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

Stock Market update -Jun 29th

Fasten your seat belts! We will close out June and the 2nd quarter with another big slide in prices. The Dow has lost 1600 points since the turn in mid-May at the 13000 level; the S&P 500 lost 160 points from the 1440 level, while the Nasdaq lost 550 points -the Dow has been the worst performer of the three.


Here is a longer term look at the three major indexes. This clearly shows the importance of using simple charts to track performance -the Nasdaq has been a clear loser here if you held it for the 'long term'.

After the Fed meeting on Wednesday, the market sold off hard on Thursday, with some more selling on Friday; the US Dollar also sold off. I would be very cautious going forward as the economy continues to be dragged down by a number of factors (Oil continues to move higher, touching $142 this week). The market has already given back around 20% since last October. Cash is a great position in these uncertain times -why risk losing an additional 10% plus, when you can get around a 2-4% return in cash. Not to sound like a broken record, but the credit crisis is still looming large out there, with the potential for possible bank failures as things continue to get worse (bank index).

Next week we have a short week because of the 4th of July holiday on Friday. We could expect some action in the US Dollar based on the ECB actions next week. Also, the market is very oversold, and with the S&P 500 approaching the March and January lows, we could get a small bounce at that level (note that the DOW has already broken down 'past' those levels). On a side note, Gold and gold equities saw a nice jump this week.

News stories:
Oil hits $140 for the first time
U.S. Stocks Tumble, Sending Dow to Worst June Since Depression
Dow in 350-point tumble
Gloom Descends Over Wall Street Again
Barclays warns of a financial storm as Federal Reserve's credibility crumbles
This Recession, It's Just Beginning
Gold surges into $900 territory

BofA to cut 7,500 jobs after Countrywide deal
Banks' pipelines to fresh capital are narrowing
Citigroup sinks to 10-year low, Goldman urges short sale
GM drops to 53-year low, Goldman urges "sell"
GM's Market Value Is Only $7 Billion—Half That of Avon
Ford (F) Says It Will Never Make Money Again
New home sales and prices both drop in May
The Housing Abyss

Intel to skip Vista upgrade
Eleven Billion Videos Viewed In April, And No One Made A Dime
World now has 10 million millionaires

Stock Market Update -Jun 22nd

The downtrend continues with another bad week in the market (the DOW was down 465 points for the week). High oil prices, inflation, and the ongoing credit crisis and housing problems continue to hurt the market. We continued to see weakness in the Regional Banks too (see the chart in last week's post). Also take a look at some of these charts BBT BKUNA FITB KEY STI WB WM.



Shares of GM fell to levels we havent seen in over 15 years, Ford also continues to fall, along with the airlines, and major bond insurers (ABK and MBI). Also, GE's stock price is plunging like the financial companies. A key thing to keep in mind here is that whether it's a large 'blue chip' company or not, always protect your position or exit when there is a major trend change in the stock price. What to do? Unless you are a trader, stay out of this market until the downtrend reverses! Instead of losing money, at least your cash will earn a small return.

Meanwhile the FBI is trying to show that they are helping to fix things with an announcement of more than 400 arrests for mortgage related fraud, and by parading 2 former Bear Stearns fund managers before all the news cameras as they they were taken into custody (Bear Stearns kick started the sub-prime crisis last summer with the collapse of one of their hedge funds, then the entire Company itself collapsed and went on to being acquired by JP Morgan for a small pittance).

Next week we have a Fed meeting, and we also approach the end of the 2nd quarter.

News stories:
A Rough Week in a Rough Year for Stocks
Bank and economic fears drive Dow to 3-month low
RBS issues global stock and credit crash alert
Writedowns will hit US$1.3-trillion: fund company
Citi to suffer more 'substantial' writedowns

Banks Trimming Limits for Many on Credit Cards
Wall Street’s Fading Crush on G.E.
More than 400 Arrested in Mortgage Fraud Sting
Ex-Bear Stearns Fund Managers Taken Into Custody
There's nothing else the president can do to fix the economy.
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Other stories:
XP era ends: Will Vista step up?
Woman sues Victoria's Secret claiming thong injury

Stock Market Update -Jun 15th

We saw more downside action in the market this past week, except for a rally on Friday, in the face of a bad CPI number (inflationary), and persistently high Oil and Gas prices. I expect continued weakness in the market going forward.

The Financial stocks took a beating again this week, but recovered a bit near the end of the week. Apple shares fell this week as well after the much anticipated announcement of the new iPhone. Bond prices fell, helping to push mortgage rates up. The US Dollar continued to gain ground. Corn and Soybean prices are on the rise again -Corn surged to new record highs!

Next week we have expiration of the June Options and Futures contracts on Friday. We also get earnings reports from some of the big financial firms.

Keep your eye on the Regional Banks...


News stories:
May foreclosures rise 50%
U.S. home prices may dip 30%, junk bonds weaken by 2010, says J.P. Morgan analyst
Mortgage Rates Fly Higher
Heads roll as banks scurry for high ground
Wachovia, WaMu still in big trouble
Lehman raising $6B in capital, expects $2.8B loss
Lehman shares plummet amid write-down fears
Derivatives Market Grows to $596 Trillion on Hedging
A Banner Year for Farmers Buried By Floods
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Stock Market Update -Jun 8th

In my blog post last week I said 'We could see the market continue to reverse the recent rally from the March 17th lows if we get a bad jobs number on Friday.' Well, guess what? We got a bad Jobs number, and the market reversed -big time!! Also the Unemployment rate shot up to 5.5%, while Oil rocketed up to over $138 on Friday. Expect more downside action in stocks -looks like a classic ABC pattern unfolding (see chart).


On Thursday we had the biggest one-day move up in oil prices in history. Then on Friday oil prices doubled that move! Maybe this will be a blow off top in oil prices for now? If you are interested in trading these crazy moves in oil prices take a look at USO.

Next week we get the CPI report on Friday -probably more bad news on inflation; we'll see how the market reacts. Be sure to protect your ASSets; if this market continues with a new down-leg as projected above it could get ugly (remember the slide from October to March).

Also avoid the financial stocks -they have not bottomed, despite what the 'experts' are saying. I think we are actually beginning to see Part 2 of the Credit Crisis starting to unfold! (more charts)

News stories:
S&P slashes bank, broker ratings on loan loss fears
Stocks slide on more concerns about financials
Busy Week On Tap After Oil Surges, Stocks Crumble
Stocks fall sharply on surge in oil, jobs data
On a Disastrous Jobs Number, Recession is Obvious
GM closing 4 truck and SUV plants in North America

Lenders slash prices on foreclosed houses as numbers surge
Now lenders are facing HELOC hell
California Housing: Buy One Home, Get One Free! Really!
Subprime Debacle May Spark 2-Year Credit Crisis
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.

Stock Market Update -Jun 1st

Last week we recovered some of the losses from previous week, but with mixed signals from the market. The S&P 500 closed right at the 1400 level, the Nasdaq recovered most of it's loss, while the DOW is still below the broken up-trendline, so we have some divergence among these indexes, with the DOW being the weakest.

Oil prices retreated a bit, as the US Dollar strengthened. We also saw a drop in Bond prices.

Next week we get the much anticipated monthly Jobs report on Friday. We could see the market continue to reverse the recent rally from the March 17th lows if we get a bad jobs number on Friday.

S&P Sector Performance

News stories:
Oil Can't Rise Forever, So It Stops
Property Pain Past, Present And Future For U.S. Banks
Decline in home prices accelerates in March
Where the Financial Crisis Is Headed Next
The Next Shoe to Drop

Consumer confidence hits 16-year low in May
US and European debt markets flash new warning signals
Euro suffering from 'reserve currency curse' as investors pull out
Time for Goldman to Add Indonesia to the BRICs

Other news:
Touchdown! Phoenix Spacecraft Lands on Mars
Japan man discovers woman living in his closet
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.