7.11.08

  7.11.08

            It's somewhat difficult to know where to begin to describe the market action this week, because the market itself was literally all over the map. Once again, the financial sector and oil prices were the primary swing factors.

Government sponsored enterprises Fannie Mae (FNM) and Freddie Mac (FRE) were the main source of volatility for the market, as speculation ran rampant that they were destined for a government bailout despite repeated assurances from government officials and their regulator that they are adequately capitalized.

It was that kind of week frankly.  There was so much back and forth on rumors and clarifications that the stock market resembled a roller coaster ride that left you feeling dazed and confused.

Oil prices certainly greased the ride.  They experienced wide swings, too, touching $135.14 at their low Tuesday before rallying back to a new record high of $147.27 Friday.  They eventually settled the week just below $145, little changed from their close last Friday.

Various reports (some confirmed and others not) discussing military posturing on the part of Iran and Israel, coupled with ongoing supply concerns, were at the heart of this week's trading action in the energy pits. Neither of them have land based missiles that are capable of traveling the 800 plus miles to hit targets in the other country. Again, a rumor that is not based in fact that the commodities speculators spread to cause consternation in the oil pits.

The economic data in the coming week isn't likely to be considered irrelevant to the trading action.  There are key inflation reports in the form of the PPI and CPI Indexes, as well as the latest data on retail sales, housing starts and industrial production.

In fact, there will be a number of key happenings in the coming week. 

The earnings reporting will kick up several notches with reports from a number of major financial and technology companies; the minutes from the June 25 FOMC meeting will be released; and Fed Chairman Bernanke is slated to present his semi-annual testimony before Senate and House committees.

There will be no rest for the weary (or the dazed and confused), because the market's roller coaster ride begins anew Monday morning.

And after the close Friday it was revealed that the government had to take over IndyMac Bank in Los Angeles, transferring its operations to the Federal Deposit Insurance Corporation. It will re-open Monday as the Federal IndyMac Bank. The bank had $50 billion in assets in March. But a depositors' run on the bank after a letter to the FDIC from NY Senator Charles Schumer was made public. The letter voiced concerns about IndyMac's soundness. It was the 2nd largest bank failure in U.S. history. Not good news to begin the week on Monday

It's too bad the market is catching these blows in the news, as it looks like it would like to rally off the oversold condition of its short-term technical indicators.

We will of course be staying 100% in CASH in our conservative accounts. Those of you that are more aggressive should stay short at this time.

Till next time

 MTA Staff