9.12.08

   9.12.08

Even though there were some triple digit moves, the market was able to stabilize and the major averages up slightly for the week. Stocks posted solid gains Monday following news that the government seized control of troubled mortgage companies Freddie Mac and Fannie Mae. Broad based selling returned the next day amid renewed worries over the housing and financial sector: sales of existing homes plunged 3.2% in July, more than expected, and shares of investment bank Lehman Bros. lost 45% of their value as talks of a possible capital infusion by a Korean bank broke down. The S&P 500 lost 3.4% during the session on heavy volume. Wednesday was a non-event and volatility returned to the markets the next day: after an initial plunge caused by increased concerns over the fate of Lehman Bros., stocks were able to turn around and close in positive territory as reports surfaced that Bank of America may be involved in a Lehman buyout. Friday the market started to the downside but renewed strength in the energy, utilities and materials sector helped them recoup their losses to close flat on the day.

            For the week, the S&P 500 and Russell 2000 respectively gained 1.34% and 0.85% while the Nasdaq 100 lost 0.05%. All the major indices remain below both their 50-day and 200-day exponential moving averages.

            Oil settled the week at $101.18, down 4.8% from the prior week's close.  That move was remarkable in itself given Ike's menacing manner and word from OPEC that it would get back to producing in accordance with agreed-upon production quotas, meaning supplies would be cut by roughly 500K barrels per day. In Friday's trading, oil prices hit $99.99 per barrel, which was the first reading below $100 in five months.  The behavior of oil prices was viewed as a reflection of underlying concerns about a slowdown in global economic growth.

            We still are happy sitting on the sidelines 100% in Cash and sleeping well.

Till next time

The MTA Staff