Monday, June 11, 2007
Jitters Ahead?
It was another volatile day for stocks Friday, but happily for us the bulls won the battle this time. The Dow gained 157.66 points to close at 13,424.39. The SPX gained 16.95 points to finish on 1,507.67. We are in the green and looking ok for now.
After three sessions of large losses, traders decided to buy the dip Friday. A drop in bond yields provided the impetus and despite a volatile session, the bulls were able push stocks sharply higher. A drop in oil prices and a larger than expected drop in the trade deficit in April also helped the bull’s cause.
Overnight Thursday, the 10-year Treasury bond yield reached a high of 5.25 percent. Thursday’s sharp decline came after bond yields moved above the psychological five percent level. However, this resulted in traders buying bonds, pushing the yield down to 5.12 percent Friday.
News the U.S. trade deficit fell by 6.2 percent also benefited stocks and bonds. The deficit for April came in at $-58.5 billion when estimates were for a reading of $-63.5 billion.
This week is again going to be interesting. On the economic side, we have reports covering growth and inflation. The headliner of the week will be Friday’s CPI and core reading. This closely-watched report will probably take on increased importance due to the prospects of higher interest rates and potentially increased vigilance by the Fed.
Thursday offers up the typically less important PPI, while Wednesday’s Beige Book and retail sales could well be market / sentiment movers.
In addition to these big reports, the day-to-day movements of crude and the realities or perceptions behind them, could also easily affect conditions in the broader indices.
Therefore even though we are close to being in the middle of our green zone, sense would dictate that we seek to take this play off on Tuesday which we may well do.
Let's see what happens today.
Until next time.
Paul
After three sessions of large losses, traders decided to buy the dip Friday. A drop in bond yields provided the impetus and despite a volatile session, the bulls were able push stocks sharply higher. A drop in oil prices and a larger than expected drop in the trade deficit in April also helped the bull’s cause.
Overnight Thursday, the 10-year Treasury bond yield reached a high of 5.25 percent. Thursday’s sharp decline came after bond yields moved above the psychological five percent level. However, this resulted in traders buying bonds, pushing the yield down to 5.12 percent Friday.
News the U.S. trade deficit fell by 6.2 percent also benefited stocks and bonds. The deficit for April came in at $-58.5 billion when estimates were for a reading of $-63.5 billion.
This week is again going to be interesting. On the economic side, we have reports covering growth and inflation. The headliner of the week will be Friday’s CPI and core reading. This closely-watched report will probably take on increased importance due to the prospects of higher interest rates and potentially increased vigilance by the Fed.
Thursday offers up the typically less important PPI, while Wednesday’s Beige Book and retail sales could well be market / sentiment movers.
In addition to these big reports, the day-to-day movements of crude and the realities or perceptions behind them, could also easily affect conditions in the broader indices.
Therefore even though we are close to being in the middle of our green zone, sense would dictate that we seek to take this play off on Tuesday which we may well do.
Let's see what happens today.
Until next time.
Paul
# posted by Paul @ 5:50 AM 
