Thursday, February 28, 2008
We Went Up - But Will It Stay There?
The SPX has rallied since my last post. Yesterday it ended fairly flat, after another up and down day, down 1.27 at 1380.02. We have no play on so far.
The economy drew most the attention Wednesday with several reports and testimony from Fed Chairman Bernanke. Earnings news was mixed and Microsoft (MSFT) was also in the news as well after being fined by the European Union. Overall, the major market indices continue to trade in a narrowing range, which again could lead to a large move in one direction or the other in the near term.
Mr. Bernanke provided his semiannual testimony to Congress today. The Fed Chairman’s comments hinted at more rate cuts to help offset economic slowing. However, he noted that inflation pressures remain a concern. Fed fund futures continue to price in strong odds of at least a 50-basis point cut by the Fed on or before their next meeting on March 18.
Economic data released yesterday did little to show improvement in the economy. Durable goods orders plummeted 5.3 percent in January, much worse than the decline of 3.5 percent expected. At the same time, new home sales fell 2.8 percent in January to an annualized rate of 588,000 units. Estimates were for a figure of 600,000 and new home sales are down 34 percent this past year. Supply rose to 9.9 months, its highest since the recession in 1991. This has put pressure on prices, which fell over 4 percent during the month.
We will be looking to get a play on soon. I'm really waiting to sense what direction these markets could move and whether there is still a little more steam in this rally. Looking at the futures today maybe not!!
The economy drew most the attention Wednesday with several reports and testimony from Fed Chairman Bernanke. Earnings news was mixed and Microsoft (MSFT) was also in the news as well after being fined by the European Union. Overall, the major market indices continue to trade in a narrowing range, which again could lead to a large move in one direction or the other in the near term.
Mr. Bernanke provided his semiannual testimony to Congress today. The Fed Chairman’s comments hinted at more rate cuts to help offset economic slowing. However, he noted that inflation pressures remain a concern. Fed fund futures continue to price in strong odds of at least a 50-basis point cut by the Fed on or before their next meeting on March 18.
Economic data released yesterday did little to show improvement in the economy. Durable goods orders plummeted 5.3 percent in January, much worse than the decline of 3.5 percent expected. At the same time, new home sales fell 2.8 percent in January to an annualized rate of 588,000 units. Estimates were for a figure of 600,000 and new home sales are down 34 percent this past year. Supply rose to 9.9 months, its highest since the recession in 1991. This has put pressure on prices, which fell over 4 percent during the month.
We will be looking to get a play on soon. I'm really waiting to sense what direction these markets could move and whether there is still a little more steam in this rally. Looking at the futures today maybe not!!
# posted by Paul @ 7:31 AM 
