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Monday, September 21, 2009

Morning Market Report

So far this September has been a lesson in conventional wisdom. Conventional wisdom number one says that generally Septembers are bad for equities. Conventional wisdom number two says that they are especially bad when markets had good months coming into September. So, given a good near 40% increase heading into September, we would expect a bloody September. Instead, we've seen gains of about 7%.

The futures this morning are signaling a break from the euphoria. They are down between a half and three quarters of a percent. That said, there was just a major announcement in which Dell Computers will buy Perot Systems. The last time the Dow traded at 10000 was on October 3rd, 2008. It's now within two hundred points of reaching that level. Of course, let's not forget that it first reached there in 2000.

That makes valuation a very tricky thing. We've seen a run up of 40% from March lows at 6700. It's now at 9700. So, one might think that it's time for a pull back. On the other hand, it's still lower than it was eight years ago. In my estimation, the only thing you can bank on is continued volatility and even that is difficult to predict.

The Ten Year U.S. Treasury is now trading at 3.42%. Since reaching 3.38% early last week, it's been bouncing in a narrow range just higher than here and its low. The yield spread between the two and ten year bond is also at 2.46%, which is about where it's been for the better part of a month.

Oil is finally taking a breather. It's currently at $70.15 a barrel and down nearly two dollars a barrel this morning. Markets were nearly unanimously down this morning both in Europe and in the Far East. The Hang Seng in China was down .7%. Both the NIKKEI and the Straits Time Index weren't trading today for a market holiday. The broad Chinese index was up .15% but that was the only index up anywhere. Meanwhile, in Europe, the FTSE in London was down .87%, the DAX in Germany was down .98% and the Spanish Index was down .99%.

In currencies, the U.S. Dollar is showing early strength. It's up .43% against the Euro, up .5% against the British Pound, and it's 1.19% against the Japanese Yen.

1 comment:

Anonymous said...

40% of NYSE volume has been in just 4 stocks: Fannie Mae, Freddie Mac, Citi, and Bank of America.