Monday, October 30, 2006

WMT Holds Down the Dow

The stock market started the week with a whimper as WMT (Wal-Mart) announced October comps of only 0.5%. Sometime in the last few weeks WMT lowered guidance from 2%-4% down to 1% and now this announcement to 0.5%. WMT got off to a poor start and helped drop the Dow about 25 points in the early going, since WMT is a Dow component.

After this initial drop, the market forgot about the troubles at WMT and the troubles in tech from last Friday. There was an upward bias such that the Dow was up 35 points in the early afternoon. Some of this may have been due to the drop in oil of around 4% during the day but that can’t really be known. We don’t think the market pays much attention to any outside influences at the moment.

That said, there are some news items coming this week, the big one being the jobs’ report but there are some others. Tuesday brings the October Conference Board’s consumer confidence numbers with consensus being for an increase to 108 from 104.5. At the same time, the Chicago purchasing managers’ index is expected to show a slight drop from 62.1 down to 58. On Friday, the jobs’ report is supposed to show an increase in jobs of 125K versus last month’s 51K. We will keep highlighting some of these news stories during this time while the market doesn’t seem to care much about the news.

We have tried to separate the market from the news in general just because we think the movement of the stock market doesn’t really depend on what’s going on in the world so much as what’s going on in the minds of the traders and the liquidity factors, neither of which we know much about. The pattern of trading is only reflected in the prices and some of the underlying technical factors. One factor on Monday was volume which was anemic again.

Right now the stock market is trying to continue a string of upward movement that has lasted a long three months and must be getting tired. We see that Tuesday is Halloween, the last trading day of October and Friday is the jobs’ report. Since the market is Due for a correction, this would be a nice time for it. For now, we wait.

Dow Industrials: 12,086.50 -3.76
VIX: 11.20
QQQQ: 42.48
RYVNX: 18.21
RYAIX: 22.20
RYCWX: 37.36
TLT: 89.12
BEGBX: 13.76

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