Sunday, December 16, 2007
A Drop Too Far!
Stocks ended the week Friday on a sour note and scuppered our chances for getting a play on that day.
The Dow fell 178.11 points Friday to close at 13,339.85. The SPX lost 20.46 points to finish the session at 1,467.95. We still have no play on for December.
Inflation worries took a toll on the markets Friday. The CPI rose more than expected, following a strong gain in producer prices on Thursday. The financial sector continued to struggle on further reports of huge write-downs for the biggest companies, including Merrill Lynch.
Consumer prices rose 0.8 percent in November with the core rate up 0.3 percent. Both figures were a tenth higher than estimates leaving the year on year rate at 4.3 percent overall and 2.3 percent at the core. Both are above the Fed comfort level, leaving traders with the feeling interest rates won’t be coming down in the near term unless data changes between now and the end of January. In fact, the odds of a Fed rate cut on or before the January meeting fell 10 percentage points Friday to just over 50 percent.
This large move down Friday was not ideal for us. I consider the 1450-1470 range to be a bit of a twighlight zone for the SPX. From this range it can seem to move up or down very quickly. Which is no good for making a condor play. Lets see what happens with the markets Monday as to what we do next.
Its gonna be a busy week data wise this week. There are housing starts Tuesday and the next important data will come Friday when the Commerce Department releases numbers about personal income and spending in November, including the core personal consumption expenditure price index, the Fed's favored measure of underlying inflation.
You can be sure of one thing though. These markets will move!
Until next time.
The Dow fell 178.11 points Friday to close at 13,339.85. The SPX lost 20.46 points to finish the session at 1,467.95. We still have no play on for December.
Inflation worries took a toll on the markets Friday. The CPI rose more than expected, following a strong gain in producer prices on Thursday. The financial sector continued to struggle on further reports of huge write-downs for the biggest companies, including Merrill Lynch.
Consumer prices rose 0.8 percent in November with the core rate up 0.3 percent. Both figures were a tenth higher than estimates leaving the year on year rate at 4.3 percent overall and 2.3 percent at the core. Both are above the Fed comfort level, leaving traders with the feeling interest rates won’t be coming down in the near term unless data changes between now and the end of January. In fact, the odds of a Fed rate cut on or before the January meeting fell 10 percentage points Friday to just over 50 percent.
This large move down Friday was not ideal for us. I consider the 1450-1470 range to be a bit of a twighlight zone for the SPX. From this range it can seem to move up or down very quickly. Which is no good for making a condor play. Lets see what happens with the markets Monday as to what we do next.
Its gonna be a busy week data wise this week. There are housing starts Tuesday and the next important data will come Friday when the Commerce Department releases numbers about personal income and spending in November, including the core personal consumption expenditure price index, the Fed's favored measure of underlying inflation.
You can be sure of one thing though. These markets will move!
Until next time.
# posted by Paul @ 3:36 PM 
