Katrina Still Lethal

The stock market had to deal with some more news from Katrina today but, like Monday, found some support when the August Consumer Confidence numbers came out better than expected at 105.6. This number seems a little out of place at the moment due to the price of gas, which has rallied 60 cents in the last two days, and the effects of the hurricane. These numbers reflect data prior to the weekend but still could have given some strength to the market. The Dow tried to maintain down 50 for about a half an hour before giving way to more selling.

At mid-morning a bottom was found that launched a 60 point run in the Dow in the middle of the day. Then the minutes to the Fed’s August meeting were released indicating the possibility of further tightening due to the threat of inflation. That news item pushed the Dow back to fresh lows for the session around 10,350. This level has provided some support to the Dow over the past several trading days and it did today, too, as the Dow climbed over 60 points again to close down only 50.

The news on Katrina continues to push gas prices up due to three troubled refineries in Louisiana. The burst in gas prices must be an over reaction but it is definitely something to have to deal with at the pump for the near term.

Tomorrow is the end of the month and normally would provide some strength to the market. Neither are we are convinced that September will be as strong as some have suggested. Of course, the same obvious bullish patterns normally develop during this time of the month and just ahead of a holiday. We aren’t going to get too excited just yet.

Erick has left us some good information out in the comments to yesterday’s post. He is talking about heavy insider sales of the homebuilders. Take a look and thanks Erick.

The precious metals didn’t have a very good day today with gold down over six dollars today. The HUI was not down nearly that much so it might be finding support here around 200. We may consider buying more mining stocks or BGEIX if things start looking oversold in this arena.

Dow Industrials: 10,412.82 -50.23
BGEIX: 11.19 (ouch)