up'
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Stock Market Update -May 18th

The market moved higher last week, putting us back above the 1400 level on the S&P 500. If it continues the uptrend, we will finally be in positive territory for the year. I'm still cautious though with $127 Oil, inflation still looming out there, and the consumer pulling back on spending.


Next week we get earnings from HP, Target, Home Depot and Lowe's.

News stories:

U.S. Consumer Sentiment Decreases to 28-Year Low
U.S. industrial output plunged in April
The dollar's short-lived comeback
Dollar's decline finally may have ended
Housing starts surge on condo construction
US foreclosure filings surge 65 percent in April
Credit Problems Spreading Beyond Mortgages: FDIC
Saudi Arabia rebuffs Bush on oil production

Other stories:
China quake toll about 30,000; new aftershock is felt
Microsoft should nuke Vista instead of Windows XP
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Stock Market Update -May 11th

The market gave up some ground last week with bigger than expected losses from AIG and Fannie Mae, and oil prices topping $126 per barrel. The US Dollar pulled back a bit, but I expect it will move back up to test the 75-76 area.


Next week we have more earnings -some of the big names reporting include Walmart and Hewlett-Packard.

News stories:
Can Citi Find $400 Billion in Assets to Sell?
Oil prices at more than $126 a barrel
Some See Oil At $150 a Barrel This Year
Venezuela, China set to ink new oil deal

The dollar danger is not over yet
American housing -Map of misery
U.S. April Business Bankruptcy Filings Increase 49%
Ethanol Fantasy Fuels a Food-Price Nightmare

Other stories:
California man losing nine homes in mortgage mess
Clashes in northern and eastern Lebanon, outside Beirut
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Stock Market Update -May 4th

The market continued its recent upward trend after the Fed and GDP announcements and the Jobs report. The DOW is now back over 13000, and the S&P has finally moved past the 1400 level. Maybe we'll see the Nasdaq 100 (QQQQ) take out the 50 level next week (that's where we started the year!)


MasterCard surged from the $240 level to almost $300 and Google traded past the $600 level for the first time since January. The China market (FXI) also continues to recover. Exxon fell after reporting over $10b in earnings! Sun (JAVA) was a big loser this week.

We did see a steady drop in Oil prices as I predicted last week (until it rallied again on Friday!) In general, Commodity prices dropped as the US Dollar continued its recent rally. Gold pulled back to the mid $800 level that I predicted earlier -many of the mining stocks have now pulled back to attractive levels. Brazil (EWZ) continued on its winning streak after an upgrade from Standard & Poor's.

Meanwhile Citi had to raise another $4.5 billion in capital this week, Bank of America said it may not guarantee $38 billion in Countrywide Financial debt, while S&P finally cut Countrywide's credit rating to Junk -the saga continues.

Next week we don't have much in the way of economic reports. Some of the big names reporting earnings include AIG, CSCO, DIS, and FNM.

News stories:
Countrywide Rating Cut to 'Junk' By Standard & Poor's
Homebuilders: No recovery until 2009
Housing prices post record declines
Home Vacancies Rise to Record 18.6 Million
Foreclosures spike 112% - no end in sight (Video)

Buffett Says Worst of Crisis Over for Wall Street, Individuals May Suffer
JPMorgan says no near end to financial crisis
Home Depot to close 15 underperforming US stores
Brazil's Bovespa Extends Record, Led by Retailers, After S&P Upgrade
Why we're stuck with insane prices
Forget gas: Get ready for $4 a gallon milk
Wall Street: Sell what in May and go away?

Other stories:
Crackdown on unfair credit card practices
US deep in debt and still digging
China to build 97 airports in 12 years
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

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.