Wednesday, January 09, 2008
How Low Will You Go?
The Selling continued on Tuesday on news of continuing weakness in the housing sector and more subprime woes. The Dow fell 238.42 points to close at 12,589.07. The SPX lost 25.99 points closing at 1,390.19. We are in the green and looking very good.
The real concern now is that the SPX has broke 1400 support level. Today will be a key day as we need to see whether there will be a bounce or whether the decline will continue.
Data on the economy continues to be all bad news, leaving traders unwilling to purchase stocks. Pending home sales in November fell by 2.6 percent, putting the year on year decline at 19.2 percent. The problem is that this index is used as a leading indicator for housing activity, leaving the outlook grim for existing home sales in December and January.
In related news, the mortgage lender Countrywide Financial (CFC) saw its shares fall a massive 28.4 percent to a price of $5.47. The New York Times reported that the company fabricated bankruptcy papers. At the same time, Bloomberg.com reported that CFC could file for bankruptcy protection as early as this week. CFC denied the rumors, but this didn’t help stem the large losses.
As mentioned in earlier postings the lack of economic data this week means traders will be givng a lot of attention to the Fed speeches this week. Yesterday Philly Fed President Charles Posser stated that he doesn’t feel further rate cuts will be needed to fix the economy. Mr. Posser feels that recent rate cuts haven’t yet filtered throughout the economy and that broad-based inflation pressures are a concern. Boston Fed President Eric Rosengren is also concerned about inflation, but did state he would favor a rate cut if needed.
As for our play the market makers are playing silly buggers and won't let us close the play for a sensible price (ie 10c or less). What with the drop yesterday my gut instinct is to now sit tight. Lets see what happens today and review the situation.
Until next time.
The real concern now is that the SPX has broke 1400 support level. Today will be a key day as we need to see whether there will be a bounce or whether the decline will continue.
Data on the economy continues to be all bad news, leaving traders unwilling to purchase stocks. Pending home sales in November fell by 2.6 percent, putting the year on year decline at 19.2 percent. The problem is that this index is used as a leading indicator for housing activity, leaving the outlook grim for existing home sales in December and January.
In related news, the mortgage lender Countrywide Financial (CFC) saw its shares fall a massive 28.4 percent to a price of $5.47. The New York Times reported that the company fabricated bankruptcy papers. At the same time, Bloomberg.com reported that CFC could file for bankruptcy protection as early as this week. CFC denied the rumors, but this didn’t help stem the large losses.
As mentioned in earlier postings the lack of economic data this week means traders will be givng a lot of attention to the Fed speeches this week. Yesterday Philly Fed President Charles Posser stated that he doesn’t feel further rate cuts will be needed to fix the economy. Mr. Posser feels that recent rate cuts haven’t yet filtered throughout the economy and that broad-based inflation pressures are a concern. Boston Fed President Eric Rosengren is also concerned about inflation, but did state he would favor a rate cut if needed.
As for our play the market makers are playing silly buggers and won't let us close the play for a sensible price (ie 10c or less). What with the drop yesterday my gut instinct is to now sit tight. Lets see what happens today and review the situation.
Until next time.
# posted by Paul @ 4:15 AM 
