Market Commentary for October 19, 2007 from Millennium-Traders.Com

MTnews · #1 (**permalink**) 10-19-2007, 07:42 PM

Twenty years ago today, the markets posted their largest one day loss in history; the day which will go down in history is referred to as, Black Monday. On Black Monday, the DOW shed over $500 Billion, on that one day.
Today, the trading session was plagued by a strong south bound trend with the Bears clearly in control. Trading volume was heavy as the markets literally sank lower, as the day moved forward. Short sellers reaped from the negative trend, investors on the other hand were either struck by a panic mode or possibly joined in on the sell off, to cut their losses. The down draft is attributed to increased concerns over the state of our economy as well as, the increasingly rising cost of oil. As the price of a barrel of oil continues to surge higher, the likelihood of the market to move lower is almost imminent.
At the closing bell, here is how the major indices ended the session: the DOW (Dow Jones Industrial Average) posted a hefty triple digit loss of 366.94 points on the day to end the session at 13,522.02; the NYSE (New York Stock Exchange) posted a hard triple digit loss of 254.34 points to end the session at 9.920.27; the NASDAQ posted a sharp loss of 74.15 points for a close at 2,725.16; the S&P 500 moved lower by 39.45 points to end at 1,500.63 and the RUSSELL 2000 moved lower by 26.24 points to close at 798.79. The FTSE All-World Index ex-US (top Large/Mid Cap aggregate from over 2,700 stocks from the FTSE Global Equity Index Series (GEIS) which covers 90% of the world’s investable market capitalization) posted a loss of 4.62 points to close at 269.15 and the FTSE RAFI 1000 posted a triple digit loss of 159.40 points to close at 6,157.33.
Federal Reserve Chairman Ben S. Bernanke comments released today: Rate Policy Predictability Is 'Critical'; Should Be Cautious In Estimating Growth Potential; Assessing Economies True State 'Formidable' Challenge; Fed Should Avoid 'Overreacting' To Economic Info; Markets Have Already Tightened Lending Standards; Hard To Know What Fed's Future Challenges Are and Communication, Information Key To Predictability.
William Poole, President of the Federal Reserve Bank of St. Louis, comments released today, from yesterday: Recent Housing Cycle Unique Due To Sub-prime Rise and Sees Long Road To Recovery For Sub-prime Lending.
William Poole, President of the Federal Reserve Bank of St. Louis, comments released today: Important For Fed To Do What Is Says It Will Do; Markets Now Do Much Of Fed's Work For It; Banks Well Capitalized Amid Current Troubles; Fed Credibility Intact Amid Recent Market Troubles; Best For Fed To Head Off Rising Market Troubles; Political Leaders Often Misunderstand Monetary Policy; Fed Should Not Experiment With Monetary Policy; Important For Fed To Do What It Says It Will Do; Central Bank Credibility 'Fragile,' Hard To Earn; Policy Rules Help Avoid Mistakes Of The Past and Limits To How Often Fed Should Release Forecasts.
Commodities Markets
The trend was lower across the board today for the Energy Sector: Light crude moved lower today by $0.87 to close at $88.60 a barrel; Heating Oil closed lower by $0.02 at $2.35 a gallon; Natural Gas moved lower today by $0.35 to close at $7.73 per million BTU and Unleaded Gas moved lower today by $0.02 to close at $2.17 a gallon.
Metals Market ended the session mixed across the board today: Gold moved lower today by $0.30 to close at $768.40 an ounce; Silver moved lower by $0.17 to close at $13.64 per ounce; Platinum moved higher today by $1.00 to close at $1,448.60 an ounce and Copper closed higher by $0.01 today at $3.55 per pound.
On the Livestock and Meat Markets, the trend was mostly lower across the board today: Lean Hogs ended the day lower by $0.45 to close at $56.93; Pork Bellies ended the day higher by $0.43 at $83.40; Live Cattle ended the day lower by $0.40 at $97.30 and Feeder Cattle ended the day lower by $1.10 at $111.15.
Other Commodities: Corn moved higher today by $3.00 to close at $370.25 and Soybeans moved lower today by $9.25 to end the session at $1,001.25.
Bonds were nicely higher across the board yet again today: 2 year bond moved higher by 8/32 today to close at 100 13/32; 5 year bond moved higher by 18/32 to close at 101 today; 10 year bond moved higher by 27/32 today to close at 102 27/32 and the 30 year bond closed higher by 1 15/32 at 105 for the day.
The e-mini Dow ended the session today at 13,538 with a heavy loss of 402 points on the trading session. The total Dow Exchange Volume for the day came in at 146,784 which are comprised of Electronic, Open Auction and Cash Exchange. Traders should review workshops available at the CBOT (Chicago Board of Trade) Educational in-person seminars schedules available on CBOT (Chicago Board of Trade) website.
The end of day results for the CBOT (Chicago Board of Trade) which is comprised of the total Exchange Volume for Futures and Options (EVFO) including Electronic, Open Auction and Cash Exchange ended the day at 3,679,975; Open Interest for Futures moved lower by 27,476 points to close at 9,552,942; the Open Interest for Options moved higher by 146,695 points to close at 8,840,366 and the Cleared Only closed higher by 193 points at 9,447 for a total Open Interest on the day of 18,402,755 for a total Change on the day with a gain of 119,412 points.
On the NYSE today, advancers came in at 524 decliners totaled 2,778; unchanged came in at 80; new highs came in at 121 and new lows came in at 169. Gainers and losers for the day as well as active day trading stocks on the NYSE: FTSE/Xinhua China (FXI) pushed lower today with a loss of 13.20 points with a high on the session of $209.55, a low of $197.75 with a final trading price at $199.30; Rio Tinto plc (RTP) moved sharply lower on the session to post a loss of 13.36 points with a high on the day of $352.23, a low of $341.14 for a closing price on the week at $341.14; China Petroleum & Chemical Corporation (SNP) fell lower on the day for a loss of 10.08 points with a high on the day of $162.81, a low of $154.25 for a final price at the bell of $154.73; PetroChina Company Limited (PTR) continued its trend into lower territory with a heavy loss of 17.74 points with a high on the session of $246.50, a low of $232.75 with a closing price at $232.98; Schlumberger Limited (SLB) took a hit today for a loss of 12.30 points with a high on the day of $105.48, a low of $98.00 to close the session at $99.32;Uniao de Bancos Brasileiros (UBB) shed 8.18 points on the day with a high of $142.83, a low of $135.05 for a final trading price at $135.19 and China Telecom Corporation Limited (CHA) moved lower on the day by 6.79 points for a final trading price at $84.47.
On the NASDAQ today, advanced totaled 488; decliners totaled 2,495; unchanged came in at 114; new highs came in at 45 and new lows came in at 196. Gainers and losers for the day as well as, active day trading stocks on the NASDAQ: Intuitive Surgical Incorporated (ISRG) soared higher on the day by 12.90 points with a high on the day of $270.52, a low of $265.90 with a final trading price of $269.34; Cerner Corporation (CERN) fell lower on the session to post a loss of 5.98 points with a high on the day at $61.16, a low of $58.32 for a closing price at $59.47; SanDisk Corporation (SNDK) took a sharp dive today with a loss of 15.07% to shed 7.58 points with a final trading price at $42.73 and Google Incorporated (GOOG) moved green on the day by 5.09 points with a high of $658.49, a low of $643.23 to end the session at $644.71.

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Dru · #2 (**permalink**) 10-20-2007, 01:23 AM

Thank you for the summary.

Unfortunately, temporary upswings in a market that is not strong enough to support the higher level gets too many buyers excited and they jump in on the up-tick. Later, they are left holding the bag of deflated securities. Continued volatility will most likely continue for some time until the US currency finds a stable international trading level. The currency that has been the benchmark of the modern era is feeling the effects of globalization of free markets. As more and more jobs are sent to countries with cheap labor forces, the dollar will sag until it reaches some sort of equilibrium. Meanwhile, the American worker demands more, even as jobs turn from high paying technical, to lower paying service jobs and a drop in the scale of many technical positions. Just one example would be a computer programmer who 20 years ago was a rare and expensive breed. Today you can hire one for 10 bucks an hour.

Yet the American dream survives, mostly on the television. Beautiful homes with manicured yards and expensive cars in the driveway are seen as the norm, or standard of society. Yet for most consumers, the urge to spend has been out of control for so long that debt is dismissed with little regard for any consequence. Individuals have over-spent and under-saved and as times grow tight with international balancing of currencies, many have no reserve to draw from. Debt continues to escalate as non-essential purchases are seen as a necessary expense to maintain class position. The bubble will eventually burst, in spite of efforts of the fed to keep it from happening. There is only so much, and so long that a carefree attitude of wastefulness and lack of fiscal prudence can be disguised. Eventually the piper wants to be paid but the kitty is empty.

So here we find ourselves on the eve of a new political era. Politicians have long believed that the answer to any problem is to throw more money at it. Historically, more money has not solved many problems. Yet there must be a proper balance between charity and responsibility. The only way to satisfy both is to demand accountability of public monies. Unfortunately too many people believe that money comes from an endless supply of gold in Fort Knox, or maybe buried under the House of Congress. We tend to forget that every time a new school or highway is built, we the people will be paying the bill. Every time an entitlement is handed out, we the people will pay that bill too.

It is not until we learn to be thrifty savers like our grandparents were, that we will have the peace and security our grandparents had in their retirement years. Everyday I am talking with senior citizens worried about how they will afford their medical costs and drug therapies. These are individuals who have a pension, and social security, and a continuing medical benefit fund. These are the lucky ones. These are the ones who earned large salaries during those working years. What about the ones just now entering retirement? The Baby Boomers? Have they been saving? Not really. And what about their kids? Gen X'ers, or the Y generation? In this spend first society, more and more individuals believe that the government will be there to bale them out. They believe they will have a great government retirement..."Social Security, right?" They believe there will be health care, and retirement homes, and food for all! But no one is saving to have those things, in fact we consume before we have even earned it.

Was todays fall back, or indeed the pullback of the past week a surprise? Only to those who invested three weeks ago as the DOW was pushing new records. Will it be up again? Probably. Will it drop again? Most definitely. Will politicians be able to control it? Not likely.

We are feeling the high and low tides of a global economy shifting to a least common denominator. As free international trade continues to find markets of cheap labor and wealthy consumers, the rumblings will continue. Savvy investors, and diligent savers will continue to win, while those who are enticed to play the game of consumerism at all costs will be buried in their credit heaps.

It will take everyone wanting to see a change, before it can happen. Governments must take less from the people and be forced to have a budget and be accountable to the people. Individuals must have their own budgets that include saving and investing. It has always been, and will always be the American way to stand tall and proud. We must be willing to take care of ourselves, and our families, and our neighbors if necessary. When we get our own houses in order, when we stop being so wasteful in everything we do, maybe then the value of the American Dollar will have something to stand for once again. Maybe then we can be proud of what we have done, instead of what we have bought.

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