Dow Jones 30: Industrials Index

[setravis]

Wall Street Sees Red.......


Wednesday into the close 11/21/2007


Stocks closed sharply to the downside Wednesday as session that had been weak all along took a decided turn for the worse in the final minutes of trading.

The Dow Jones Industrial Average sank 211 points, or 1.6%, to 12,799, and the S&P 500 plunged 23 points, or 1.6%, at 1417, leaving the index roughly flat with its 2006 close. The Nasdaq Composite tumbled 35 points, or 1.3%, to 2562.

Weighing on the mood were oil hitting a record high overnight, the dollar's continuing downward spiral and traders seeking safety in bonds.

U.S. Treasury securities were rallying, pulling down yields. The 10-year note was up 23/32 in price, yielding 4.01%, a level not seen in two years. The 30-year bond was adding 22/32, yielding 4.46%.

"With the market weakness, the bond market is reacting out of fear that equities will break down further," said John Canavan, market analyst with Stone & McCarthy Research Associates. "No one wants to miss out on the trade. It's a very strong safe-haven bid."

Meanwhile, crude futures reached a record $99.29 a barrel overnight, oil's first time above the $99-a-barrel mark. Prices retreated, though, despite the Energy Department's weekly inventory report that showed a 1.1-million-barrel decline in crude stocks.

Recently, crude was down 38 cents from the last settlement price to $97.65 a barrel.

The dollar lost ground against the euro and the yen on fears that credit market woes and higher energy costs will cause economic growth in the U.S. to slow.

Both higher oil prices and a weakening dollar become more worrisome for traders in light of Tuesday's release of the minutes from the October Federal Reserve policy meeting.

"These problems are taking on the shape of a grinding panic, although it may be exaggerated," said Edgar Peters, chief market strategist with Pan Agora. "The market is pricing in a recession, and not just slowing consumer growth but falling consumer growth."

The expanded minutes showed that Fed members regarded the interest rate cut last month as a "close call," but that the reduction was appropriate to help offset the effects of tighter financial conditions on the economic outlook.

"Part of the problem is that the dollar is dropping and oil is rising," said Paul Mendelsohn, chief investment strategist with Windham Financial, after the release of the minutes. "Cutting rates would make that worse than better. The Fed needs to do much more in order to stabilize these forces."

"This is a real conundrum for the Fed as they have conflicting goals and only one instrument," said Peters. "It's times like this that monetary policy doesn't work as cleanly as they'd like. The Fed is facing a weaker economy and rising inflation."

More fears over the credit crisis were ignited after a Reuters report that Treasury Secretary Henry Paulson said he expects home default rates to climb higher in 2008.

Financial stocks were slipping on the Paulson comments. AIG (AIG:) , Goldman Sachs (GS:) , Merrill Lynch (MER:) , Morgan Stanley (MS:) , and Bear Stearns (BSC:) were all lower by 2% or more.

On the corporate news front, retail stocks were in focus amid several earnings releases. Abercrombie & Fitch (ANF:) topped profit estimates by a penny, but revenue was a bit light. Shares of Gap (GPS:) fell more than 4% as third-quarter revenue was flat and same-store sales fell 5%.

Limited Brands (LTD:) posted a 48% drop in third-quarter earnings due to weak fall sales. The retailer also offered holiday quarter guidance that was below the Thomson First Call consensus. Still, the stock was up 33 cents, or 1.9%, at $17.86.

After the last close, Whole Foods Market (WFMI:) posted a 15% decline in fiscal fourth-quarter earnings due to the acquisition of Wild Oats. Excluding items, the company matched Wall Street's expectations. Whole Foods was recently down 23 cents, or 0.5%, to $42.02.

Also, teen apparel retailer Hot Topic (HOTT:) reported a decline in third-quarter profit, although results matched expectations. The company also backed its fourth-quarter guidance, which is ahead of the consensus forecast. Still, shares were falling by 43 cents, or 5.9%, to $6.88.

Several economic reports were due out before midsession. Already, the Labor Department said initial jobless claims fell by 11,000 last week to 330,000 claims, falling in line with estimates.

Elsewhere, the University of Michigan said its consumer sentiment index fell to a reading of 76.1 in November, slightly better than expectations, and the Conference Board said that leading economic indicators a greater-than-expected 0.5% in October.

Overseas markets were uniformly lower. In Asia, Hong Kong's Hang Seng plummeted 4.2%, and Japan's Nikkei 225 decreased by 2.5%. Among European bourses, London's FTSE 100 fell 2.5%, while Germany's Xetra Dax was down 1.5%.

The U.S. market will be closed Thursday for Thanksgiving. Trading will resume Friday, but will end at 1 p.m. EST.

[setravis]

The DJIA continues to look like a ball bouncing down a hill,
It continues to look for a place to stop. The 13,000 support level has been penetrated twice now, and there is more bouncing downward due.
The next level of support, and perhaps the bottom, will be at 12,750, probably sometime next week, before a reversing near-term rally can get going.

The intermediate-term downtrend is in charge. It eroded further yesterday by all its measures.
Dove further into its oversold zone, but can still go down more.

The near-term trend indicators have tried several times in the last two weeks to kick up the market indices and each time have failed to sustain any significant rally.
The action of both trend indicators signals that the market indices' downhill rolling ball has not found a place to rest and until it does no meaningful rally can ensue. However, with all of the indicators in or near their oversold territories, it is reasonable to expect a bottom in the DJIA 12,750 area.

The trade-term trends are adding enough bounce every day that the prudent buyer of stocks will wait for the bottom of this intermediate-term trend to be clearly established before jumping into long positions with abandon. Seemingly there currently remains much economic uncertainty about a credit crisis-triggered future recession and other factors for equity value discounting from fear to be replaced by enthusiastic outlooks. It has now been estimated that the sub-prime loan debacle created $400 billion in bad loans, and financial institutions have yet to own up publicly to a quarter of that amount. That alone casts a continuing pall over equity valuations, and until it is lifted the stock market is going to have a difficult time rallying.

[setravis]

Wall Street Catches a Break.......


Friday into the close , 11/23/2007


Stocks ended a light volume, holiday-shortened session with solid gains Friday, as retailers, financials and commodity stocks led the market higher.

The Dow Jones Industrial Average jumped 181.84 points, or 1.42%, to 12,980.88, and the S&P 500 was up 23.93 points, or 1.69%, at 1440.70. The Nasdaq Composite rose 34.45 points, or 1.34%, to 2596.60.

Markets were closed in the U.S. Thursday for Thanksgiving. The day after the break is typically one of the lowest-volume trading days of the year, and this year didn't disappoint. About 1.53 billion shares traded on the New York Stock Exchange, and advancers beat decliners by a 5-to-1 margin.

Volume on the Nasdaq was 783 million shares, with winners topping those that fell by 3 to 1.

Shoppers appeared to be out in droves to take advantage of big promotions at Wal-Mart (WMT:) , Best Buy (BBY:) , Target (TGT:) and Macy's (M:) .

The S&P Retail Index climbed 2.8%. Among the best performing names, Circuit City (CC:) jumped 19.5%, Target was up 5.7%, Kohl's (KSS:) gained 2.4%, and Wal-Mart added 1.9%.

"This is partially a technical bounce as everyone sold off and went home early Wednesday," said Edgar Peters, chief investment officer with Pan Agora. "It's difficult, though, to read a lot into today's move because of low volume and the early close."

Meanwhile, financials were buoyed by rumors E*Trade Financial (ETFC:) would be a buyout target. Shares soared 25.1% at $5.33. The KBW Bank Index rose 3.4%.

Oil prices were on the rise. Crude was holding near $98 a barrel, slightly higher for the day. Gold and silver futures also rallied. The Amex Gold Bugs Index was better by 3.7%.

In other corporate news, United Airlines parent UAL Corp. (UAUA:) is still open to a potential merger with another air carrier, according to a recent report in Business Week. Shares of UAL gained $1.23, or 3.2%, to close at $40.23.

There were no economic releases on the docket, and bond pits closed early. The 10-year Treasury note was flat in price, yielding 4.01%. The 30-year bond was up 13/32, yielding 4.43%.

Overseas markets were stronger. In Asia, Hong Kong's Hang Seng added 2.1%. Japan was closed. Among European bourses, London's FTSE 100 rose 1.7%, while Germany's Xetra Dax was up 0.6%.

[setravis]

Futures Point to Early Gains.......


Monday 11/26/2007 8:39 AM EST


Stock futures were pointing to a higher open for the U.S. market as the momentum from the holiday-shortened session that ended last week appeared to be set to flow over.

However, the gains were beginning to fade a bit. Lately, S&P 500 futures were around 2 points better than fair value, and Nasdaq 100 futures were about 4 points ahead of fair value.

Overnight, Asia's stocks rose. Tokyo's Nikkei advanced 1.7%, and Hong Kong's Hang Seng was up 4.1%. Europe was also higher. London's FTSE was tacking on 0.3%, and Frankfurt's Dax was up 0.4%.

New York had only a half session Friday, the day after Thanksgiving, but with retailers, financials and commodity stocks leading the way, the major averages posted solid gains.

The Dow Jones Industrial Average jumped 181.84 points, or 1.42%, to 12,980.88, and the S&P 500 was up 23.93 points, or 1.69%, at 1440.70. The Nasdaq Composite rose 34.45 points, or 1.34%, to 2596.60.

Once again, financials were in focus. London's HSBC (HBC:Nasdaq) said it plans to transfer two structured investment vehicles to its balance sheet, increasing its assets by $45 billion. HSBC said it doesn't anticipate a material effect on its earnings.

Also, The Wall Street Journal said potential buyers of E*Trade (ETFC:Nasdaq) are proving reluctant to come through with a bid because of concerns about the declining value of the online broker's mortgage portfolio. The report cited people who were familiar with the talks.

Meanwhile, with the subprime mess showing no signs of being resolved anytime soon, former Treasury secretary Lawrence Summers believes the U.S. could be in danger of being hit by a recession. Writing in the Financial Times, Summers said that "without stronger policy responses than have been observed to date, moreover, there is the risk that the adverse impacts will be felt for the rest of this decade and beyond."

Among early research calls, Citigroup did what so many others have already down, lowering its near-term outlook for the homebuilding sector.

Citi cut Centex (CTX:NYSE) , D.R. Horton (DHI:NYSE) , KB Home (KBH:NYSE) , Lennar (LEN:NYSE) , Toll Brothers (TOL:NYSE) and others to hold from buy.

Bank of America upgraded Deere (DE:NYSE) , while UBS downgraded Fannie Mae (FNM:NYSE) and Freddie Mac (FRE:NYSE) . Boeing (BA:NYSE) was upgraded at Wachovia.

Elsewhere, Newell Rubbermaid (NWL:NYSE) affirmed its fourth-quarter profit estimates but trimmed its guidance, and Philips Electronics (PHG:NYSE) set plans to acquire Genlyte (GLYT:Nasdaq) for roughly $2.7 billion.

Away from stocks, Treasury prices were declining early. The 10-year note was down 9/32 in price, lifting the yield to 4.03%, and the 30-year bond was losing 3/32 to yield 4.43%.

The dollar fell against the euro and the pound, but gained on the yen.

Commodities were on the rise. Crude oil prices were adding 20 cents to $98.38 a barrel, and gold was up $7.10 to $831.80 an ounce.

[setravis]

Financials Drag Down Stocks.......


Monday 11/26/2007


Stocks in the U.S. were having a rocky session Monday as weakness in financials and precious-metals names trumped gains in the transportation sector.

The Dow Jones Industrial Average was slipping 33 points at 12,948, and the S&P 500 was giving back 9 points to 1432. The Nasdaq was retreating 9 points to 2588.

Once again, financials were in focus. London's HSBC (HBC:Nasdaq) said it plans to transfer two structured investment vehicles to its balance sheet, increasing its assets by $45 billion. HSBC said it doesn't anticipate a material effect on its earnings.

Goldman Sachs, however, predicts more writedowns for HSBC, and its shares slipped 1.3%.

Separately, The Wall Street Journal said potential buyers of E*Trade (ETFC:Nasdaq) are proving reluctant to come through with a bid because of concerns about the declining value of the online broker's mortgage portfolio.

E*Trade was down 9.4%.

Also, Fannie Mae (FNM:NYSE) and Freddie Mac (FRE:NYSE) were losing 7% and 4%, respectively, after UBS downgraded both of the government-chartered mortgage buyers.

The financial subgroup trackers were well into the red. The Amex Securities Broker/Dealer Index was losing 2.3%, and the NYSE Financial Sector Index was down 1.3%. The KBW Bank Index was surrendering 1.7%.

Meanwhile, with the subprime mess showing no signs of being resolved anytime soon, former Treasury secretary Lawrence Summers believes the U.S. could be in danger of being hit by a recession. Writing in the Financial Times, Summers said that "without stronger policy responses than have been observed to date, moreover, there is the risk that the adverse impacts will be felt for the rest of this decade and beyond."

Commodities were generally lower. Crude oil was losing $1.35 to $96.83 a barrel amid reports Saudi Arabia is increasing production, and gold was off 50 cents to $824.20 an ounce.

The Amex Gold Bugs Index was falling 1%, as Agnico-Eagle Mines (AEM:NYSE) shed 4%.

That was the case around the market, with most sectors were under selling pressure, but the Dow Jones Transportation Average and the Dow Jones U.S. Trucking Index were fractionally higher as oil dropped.

Homebuilders including Centex (CTX:NYSE) , D.R. Horton (DHI:NYSE) , KB Home (KBH:NYSE) , Lennar (LEN:NYSE) and Toll Brothers (TOL:NYSE) were falling between 2% and 4% after Citigroup did what so many others have already done, lowering its near-term outlook for the sector. Citi cut the housing stocks to hold from buy.

Among other research calls, Bank of America upgraded Deere (DE:NYSE) , while Boeing (BA:NYSE) was upgraded at Wachovia.

Elsewhere, Newell Rubbermaid (NWL:NYSE) affirmed its fourth-quarter profit estimates but trimmed its guidance, and Philips Electronics (PHG:NYSE) set plans to acquire Genlyte (GLYT:Nasdaq) for roughly $2.7 billion.

Treasury prices strengthened. The 10-year note was up 4/32 in price, reducing the yield to 3.99%, and the 30-year bond was jumping 19/32 to yield 4.39%. The dollar fell against the euro and the pound, but gained on the yen.

Overnight, Asia's stocks rose. Tokyo's Nikkei advanced 1.7%, and Hong Kong's Hang Seng was up 4.1%. Europe was also higher. London's FTSE was tacking on 0.3%, and Frankfurt's Dax was up 0.4%.

New York had only a half session Friday, the day after Thanksgiving, but with retailers, financials and commodity stocks leading the way, the major averages posted solid gains.

Last time out, the Dow surged 181.84 points, or 1.42%, to 12,980.88, and the S&P was up 23.93 points, or 1.69%, at 1440.70. The Nasdaq rose 34.45 points, or 1.34%, to 2596.60.

[setravis]

Citi Deal Fires Up Stocks.......


Tuesday 11/27/2007


Stocks in New York were heading to the upside Tuesday as the financial sector got some good news for a change.

The Dow Jones Industrial Average was climbing 230 points, or 1.8%, to 12,974, and the S&P 500 was adding 18 points, or 1.3%, at 1426. The Nasdaq was rising 38 points, or 1.5%, to 2579.

Spurring the advance was news that Citigroup (C:NYSE) will receive a $7.5 billion cash injection by selling a stake in the firm to an entity controlled by the government of Abu Dhabi.

However, not all was well for the financial-services giant, whose stock has been punished in recent weeks amid the writedowns that led to the departure of CEO Chuck Prince. CIBC said it still expects Citi to have to cut its dividend in order to preserve capital.

Punk Ziegel's Richard Bove disagreed though, putting a buy rating on the stock and saying the payout is safe.

While the investment improved the overall mood since it suggests deep-pocketed foreigners will buy when they see value in the U.S., it wasn't doing much for Citi's shares, which were unchanged.

That's because investors don't appear to be certain the company is completely out of the woods yet considering the sizable challenges it's facing.

Despite Citi's inability to rally, the rest of the financials were enjoying a strong session, aided by Bove's upgrade of KeyCorp (KEY:NYSE) , Washington Mutual (WM:NYSE) , Regions Financial (RF:NYSE) , PNC (PNC:NYSE) and BB&T (BBT:NYSE) .

As a result, the KBW Bank Index was up 2.8%, and the Amex Securities Broker/Dealer Index was gaining 2.5%. The NYSE Financial Sector Index was surging 2.2%.

Last time out, U.S. stocks fell hard, with most of the damage done late, as continuing fears about the health of the credit market left the averages sharply lower.

The Dow lost 237.44 points, or 1.8%, to 12,743.44, putting it 10% below its high in October. The S&P 500 surrendered 33.48 points, or 2.3%, to 1407.22, and the Nasdaq declined 55.61 points, or 2.1%, to go out at 2540.99.

Monday's selloff was only the latest step down for equities, which have been working their way lower for several weeks amid worries that problem mortgages will lead homeowners, lenders and anyone else with exposure to the loans to ruin.

A growing chorus has been warning of the possibility of a recession for the U.S., including Lawrence Summers, the former Treasury secretary, whose cautious observations appeared this week in the Financial Times.

Now, Goldman Sachs has told Bloomberg that the Federal Reserve will cut overnight lending rates to 3% by the middle part of next year, from 4.50% currently, in order to prevent a serious contraction. The central bank has already reduced its fed funds target rate twice, by 75 basis points in total, in recent weeks.

Monetary officials have been careful of late not to encourage too much optimism about further easing, and Philadelphia Fed President Charles Plosser offered remarks that could be interpreted to mean rates will remain on hold, at least for the near term.

During a speech in which he covered both the possibility that growth could slow sharply or that prices could increase too quickly, his comments on the latter were the newest evidence the Fed isn't in danger of forgetting about inflation.

"If inflation begins to creep up or expectations of future inflation rise in the coming months -- which is a risk given the [Federal Open Market Committee''s] decision to cut interest rates -- the outlook will be affected and policy may have to be adjusted," he said.

Plosser's speech was just the first in a busy week that will feature a number of central bankers, including Chicago Fed President Charles Evans later in the day, and they'll of course require close monitoring with another FOMC meeting coming on Dec. 11.

Treasury yields have been falling as bond traders bet that a slowdown will lead to lower rates, and the 10-year plummeted to its worst yield in more than three years during the prior session.

But for the moment, that trend wasn't holding. The 10-year note was down 1-6/32 in price, yielding 3.98%, and the 30-year bond was plunging 1-25/32, yielding 4.39%.

Similarly, the dollar has been under selling pressure for months. This time though, it too was showing signs of life. In recent trading, the greenback rose against its major counterparts, with the exception of the Australian dollar.

Meanwhile, Soleil Securities initiated the homebuilding stocks with a cautious stance, giving KB Home (KBH:NYSE) , D.R. Horton (DHI:NYSE) and Pulte Homes (PHM:NYSE) , which reaffirmed its projections, hold ratings.

The firm gave Lennar (LEN:NYSE) , Centex (CTX:NYSE) and Toll Brothers (TOL:NYSE) buy ratings.

The research call on housing names came as a report from the U.S. Conference of Mayors provided another dim view for homeowners, who by now have grown accustomed to troubling developments, by saying property values of American dwellings will sink by $1.2 trillion in 2008.

That forecast was released just before the S&P/Case-Schiller index dealt an added blow, indicating that domestic home prices in the third quarter tumbled 4.5% from the same period a year ago, the steepest fall on record. Compared with the second quarter, prices were off 1.7%.

Also on the economic front, the Conference Board's November consumer confidence survey fell to 87.3 from a downwardly revised 95.2 in October and was weaker than expected.

Additionally, several earnings reports were rolling in, many of them from the retail group.

Results from American Eagle (AEO:NYSE) were in line with estimates, and Talbots (TLB:NYSE) had quarterly numbers that were better than anticipated. Tech Data (TECD:Nasdaq) also exceeded the consensus bottom-line forecast, but it guided lower.

Office-supplies seller Staples (SPLS:Nasdaq) topped analysts'' profit estimates for the most recent quarter, and Activision (ATVI:Nasdaq) , the maker of video games including Guitar Hero, sharply raised its outlook.

Chevron (CVX:NYSE) and Marathon Oil (MRO:NYSE) were fractionally lower early despite a pair of Bear Stearns upgrades. BP (BP:NYSE) , which was also upgraded, was rising.

Away from stocks, commodities were weaker. Crude oil futures were losing $3.08 to $94.62 a barrel, and gold was down $16.50 at $817.20 an ounce.

Overseas, Europe's major markets pared their losses by the close. London's FTSE and Frankfurt's Dax slipped 0.6% and 0.5%, respectively, and the Paris Cac gave back 0.4%. In Asia, Tokyo's Nikkei gained 0.6%, but Hong Kong's Hang Seng was worse by 1.5%.

[setravis]

Citi Deal Ignites Rally.......


Tuesday into the close 11/27/2007


Stocks in New York finished sharply higher Tuesday as the financial sector, beaten down consistently and repeatedly for months, led the market to the upside.

The Dow Jones Industrial Average climbed 215 points, or 1.7%, to 12,958.44, and the S&P 500 added 21.01 points, or 1.5%, at 1428.23. The Nasdaq rose 39.81 points, or 1.6%, to 2580.80.

Spurring the advance was news that Citigroup (C:NYSE) will receive a $7.5 billion cash injection by selling a stake in the firm to an entity controlled by the government of Abu Dhabi.

Punk Ziegel analyst Richard Bove liked the move, putting a buy rating on the financial-services giant, whose shares have been punished in recent weeks amid the writedowns that led to the departure of CEO Chuck Prince, and saying he believes its dividend is safe.

While the investment improved the overall mood since it suggests deep-pocketed foreigners will buy when they see value in the U.S., Citi's shares got only a modest lift, tacking on 1.8% to $30.32.

That's because investors don't appear to be certain the company is completely out of the woods yet, considering the sizable challenges it's facing. Indeed, CIBC said it still expects Citi to have to cut its quarterly payout in order to preserve capital.

Despite Citi's inability to rally more convincingly, the rest of the financials enjoyed a strong session, aided by Bove's upgrade of KeyCorp (KEY:NYSE) , Washington Mutual (WM:NYSE) , Regions Financial (RF:NYSE) , PNC (PNC:NYSE) and BB&T (BBT:NYSE) .

As a result, the KBW Bank Index was up 2.6%, and the Amex Securities Broker/Dealer Index gained 3.3%. The NYSE Financial Sector Index surged 2.8%.

Last time out, financials helped push U.S. stocks far into the red, with most of the damage coming late, as traders continued to grapple with fears about the health of the credit market.

The Dow lost 237.44 points, or 1.8%, to 12,743.44, putting it 10% below its high in October. The S&P 500 surrendered 33.48 points, or 2.3%, to 1407.22, and the Nasdaq declined 55.61 points, or 2.1%, to go out at 2540.99.

Monday's selloff was only the latest step down for equities, which have been working their way lower for several weeks owing to concerns that problem mortgages will lead homeowners, lenders and anyone else with exposure to the loans to ruin.

A growing chorus has been warning of the potential of a recession for the U.S., including Lawrence Summers, the former Treasury secretary, whose cautious observations appeared this week in the Financial Times.

Now, Goldman Sachs has told Bloomberg that the Federal Reserve will cut overnight lending rates to 3% by the middle part of next year, from 4.50% currently, in order to prevent a serious contraction. The central bank has already reduced its fed funds target rate twice, by 75 basis points in total, in recent weeks.

Monetary officials have been careful of late not to encourage too much optimism about further easing, and Philadelphia Fed President Charles Plosser offered remarks that could be interpreted to mean rates will remain on hold, at least for the near term.

During a speech in which he covered both the possibility that growth could slow sharply or that prices might increase too quickly, his comments on the latter were the newest evidence the Fed isn't in danger of forgetting about inflation.

"If inflation begins to creep up or expectations of future inflation rise in the coming months -- which is a risk given the [Federal Open Market Committee''s] decision to cut interest rates -- the outlook will be affected and policy may have to be adjusted," he said.

Chicago Fed President Charles Evans, who also spoke, said there's still "a good deal of uncertainty over how events will play out over time, and we are monitoring conditions closely for developments that may change our assessments of the risks to growth and inflation."

He also said that, "Outside of the financial sector and housing, the rest of the economy appears to have weathered the turmoil relatively well."

This is a busy week that will feature a number of Fed bankers on the podium, and they'll of course require close monitoring with another FOMC meeting coming on Dec. 11.

Treasury yields have been falling as bond traders bet that a slowdown will lead to lower rates, and the 10-year plummeted to its worst yield in more than three years during the prior session.

But for a day anyway, that trend didn't hold. The 10-year note was down 29/32 in price, yielding 3.95%, and the 30-year bond plunged 1-10/32, yielding 4.37%.

Similarly, the dollar has been under selling pressure for months. This time, though, it too showed signs of life, rising against most of its major counterparts.

Much of the market's credit worries stem from reverberations from the deteriorating housing market, which was the subject of more dismal news. A report released by the U.S. Conference of Mayors predicted that property values of American dwellings will sink by $1.2 trillion in 2008.

That forecast was released just before the S&P/Case-Schiller index dealt an added blow, indicating that domestic home prices in the third quarter tumbled 4.5% from the same period a year ago, the steepest fall on record. Compared with the second quarter, prices were off 1.7%.

Meanwhile, Soleil Securities initiated the homebuilding stocks with a cautious stance, giving KB Home (KBH:NYSE) , D.R. Horton (DHI:NYSE) and Pulte Homes (PHM:NYSE) , which reaffirmed its projections, hold ratings.

The firm assigned Lennar (LEN:NYSE) , Centex (CTX:NYSE) and Toll Brothers (TOL:NYSE) buy ratings.

Elsewhere on the economic front, the Conference Board's November consumer confidence survey fell to 87.3 from a downwardly revised 95.2 in October and was weaker than expected. The report came as several earnings releases were rolling in from big consumer-focused names.

Results from American Eagle (AEO:NYSE) were in line with estimates, and Talbots (TLB:NYSE) had quarterly numbers that were better than anticipated. Tech Data (TECD:Nasdaq) also exceeded the consensus bottom-line forecast, but it guided lower.

Office-supplies seller Staples (SPLS:Nasdaq) topped analysts'' profit estimates for the most recent quarter, and Activision (ATVI:Nasdaq) , the maker of video games including Guitar Hero, sharply raised its outlook.

Away from stocks, commodities were weaker. Crude oil futures lost $3.28 to $94.42 a barrel, and gold was down around $12 to about $814 an ounce.

Overseas, Europe's major markets pared their losses by the close. London's FTSE and Frankfurt's Dax slipped 0.6% and 0.5%, respectively, and the Paris Cac gave back 0.4%. In Asia, Tokyo's Nikkei gained 0.6%, but Hong Kong's Hang Seng was worse by 1.5%.

[setravis]

Wall Street Keeps Rallying.......

Wednesday 11/28/2007


Stocks in the U.S. surged Wednesday and continued the previous session's rally as comments from a high-ranking Federal Reserve official suggested further rate cuts could be on the table.

The Dow Jones Industrial Average was soaring 310 points, or 2.4%, to 13,268. All 30 of the Dow's components were trading higher, led by advances of 4.5% or more in Citigroup (C:) , AIG (AIG:) , General Motors (GM:) and Home Depot (HD:) .

At the same time, the S&P 500 was up 36 points, or 2.5%, at 1464. The Nasdaq Composite added 74 points, or 2.9%, to 2655, supported by gains in Internet stocks Amazon.com (AMZN:) , eBay (EBAY:) , and Yahoo! (YHOO:) .

Giving the market a lift were remarks from Fed Vice Chairman Donald Kohn, who said policymakers need to be "flexible and pragmatic" in order to deal with the uncertainty in the economy and financial arena.

He offered that the central bank should be "nimble" with regard to its response to developments in the markets and not be paralyzed by fears of creating a "moral hazard," thus providing hope for those who want to see the Fed reduce rates again. The fed funds target rate has been lowered to 4.50% from 5.25% in recent weeks.

Many traders are hoping for additional easing in order to help the market, specifically the financials, navigate through the subprime mortgage mess that has forced billions of dollars in writedowns by Wall Street banks and is likely to lead to more.

"Kohn is rekindling hopes the Fed will cut at the December meeting," said Peter Cardillo, chief market economist with Avalon Partners. "The battered sectors are outperforming today. The market is now beginning to focus on the fact that most of the dangers that have emerged over the past few months may be behind us."

Cardillo warned that optimism over a Fed rate reduction next month may be overdone "unless we see job growth erode, which would come in the form of a negative number in nonfarm payrolls data."

Among subsector indices trading higher, the S&P Retail Index was higher by 4.5%, the Philadelphia Housing Sector Index was adding 4.1%, the NYSE Financial Sector Index was up 3.7%, and the Philadelphia Semiconductor Sector Index was rising 3%.

Michael Sheldon, chief market strategist with Spencer Clarke LLC, said that there is short-term buying interest in beaten-down areas of the market, and that a second winning session in a row should add to near-term positive sentiment.

"Fed rate-cut euphoria is driving stock gains once again," he noted. "However, continued worries in terms of falling consumer confidence, weak housing data, high energy and food prices, liquidity concerns among financials, tightening credit conditions in the economy, along with poor market internals are likely to limit the stock market's advance in the days ahead."

Kohn's comments arrived on the same day as Fed's regional survey, known as the beige book. The anecdotal report on economic conditions in 12 districts around the country will be considered at the Federal Open Market Committee's Dec. 11 policy meeting.

According to the document, economic activity expanded "a reduced pace compared with the previous survey period" in October and early November. The report noted that most retailers were expecting a slow holiday season and that a glut of available homes kept pressure on prices and construction activity.

"Demand for residential real estate remained quite depressed, with only a few tentative and scattered signs of stabilization amidst the ongoing slowdown," the beige book read. "The pace of homebuilding remained very low in general, and builders continued to shelve projects and lay off workers in many areas; contacts generally do not expect a significant pickup in homebuilding until well into next year at the earliest."

Later, Dallas Fed President Richard Fisher is expected to speak.

Last time out, a cash injection into Citigroup jump-started the financial sector and, in turn, the major averages.

The Dow climbed 215 points, or 1.7%, to 12,958.44, and the S&P 500 added 21.01 points, or 1.5%, at 1428.23. The Nasdaq rose 39.81 points, or 1.6%, to 2580.80.

"Yesterday's technical bounce is little more than that, but it was a good start," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "The dollar managed a modest bounce. Again, it isn't a big enough move to get overly excited about, but it was a move in the right direction."

Not all the news was positive, though. Wells Fargo (WFC:) said after the previous close that it will take a $1.4 billion charge due to the subprime mortgage mess. Still, shares were rising 4.8% to $31.25.

Freddie Mac (FRE:) piled on, saying it plans to halve its dividend and sell $6 billion of preferred stock in order to raise cash. Freddie Mac jumped 11.8% to $28.77 despite the moves.

Also on the economic front, the National Association of Realtors said existing-home sales declined 1.2% in October to a 4.97 million yearly pace, matching estimates. Inventories of unsold homes rose 1.9% to 4.45 million annualized units.

"The inventory and price data are worse than September," said Ian Shepherdson, chief economist with High Frequency Economics. "At the same time, prices appear to be collapsing. With inventory so massive, prices will keep falling."

Earlier, the Commerce Department said durable goods orders for October fell 0.4%, more than economists had expected. Excluding transportation, orders fell 0.7%, compared to forecasts of a 0.3% rise.

Commodity prices were retreating. Crude was tumbling $3.42 to $91 a barrel. Gold futures dropped $13.70 to $800.30 an ounce, and silver was off 16 cents at $14.52 an ounce.

Prices for oil pulled back following the Energy Department's weekly inventory report that showed a less-than-expected draw of 400,000 barrels in crude inventories last week. Gasoline inventories rose by 1.4 million barrels last week. Refinery utilization also increased.

U.S. Treasury securities were falling, pushing yields higher. The 10-year note was down 19/32 in price, yielding 4.02%. The 30-year bond was off 23/32, yielding 4.41%.

Overseas markets were mostly to the upside. In Asia, Hong Kong's Hang Seng added 0.6%. Japan's Nikkei 225, however, was off 0.5%. Among European bourses, London's FTSE 100 rose 2.7%, and Germany's Xetra Dax was up 2.6%.

[setravis]

Fed Keeps Rally Alive.......


Wednesday into the close 11/28/2007


Stocks in the U.S. surged Wednesday and extended the previous session's rally as comments from a high-ranking Federal Reserve official suggested further rate cuts could be on the table.

The Dow Jones Industrial Average soared 331.01 points, or 2.55%, to 13,289.45. It was the fifth consecutive triple-digit move -- three up and two down -- on the Dow in as many sessions. Over the last two sessions, the Dow has jumped 563 points, but it still remains 4.6% lower for the month.

"These moves are just unbelievable," said Paul Mendelsohn, chief investment strategist with Windham Financial. "The volatility creates a hard market to deal with. It varies between which areas stand to benefit the most, but that flexibility may be the reason we could see a rally extend through the rest of the year."

Philip Roth, chief technical market analyst with Miller Tabak, argued that "a 100-point move isn't even 1% on the Dow anymore, and that's not unusual. It's sort of a fluky number to go by."

Indeed, the Dow also had a five-session span of triple-digit changes stretching from late July into early August.

All 30 of the Dow's components traded higher, led by advances of 4.3% or more in Citigroup (C:) , AIG (AIG:) , General Motors (GM:) and Intel (INTC:) .

The S&P 500 was up 40.79 points, or 2.86%, at 1469.02, and the Nasdaq Composite jumped 82.11 points, or 3.18%, to 2662.91, supported by gains in Internet stocks Amazon.com (AMZN:) , eBay (EBAY:) and Yahoo! (YHOO:) .

Breadth was decidedly positive. On the New York Stock Exchange 4.50 billion shares changed hands, as advancers beat decliners by a 7-to-1 margin. Volume on the Nasdaq reached 2.46 billion shares, with winners topping losers nearly 4 to 1.

Giving the market a lift were remarks from Fed Vice Chairman Donald Kohn, who said policymakers need to be "flexible and pragmatic" in order to deal with the uncertainty in the economy and financial arena.

He offered that the central bank should be "nimble" with its response to developments in the markets and not be paralyzed by fears of creating a "moral hazard," thus providing hope for those who want to see the Fed reduce rates again. The fed funds target rate has been lowered to 4.50% from 5.25% in recent weeks.

Many traders want additional easing in order to help the market, specifically the financials, navigate through the subprime mortgage mess that has forced billions of dollars in writedowns by Wall Street banks and is likely to lead to more.

"Kohn is rekindling hopes the Fed will cut at the December meeting," said Peter Cardillo, chief market economist with Avalon Partners. "The market is now beginning to focus on the fact that most of the dangers that have emerged over the past few months may be behind us."

Cardillo warned that optimism over a Fed rate reduction next month may be overdone "unless we see job growth erode, which would come in the form of a negative number in nonfarm payrolls data."

Among subsector indices trading higher, the Philadelphia Housing Sector Index added 4.9%, the S&P Retail Index rose 4.6%, the NYSE Financial Sector Index finished up 4.2%, and the Philadelphia Semiconductor Sector Index climbed 2.4%.

Michael Sheldon, chief market strategist with Spencer Clarke LLC, said that there is short-term buying interest in beaten-down areas of the market, and that a second winning session in a row should add to near-term positive sentiment.

"However, continued worries in terms of falling consumer confidence, weak housing data, high energy and food prices, liquidity concerns among financials, tightening credit conditions in the economy, along with poor market internals are likely to limit the stock market's advance in the days ahead," he said.

Kohn's comments arrived on the same day as Fed's regional survey, known as the beige book. The anecdotal report on economic conditions in 12 districts around the country will be considered at the Federal Open Market Committee's Dec. 11 policy meeting.

According to the document, economic activity expanded "a reduced pace compared with the previous survey period" in October and early November. The report noted that most retailers were expecting a slow holiday season and that a glut of available homes kept pressure on prices and construction activity.

"Demand for residential real estate remained quite depressed, with only a few tentative and scattered signs of stabilization amidst the ongoing slowdown," the beige book read. "The pace of homebuilding remained very low in general, and builders continued to shelve projects and lay off workers in many areas; contacts generally do not expect a significant pickup in homebuilding until well into next year at the earliest."

Last time out, a cash injection into Citigroup jump-started the financial sector and, in turn, the major averages. The Dow climbed 215 points, or 1.7%, to 12,958.44, and the S&P 500 added 21.01 points, or 1.5%, at 1428.23. The Nasdaq rose 39.81 points, or 1.6%, to 2580.80.

"Yesterday's technical bounce is little more than that, but it was a good start," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "The dollar managed a modest bounce. Again, it isn't a big enough move to get overly excited about, but it was a move in the right direction."

Not all the news was positive, though. Wells Fargo (WFC:) said after the previous close that it will take a $1.4 billion charge due to its exposure to bad loans. Still, shares rose 3% to $30.72.

Freddie Mac (FRE:) chimed in, saying it plans to halve its dividend and sell $6 billion of preferred stock in order to raise cash. Freddie Mac jumped 14.3% to $29.42 despite the moves.

Also on the economic front, the National Association of Realtors said existing-home sales declined 1.2% in October to a 4.97 million yearly pace, matching estimates. Inventories of unsold homes rose 1.9% to 4.45 million annualized units.

"The inventory and price data are worse than September," said Ian Shepherdson, chief economist with High Frequency Economics. "At the same time, prices appear to be collapsing. With inventory so massive, prices will keep falling."

Earlier, the Commerce Department said durable goods orders for October fell 0.4%, more than economists had expected. Excluding transportation, orders fell 0.7%, compared to forecasts of a 0.3% rise.

Commodity prices retreated. Crude tumbled $3.80 to close at $90.62 a barrel. Gold futures dropped $13.70 to $800.30 an ounce, and silver was off 15 cents at $14.33 an ounce.

Prices for oil pulled back following the Energy Department's weekly inventory report that showed a less-than-expected draw in crude inventories last week.

U.S. Treasury securities were falling, pushing yields higher. The 10-year note was down 21/32 in price, yielding 4.02%. The 30-year bond was off 24/32, yielding 4.40%.

Overseas markets were mostly to the upside. In Asia, Hong Kong's Hang Seng added 0.6%. Japan's Nikkei 225, however, was off 0.5%. Among European bourses, London's FTSE 100 rose 2.7%, and Germany's Xetra Dax was up 2.6%.

[setravis]

Stocks End a Touch Higher.......


Thursday into the close 11/29/2007


Stocks in the U.S. seesawed for most of Thursday's session and closed just slightly to the upside as weakness in retailers and financials canceled out strength in the energy sector.

The Dow Jones Industrial Average tacked on 22.28 points, or 0.17%, to 13,311.73. The S&P 500 was up 0.70 point, or 0.05%, to 1469.72. The Nasdaq Composite finished ahead by 5.22 points, or 0.2%, to 2668.13.

Despite the fact that the market strung together its first three-day winning streak since September, breadth was weak. On the New York Stock Exchange 3.48 billion shares changed hands, as decliners topping advancers by nearly a 6-to-5 margin. Volume on the Nasdaq reached 2.11 billion shares, with losers beating winners 8 to 7.

On the corporate front, the news was mixed. Sears Holdings (SHLD:) was one of the drags after it posted a third-quarter profit that plummeted 99% from a year ago to a penny a share.

Results fell well short of estimates, and shares tumbled 10.5% to close at $104.09. Following Sears'' earnings, the S&P Retail Index slumped nearly 1%.

On the plus side, another financial name was getting a helping hand, as word came down that E*Trade (ETFC:) would get a $2.55 billion investment from Citadel Investment Group and that CEO Mitch Caplan would resign. Shares started in positive territory but ultimately ended down 8.7% to $4.82.

The Amex Securities Broker/Dealer Index, of which E*Trade is a component, lost 1.6%.

Stocks'' lackluster movement came after big rallies over the past two days. Last time out, the major averages surged following comments from the Federal Reserve that reignited hopes of a rate cut during the central Bank's Dec. 11 meeting.

Traders are hoping that more Fed-speak coming later will offer more clues about how the Federal Open Market Committee will vote at its next meeting. Fed Chairman Ben Bernanke is set to speak at 7 p.m. EST.

The day was also an active one for economic data. Before the opening bell, the Commerce Department said its preliminary read on third-quarter gross domestic product showed a 4.9% increase. That number was up from the advance number of 3.9% and matched expectations.

The third-quarter personal consumption expenditures price index was unrevised at 1.8%.

Also, the Labor Department said weekly jobless claims numbers jumped by 23,000 to 352,000 claims. Most economists expected claims to hold steady at 330,000.

Separately, the Census Bureau said October new-home sales rose 1.7% to an annualized rate of 728,000 units. However, that gain came after a substantial downward revision to September's data.

U.S. Treasury securities rallied, sending yields down. The 10-year note was up 24/32 in price, yielding 3.94%. The 30-year bond was adding 1-14/32 in price, yielding 4.34%.

In other equity news, General Motors (GM:) was higher after Bear Stearns upgraded the stock to peer perform from underperform. The firm cited a better risk/reward ratio for the automaker. GM tacked on 42 cents, or 1.5%, to $28.81.

Elsewhere, JPMorgan raised its rating for TiVo (TIVO:) to overweight from underweight one day after the company posted a third-quarter loss that narrowed from a year ago. TiVo climbed $1.48, or 24.8%, to $7.46.

Crude rose after a pipeline explosion in Minnesota. The pipeline, which is operated by Enbridge Energy Partners (EEP:) , supplies crude to Midwest refineries from Canada.

Oil finished higher by 39 cents at $91.01 a barrel, well off its high. Earlier, it had been up more than $4 as traders feared the worst. The Amex Oil Index rose 0.7%, led by Anadarko (APC:) .

Overseas markets were mostly higher. In Asia, Hong Kong's Hang Seng jumped 4.1% overnight, and Japan's Nikkei 225 added 2.4%. Among European bourses, London's FTSE 100 tacked on 0.7%, and Germany's Xetra Dax was up 0.5%.

[setravis]

Showing just how sensitive stock prices are to any unexpected news, yesterday the market indices oriented their shaking in one direction: up. The near-term rally, which had been trying to happen for two weeks, finally got underway. The DJIA broke through 13,000 and 13,200. Today it will try to stay above 13,200 and thus show the near-term rally has legs.

Virtually every indicator measured supports the premise that the near-term rally base was formed around 13,000 and the DJIA's next ceiling to penetrate will be around 13,600. Getting there, though is still likely to be choppy. The intermediate-term trend indicators rose also, but not enough to signal and confirm an intermediate term uptrend.

Nevertheless, the uptrends to downtrends enjoyed the first solid positive day this month.

A new intermediate-term uptrend will be confirmed when these indicators rise above their oversold zones, and the DJIA rises above 13,250 and stays there.
In the meantime, the intermediate-term trend is having little or no impact on the near-term rally. All four near-term indicators now have moved firmly above their oversold zone lines and appear on course to continue driving the market indices upward.
The confirmation of the near-term uptrend's finally gaining momentum yesterday was made when the market indices crossed up above the index ceilings established over the last week

Thanks to a hint that interest rates might again be cut by the central bank, the ignition of near-term rally, although characterized here previously as overdue, was spectacular and visible in all directions worldwide. The trade-term trends reacted with unrestrained enthusiasm. From an economics point of view, the message was the Fed would fill the credit crunch hole, still of undisclosed depth, by cutting all interest rates to compensate for the mortgage losses, which still loom large. But that fear was forgotten for the moment as euphoria took over and stock prices soared. In the process the market indices became overbought intraday and will need to correct somewhat this morning, probably mainly sideways to slightly down since the near-term rally is in full bloom.


Ultimately, the only story that counts is your own. Whether you buy the story of a soaring or a souring stock, your own research is more important than collective opinions. But these collective opinions make an individual's due diligence much easier.   

[setravis]

The DJIA held above 13,200 Friday, confirming the near-term rally has momentum and is expected to keep on rolling. The market indices had a sideways move Thursday to correct the acute overbought market state on Wednesday, but the pause did not represent weakness in the near-term uptrend, and is expected to encounter minimal resistance until the DJIA gets to 13,600.
Virtually every measure supports the notion that the near-term uptrend is progressing and will continue to do so for the next week. adds up to a reasonable expectation for relatively clear sailing by the DJIA to the 13,600 level over the next week.

Thursday's sideways move by the trade-term trends, enabling the DJIA to confirm the rally by hovering above the 13,200 level, was consistent with a market correcting an intraday overbought state and with a market where the participants are ever-sensitive to impacting economic news and thus were waiting for word from on high.
It came, when the Fed Chairman Bernanke hinted another rate cut might be forthcoming.
That should be enough to cause the market indices to climb up further, because the next best thing to assuaging fear by quantifying the scope and expected terminus of the fear-producing stimulus is to have the perceived problem salved with a broad-based treatment.
It all comes down to how much do stock values have to absorb of the huge mortgage loan losses. Any interest rate cut will provide a much broader base over which to spread the grief, and thus down-valuing in the stock market segment of the economy can cease and allow the buyers to dominate trading.
Thus the pessimism that caused the 10% correction downward by the indices over the past month is now giving way to optimism that somebody other than stocks will bear a disproportionate share of the drag from bad loans.


Ultimately, the only story that counts is your own. Whether you buy the story of a soaring or a souring stock, your own research is more important than collective opinions. But these collective opinions make an individual's due diligence much easier.   

[setravis]

Stocks Start Week in Reverse.......


Monday into the close 12/3/2007


Stocks in the U.S. ended modestly lower Monday, as traders weighed a government plan to help homeowners against jarring remarks from the Federal Reserve on the subprime mortgage mess.

The Dow Jones Industrial Average spent time on both sides of the flat line before falling 57.15 points, or 0.43%, to 13,314.57. The S&P 500 briefly poked into positive territory but ultimately ended down 8.72 points, or 0.59%, to 1472.42. The Nasdaq Composite lost 23.83 points, or 0.9%, at 2637.13.

Stocks had earlier gained ground following comments from Treasury Secretary Henry Paulson, who confirmed that the federal government is working with mortgage lenders to create a plan that would essentially bail out consumers with subprime mortgages.

Paulson said that housing is still the biggest threat to the U.S. economy, and that "we will need an aggressive, systematic approach to fast-track able borrowers into a refinance or mortgage modification."

Those comments came after Boston Fed President Eric Rosengren expressed his concern over the subprime mortgage problem, saying before the opening bell that "the foreclosure crisis will get worse before it gets better, but our forecast is quite dependent on how far house prices fall."

He also said the "outlook for how much worse this problem could become depends critically on the outlook for the economy and the housing market. We are currently expecting the economy to grow well below potential for the next two quarters, before gradually improving over the course of next year."

Meanwhile, Janet Yellen, head of the San Francisco Fed, said that since the October central bank meeting, "financial conditions have deteriorated, and we have seen some unexpected softening in the economic data." She added, "On the inflation front, I continue to expect core consumer prices to rise at a pace that is broadly consistent with price stability, although there are some notable upside risks that bear careful watching and consideration."

Last week, remarks from several Fed officials, including chairman Ben Bernanke, bolstered hopes of a rate cut when the central bank next meets on Dec. 11, helping stocks notch their best week in months. The Dow added 3%, the S&P 500 gained 2.7%, and the Nasdaq finished higher by 2.4%.

Even though Rosengren's comments could be interpreted as friendly to those wanting to see another reduction, his blunt assessment of growth prospects was troubling.

On Friday, the next data point for the Fed will arrive when the government posts the November nonfarm payrolls data. It is expected that the U.S. economy added 70,000 workers last month, and any deviation will likely help determine the Fed's next step when the Federal Open Market Committee convenes on Dec. 11.

"Today showed that we're in a wait-and-see mode, at least until the jobs number," said Paul Nolte, director of investments with Hinsdale Associates. "Investors are starting to look at the employment number in terms of what the Fed does next. It's a hard number to handicap, and judging by what we're seeing in equities and bonds, investors fear the number may be weaker than expected."

Breadth and volume were poor to start the week. On the New York Stock Exchange 3.28 billion shares changed hands, as decliners toppled advancers by a 9-to-7 margin. Volume on the Nasdaq reached 1.94 billion shares, with losers beating winners 3 to 2.

Art Hogan, chief market analyst with Jefferies, said that despite a weak close and low volume, there were still positives to take away from the session.

"There was very little input today, so it is good to see we didn't give up anything after last week's run-up," said Hogan. "As the week wears on, with more economic data to come, it is positive there wasn't a flood of people heading to the exits."

Among corporate news, E*Trade Financial (ETFC:) weighed on sentiment as shares slid 10.7% to $4.11 after Bank of America downgraded the company to sell from hold and slashed its stock price target to $2 from $9.

The downgrade comes after Citadel Investment Group poured $2.55 billion into the embattled online brokerage last week. Shares of E*Trade have now dropped nearly 60% over the last month.

Financials were among the worst-performing sectors. The KBW Bank Index ended down 1%, the NYSE Financial Sector Index was off 0.8%, and the Amex Financial Sub Index dipped 0.1%. Retail, housing and transportation subsector indices also closed lower.

In other corporate news, automakers were releasing their monthly sales data. Ford (F:) posted an unexpected 0.4% increase in November sales, and General Motors (GM:) said U.S. sales fell 11% last month. GM lost $1.22, or 4.1%, to $28.61.

One of the notable winners was Activision (ATVI:) , which soared 12.7% to $24.97 on word that Vivendi will acquire a controlling interest in the gamemaker for $9.8 billion. The companies will create a new firm, Activision Blizzard, which will trade under the Activision ticker. In total, the deal is being valued at $18.9 billion.

As for the economic front, the Institute for Supply Management said its factory index declined to a reading of 50.8 last month from October's 50.9.

"Manufacturing has slowed substantially, but is not so weak that recession is imminent," said Ian Shepherdson, chief economist with High Frequency Economics. "At this level, output will be weak and capital spending will be very subdued, but orders have not collapsed."

U.S. Treasury securities were rallying. The 10-year note was up 18/32 to yield 3.87%. The 30-year bond added 28/32 in price, yielding 4.33%. The dollar was weaker against the euro and the yen.

After falling nearly 10% last week, crude prices dropped as low as $87.20 before erasing the decline. Oil finished up 60 cents at $89.31 a barrel. Gold and silver futures also traded higher.

Overseas markets were mixed. In Asia, Hong Kong's Hang Seng rose 0.1% overnight, while Japan's Nikkei 225 slipped 0.3%. Among European bourses, London's FTSE 100 lost 0.7%, and Germany's Xetra Dax was off 0.4%.

[setravis]

Financials Weigh on Stocks.......


Tuesday into the close 12/4/2007


Downgrades of several finance names had stocks heading to the downside Tuesday, extending the late-day weakness from the previous session.

The Dow Jones Industrial Average was lower by 49 points, or 0.4%, at 13,265. The S&P 500 was losing 7 points, or 0.5%, to 1465. The Nasdaq Composite was falling 13 points, or 0.5%, to 2624.

Financial stocks, which faced pressure Monday following a downgrade of E*Trade Financial (ETFC:) , again were mired in the red after Punk Ziegel and JPMorgan cut their ratings for several firms.

Punk downgraded Lehman Brothers (LEH:) , Bear Stearns (BSC:) and Goldman Sachs (GS:) to sell from market perform. All three names were lower by 3.5% or more.

Additionally, JPMorgan cut its profit forecasts for Goldman, Lehman and Morgan Stanley (MS:) . Shares of Morgan Stanley shed 4.8%.

Subsector indices measuring financials were lower for a second straight session. The KBW Bank Index was down 1.5%, the NYSE Financial Sector Index was off 1.3%, and the Amex Financial Sub Index was losing 0.5%.

Previously, stocks in the U.S. ended modestly lower as traders weighed a government plan to help homeowners against blunt remarks from the Federal Reserve on the subprime mortgage mess.

The Dow spent time on both sides of the flat line before falling 57.15 points, or 0.43%, to 13,314.57. The S&P 500 briefly poked into positive territory but ultimately ended down 8.72 points, or 0.59%, to 1472.42. The Nasdaq lost 23.83 points, or 0.9%, at 2637.13.

Marc Pado, U.S. market strategist with Cantor Fitzgerald, said that stocks are set for a consolidation week after finishing off November with a nice bounce.

"We made several attempts to break even [in the prior session] ," he said. "Given that the market was technically ready for a pullback and the news only added to the angst, I thought the action was pretty decent."

In other corporate news, Dow component Merck (MRK:) offered guidance for 2007 that met its prior outlook but is now below the consensus view. While the drugmaker also said 2008 earnings should rise, its projected range was below analysts'' targets. Shares were off 23 cents, or 0.4%, at $58.54.

Meanwhile, Nokia (NOK:) said during a conference that margins will likely match expectations for the next few years as handset prices should fall. Shares were losing $1.38, or 3.4%, to $38.85.

Crude prices dropped $1.95 to $87.36 a barrel. Gold and silver futures, on the other hand, ended the session higher.

U.S. Treasury securities were losing ground in the absence of any economic data. The 10-year note was down 11/32 to yield 3.89%. The 30-year bond was losing 15/32 in price, yielding 4.35%.

Overseas markets were mixed. In Asia, Hong Kong's Hang Seng rose 0.8% overnight, while Japan's Nikkei 225 slipped 1%. Among European bourses, London's FTSE 100 lost 1.1%, and Germany's Xetra Dax was off 0.4%.

[setravis]

There is a DJIA floor at 13,200 and a ceiling at 13,600 within which range the DJIA is expected to move for the rest of this week. Yesterday brought a mini-uptrend pause, which is likely to extend into this morning. The near-term uptrend is then anticipated to start up again, and the DJIA is going to make its first attempt at penetrating its 13,600 ceiling later this week, before stalling out again.

Any subsequent uptrend pause should not be of great moment because the intermediate-term uptrend was reconfirmed yesterday.

The Trend Ratio moved up a notch to 34 and the gap between intermediate-term stock uptrend lengths to downtrend ones shifted to the favor of the uptrend ones for the first time in six weeks. All of these movements add up to an intermediate-term trend gathering upward momentum, which will buoy the shorter term market trends rotating more quickly but with less force.

Currently the near-term uptrend is in a mini-pause.
Overall, this near-term uptrend pause should provide long buyers with opportunities to participate handsomely in the next leg up by the market indices.

Lurking in the background, of course, is the continuing anxiety over how deep the credit crunch hole really may be. Such fears crop up every day or two and of late frequently stimulate a trade-term downtrend cycle. That anxiety is present this morning and it would not take much to fan a downtrend fire, but the trade-term indicators are already close to being oversold and it appears that after a few trading hours of sliding down not lower than the DJIA floor, the index should begin its climb toward 13,600. The news later this week regarding a Federal plan to save defaulting home borrowers from foreclosures may be the spark that is needed to turn fear to indifference to enthusiastic buying.

Ultimately, the only story that counts is your own. Whether you buy the story of a soaring or a souring stock, your own research is more important than collective opinions. But these collective opinions make an individual's due diligence much easier.