We’re wondering how the stock market managed to stay positive through the news of the day. This morning we heard that the leading economic indicators (LEI) fell for the second month in a row. The drops of 0.1% followed by 0.2% don’t seem too bad but they were taken before Katrina hit. You can read the article in the Wall Street Journal tomorrow.
This news was coupled with the fact that jobless claims surged as the fallout from Katrina starts to take full effect on the economic numbers. Last week’s number was revised strongly upward and this week’s number is the highest since July of 2003. Now we are just waiting for the other fierce lady, Rita, in the Gulf to hit land. Traders seem to be thinking it doesn’t really matter what happens. Today, Rita was reduced to a Category 4 and reports were that it might drop to Category 3, you know, with winds only about 125 mph, before it actually gets to land.
Other news was that Delta would be cutting up to 9,000 jobs after declaring bankruptcy, this in an effort to improve their financial condition during the bankruptcy.
In other stock news, we find it interesting that in the face of all of the complacency there are two big stocks that haven’t gotten very much attention in this market, WMT and FNM. We have mentioned both before in these pages but let’s take another look at their trading of late. Walmart has just made a new 52 week low today but did close up on the day today. The WMT is now trading at a price that has most everyone who owns it losing money. Fannie Mae is not quite the same but fairly close as it has made a multiyear low in the past month. FNM started out the year just over 70 and today closed at 46 while WMT started the year around 53 and closed at 43 tonight. Have you seen anything about these price facts in the media? These are huge stocks in the Retail and Mortgage markets, two big consumer plays. We just keep wondering when the consumer will be tapped out.
Then tonight after the bell, Oracle, ORCL, a stock we haven’t mentioned too much here, announced earnings and disappointed. The stock lost a little in after hours trading but not very much. We’ll see what it will cause in the market tomorrow.
So far, our exit of BGEIX, one day, has been an ok decision. I should have mentioned that I sold out of PAAS yesterday as well. Now, we will concentrate on the short part of the market and keep an eye on the precious metal sector for opportunities.
We recommend getting out of stocks if you haven’t done so already. Last night we said we are looking for a big drop right now. Today gave you a nice lift in prices to take advantage of them.
Kudos to the Tipster, who saw CMTL jump on earnings news today to a pre-split value of 60. CMTL is a stock we mentioned some time ago and it has had a volatile ride but today it broke out and made some all time new highs.
Dow Industrials: 10,422.05 +44.02 (can it fight back to 10,500?)
BGEIX: 13.16 (it’s a habit)
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