Monday, June 23, 2008
Where Next?
You know what. The markets are not happy.....yet I couldn't be happier. There is something wrong with that somewhere...but I am not sure what!!
Our last play finished a winner Friday. The SPX settled nearly 60 points away from our short strike deep in the green. It was a great 4 day 20 minute play!
The markets really finished the week on a bad note. The Dow fell 220.40 points to close at 11,842.69. The SPX gave up 24.90 points to end on 1,317.93.
Things were just bad everywhere Friday. Israel hinted that it would attack Iran and that sent oil rising over $4 a barrel and that brought out the bears at the open.
Then financial stocks yet again continued to haunt the markets. Big bond insurers Ambac (ABK) and MBIA (MBI) saw their rating cut by Moody’s below triple AAA. Then Merrill Lynch cut its earnings target for the sector by 15 percent on concerns banks will see further write-downs. J.P. Morgan also stated that banks will need to replenish reserves.
By the way I get a lot of people asking me how to play the bank sector. A nice way to do this is through the KBW banking index ($BKX). Be warned though, it can be volatile!
And then just to finish the day off S&P warned they would downgrade automakers on the back of sky high energy prices as customers would start seeking alternative travel arrangements and smaller cars.
The Dow fell below its key 12,000 support and the SPX is right at its support level now of 1317. If the markets do not bouce at these levels then I think that could be a very bearish sign.
Anyway major event this week is of course the Fed meeting. I don't envy them. They have to decide whether to fight inflation (raise rates) or promote economic growth (cut rates). They can't do both!!
My guess is they will probably do nothing.....but its the statement which counts which will indicate what they may do in the future. Sticking their head in the sand is not...I hope.....an option.
Until next time.
Our last play finished a winner Friday. The SPX settled nearly 60 points away from our short strike deep in the green. It was a great 4 day 20 minute play!
The markets really finished the week on a bad note. The Dow fell 220.40 points to close at 11,842.69. The SPX gave up 24.90 points to end on 1,317.93.
Things were just bad everywhere Friday. Israel hinted that it would attack Iran and that sent oil rising over $4 a barrel and that brought out the bears at the open.
Then financial stocks yet again continued to haunt the markets. Big bond insurers Ambac (ABK) and MBIA (MBI) saw their rating cut by Moody’s below triple AAA. Then Merrill Lynch cut its earnings target for the sector by 15 percent on concerns banks will see further write-downs. J.P. Morgan also stated that banks will need to replenish reserves.
By the way I get a lot of people asking me how to play the bank sector. A nice way to do this is through the KBW banking index ($BKX). Be warned though, it can be volatile!
And then just to finish the day off S&P warned they would downgrade automakers on the back of sky high energy prices as customers would start seeking alternative travel arrangements and smaller cars.
The Dow fell below its key 12,000 support and the SPX is right at its support level now of 1317. If the markets do not bouce at these levels then I think that could be a very bearish sign.
Anyway major event this week is of course the Fed meeting. I don't envy them. They have to decide whether to fight inflation (raise rates) or promote economic growth (cut rates). They can't do both!!
My guess is they will probably do nothing.....but its the statement which counts which will indicate what they may do in the future. Sticking their head in the sand is not...I hope.....an option.
Until next time.
# posted by Paul @ 6:19 AM 
