2.22.08
This holiday-shortened week ended little changed overall. Stocks gapped up at the open Tuesday, but steadily gave it all back and then some to finish lower. Oil prices closed above $100 a barrel for the first time and investors started to see the light. Record levels raise concerns about renewed inflationary pressures and will weaken consumer sentiment, thus adding to the headwinds the economy is currently facing. Market action on Wednesday was a mirror image of that of the previous day stocks opened lower but managed to rebound to close with decent gains, despite consumer inflation data that came in slightly higher than anticipated with a CPI reading of 0.4% for January. Following an analyst's upgrade of Cisco and a bullish earnings forecast by Research In Motion, tech stocks gave the market a lift at the open Thursday, but the morning rally was derailed by a weak economic report later in the day and the S&P 500 lost 1.3% on the day. With stocks on their way to post significant losses Friday, the major averages reversed once again to instead finish the day with small gains. The turnaround came late in the session and was caused by a report indicating that a bail-out plan for one of the troubled bond insurers is imminent. The news triggered a sudden rally in financial stocks that spilled over to the overall market. This was due to program buying jumping in and moving the market quickly. And when they undo the program trading it will just as quickly go the other way. Remember this, program trading is not your average investor, it is done by big institutions for the sole purpose of making large profits quickly. Most of the movement we have been seeing in the market lately is due to this type of action.
We continue to stay 100% in CASH. It’s the best place to be right now
Till next time
MTA Staff
