In a sea of short term market volatility, it’s often difficult to see the big picture but we all need to remember that in the midst of manipulation, rumor, Fed speak and chat room BS there is just one constant that will never change. Human emotion. .. specifically fear and greed. We are reminded of this yet again as we cope with yet another boom bust cycle where lessons of the past are ignored and with near certainty a fresh round of CEO’s will be spending days at the crossbar hotel.
With greed comes pain, with pain comes blame and the blame game ends in fear. Only then can we start discussing a true bottom to a market and I don’t think we’re there yet. As the characters of this housing horror show defended their practices in front of congress last week (where was Greenspan?) it’s quite clear the blame game is in full motion. The public always pays first and now it’s time for the government to make an example out of a few ill intentioned CEO’s. It’s all playing out according to the script and I don’t think we’ve seen the end of this mess until a few of the larger financial/home builder companies go under and a few recognized executives are indicted.
The technicals reveal that the market is currently at a critical point as they approach the January lows. The Nasdaq actually tested this level on Friday but managed to close above this critical support level with a bit of a late day recovery. All in all, not a bad day considering that poor jobs number but it was a day of distribution, so the Nasdaq is still very much in danger of taking out those January lows and closing below which would set it up for another leg down.
The S&P didn’t come all that close to the Jan lows on Friday but it appears to be just a matter of time before that level is tested. It would be good to take out this level with some volume, followed a big round of institutional buying to help further flush out the weak hands and set this market up for a bull run. However, as I mentioned above I think there is probably still some pain left in this market and it won’t happen that quickly. It’s possible we get a weak bounce near those Jan lows before ultimately taking it out.
The Dow looks like the S&P and needs to test the January lows as well. Note the channel that’s shaping up.
::: Model Portfolio :::
** This section will now appear as a separate report to be published every other Wednesday.
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::: Best/Worst Performers :::
– Top 10 Performing Industries For the Week –
1. Meat Products: 3.55%
2. Trucking: 1.95%
3. Tobacco Products: 1.85%
4. Grocery Stores: 1.75%
5. Multimedia & Graphics Software: 1.70%
6. Gold: 1.10%
7. Air Delivery & Freight Service: 1.05%
8. Application Software: .80%
9. Broadcasting – Radio: .75%
10. Discount – Variety Stores: .75%
– Top 10 Worst Performing Industries For the Week –
1. Mortgage Investment: -20.35%
2. Processing Systems & Products: -11.45%
3. Consumer Services: -10.50%
4. Savings & Loans: -9.45
6. Catv Systems: -8.95%
7. Education & Training Services: -8.75%
8. Surety & Title Insurance: -8.45%
9. Rental & Leasing Services: -7.30%
10. Home Health Care: -7.25%
– Top 5 Best Performing ETFs For the Week –
1. US Natural Gas (UNG) 4.70%
2. US Oil Fund (USO) 4.10%
3. Powershares Commodities (DBC) 3.05%
4. Ishares Tawain (EWT) 2.40%
5. Ishares Silver (SLV) 1.90%
– Worst 5 Performing ETF’s –
1. Herzfeld Caribbean Basin (CUBA) -13.40%
2. iPath India (INP) -12.45%
4. Morgan Stanley India Fund (IIF) -10.40%
5. iShares Home Construction
This section will now appear as a separate post on Mondays (if there are some interesting IPO’s coming to market).
While 2008 should be a much slower year for IPO’s considering the deterioration of the market, there will continue to be some good companies coming to market here and there. I’ll be highlighting the best IPO’s every Monday.
::: Upcoming Economic Reports (
Monday: Wholesale Inventories
Tuesday: Trade Balance
Wednesday: Trade Budget, Crude Inventories
Thursday: Import/Export Prices, Initial Claims, Retail Sales, Business Inventories
::: Earnings I’m Watching This Week :::
Bancolombia (CIB), China Security & Surveillance (CSR), Companhia Energetica (CIG), Gaiam (GAIA), Hovanian (HOV), LMI Aerospace (LMIA),
Dicks Sporting Goods (DKS), DIVX Inc (DIVX), GigaMedia (GIGM), LSB Industries (LXU)
Air Methods (AIRM), Flotek (FTK), Fushi Copperweld (FSIN), JA Solar (JASO), NGA Resources (NGAS), Sigma Designs (SIGM), T3 Energy Services (TTES), TBS Intl (TBSI), WuXi Pharma (WX)
Aeropostale (ARO), Akeena Solar (AKNS), Arena Resources (ARD), Comtech Group (COGO), Metalico (MEA), Pacific Sunwear (PSUN), Zumiez (ZUMZ)