Thursday, December 13, 2007
End of the Rally?
Its been a while since my last post....sorry. When we don't have a play on I get lazy!
Anyway its been a bit of a roller coaster week. The markets rallied strongly, the Fed cut rates by 0.25% and the markets hated it because:
1. they wanted a 0.50% cut; and
2. the Fed hinted that's your lot in terms of future cuts and traders were hoping the Fed would be more aggressive.
The markets tanked Tuesday with the SPX falling over 38 points.
Yesterday the Fed announced its liquidity plans to inject over $40billion into the economy and the markets liked this...a lot. The Dow made a 300 point gain in about 10minutes and the SPX nearly recovered all its losses it made the day before.
The worlds major central bnanks are colluding to provide $40 billion in liquidity that is expected to ease some of the credit crunch problems seen across the world. However the early strength faded on concerns that move will only help commercial banks and not investment banks.
There was also more bad news on the financial sector with Bank of Amercia joining the clan of banks being hit by subprime issues. This brought down the all the sector.
Concerns about inflation picked up Wednesday following the release of import and export prices and the international trade data. Both showed rising import prices, mainly due to elevated energy prices. Speaking of energy prices, oil which had been backing off last week soared on the session, adding $4.37 a barrel to $94.39. Crude inventory levels did fall by 700,000 barrels and this combined with expectations that global demand will pick up to create higher oil prices.
Traders will continue to digest economic data this week with both producer price index and consumer price index due out, along with the retail sales data for November.
We will be looking for a play today. The least time we have an open position in this market the better.
Until next time.
Anyway its been a bit of a roller coaster week. The markets rallied strongly, the Fed cut rates by 0.25% and the markets hated it because:
1. they wanted a 0.50% cut; and
2. the Fed hinted that's your lot in terms of future cuts and traders were hoping the Fed would be more aggressive.
The markets tanked Tuesday with the SPX falling over 38 points.
Yesterday the Fed announced its liquidity plans to inject over $40billion into the economy and the markets liked this...a lot. The Dow made a 300 point gain in about 10minutes and the SPX nearly recovered all its losses it made the day before.
The worlds major central bnanks are colluding to provide $40 billion in liquidity that is expected to ease some of the credit crunch problems seen across the world. However the early strength faded on concerns that move will only help commercial banks and not investment banks.
There was also more bad news on the financial sector with Bank of Amercia joining the clan of banks being hit by subprime issues. This brought down the all the sector.
Concerns about inflation picked up Wednesday following the release of import and export prices and the international trade data. Both showed rising import prices, mainly due to elevated energy prices. Speaking of energy prices, oil which had been backing off last week soared on the session, adding $4.37 a barrel to $94.39. Crude inventory levels did fall by 700,000 barrels and this combined with expectations that global demand will pick up to create higher oil prices.
Traders will continue to digest economic data this week with both producer price index and consumer price index due out, along with the retail sales data for November.
We will be looking for a play today. The least time we have an open position in this market the better.
Until next time.
# posted by Paul @ 2:21 AM 
