Market Observations 07/28/06
As the largest week of quarterly reporting closed, yesterday, Microsoft -2%, Dow Chemical at a 2.5 year low, Aetna -17% to a 52 week low. Last quarter Exxon Mobil posted the largest ever.... yesterday they posted the 2nd largest ever quarterly profit by a publically held company.
Yesterday, Chevron hit an all time high, today an earnings shortfall??? stock -2.7%. Baker Hughes Q2 was outstanding, stock -3.5%??? The oil energy sector was not happy but is still the leader +16.8% YTD.
On lowered GDP, the media hyped a "soft landing" and "reduced to 26% chance" of a Fed August rate hike. The equities and bond markets slurped it up faster than an alcoholic in denial shooting rot gut.
Witness the euphoria as the 10 year note went below the psychological 5% level while finance and tech bolted to the upside. Yes there is a slowing, but the incoming data indicates that average growth is being maintained.
Meanwhile inside the numbers there is evidence of an ugly stagflation energy passthrough picture that is out of control. Today's 2% drop in crude elevated moods, but without a decided long term pullback in crude prices, this situation will only get worse.
The market demonstrated dementia regarding Israels call up of reserves, and pending increased ground offensive in southern Lebanon. Syria, Iran and Israel will increase involvement and what this could do to the price of crude the market ignored.
Around the 31st will bring a major inflection which could determine near and longer term direction for the markets. Todays upside action was nice to compliment the last 7 days, but it still looks like a convictionless head fake. Lets see what shakes on Monday 31st.
FYI, strangles and straddles on the RUT have been very dependable of late. The RUT banged its head into 700 for the 4th time in recent days. Watch violation of DJIA 11300, SP500 1280 & RUT 705 upside or RUT 685 down for further clues.
I suspect that next Fridays non farms payroll and the Aug 8th FOMC annoucement, coupled with the quarterly financing Aug 7-10th with ultimately determine whether we get a nice summer rally or it will turn out to be a cruel, cruel summer.
Keep it tween da ditches, we take it day by day and keep our eyes peeled to the sky, because it could be a name brand that pancakes us. Just my opinion, I could be wrong, this is The Nattering Naybob and your NOT!!!
Yesterday, Chevron hit an all time high, today an earnings shortfall??? stock -2.7%. Baker Hughes Q2 was outstanding, stock -3.5%??? The oil energy sector was not happy but is still the leader +16.8% YTD.
On lowered GDP, the media hyped a "soft landing" and "reduced to 26% chance" of a Fed August rate hike. The equities and bond markets slurped it up faster than an alcoholic in denial shooting rot gut.
Witness the euphoria as the 10 year note went below the psychological 5% level while finance and tech bolted to the upside. Yes there is a slowing, but the incoming data indicates that average growth is being maintained.
Meanwhile inside the numbers there is evidence of an ugly stagflation energy passthrough picture that is out of control. Today's 2% drop in crude elevated moods, but without a decided long term pullback in crude prices, this situation will only get worse.
The market demonstrated dementia regarding Israels call up of reserves, and pending increased ground offensive in southern Lebanon. Syria, Iran and Israel will increase involvement and what this could do to the price of crude the market ignored.
Around the 31st will bring a major inflection which could determine near and longer term direction for the markets. Todays upside action was nice to compliment the last 7 days, but it still looks like a convictionless head fake. Lets see what shakes on Monday 31st.
FYI, strangles and straddles on the RUT have been very dependable of late. The RUT banged its head into 700 for the 4th time in recent days. Watch violation of DJIA 11300, SP500 1280 & RUT 705 upside or RUT 685 down for further clues.
I suspect that next Fridays non farms payroll and the Aug 8th FOMC annoucement, coupled with the quarterly financing Aug 7-10th with ultimately determine whether we get a nice summer rally or it will turn out to be a cruel, cruel summer.
Keep it tween da ditches, we take it day by day and keep our eyes peeled to the sky, because it could be a name brand that pancakes us. Just my opinion, I could be wrong, this is The Nattering Naybob and your NOT!!!
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