Wednesday, October 24, 2007

Entry for October 24, 2007 (morning)

Perhaps todays early morning decline in futures, will set the bearish tone necessary for today, which would confirm the weakness seen in the S&P 500. Some big missed earnings of Amazon and and Merill, though on a whole i don't see a significant drop, unless we have significant drop in home sales again, but on a whole fundamentals in housing as i hope, will be priced in the markets already. Interestingly, with oil, perhaps early takers of gains set off a chain reaction as higher highs were explored, leading into this drop. Previously i had expected oil to rise slightly more before this drop, though with current news and sentiment on supplies, things seem to have settled. Interestingly, despite this undecided weather, (at least on the east coast), oil is still in downtrend mode.
Though on over all cpi and ppi i would expect some relieved pressure in terms of inflation if oil can continue, probably the slight increase in the core and over all % was due to food tied to commodities and energy.
Another possible significant factor that may contribute to a drop in the S&P 500, is a focus on "weaker" consumer (as reflected on poor earnings reports on big box, soft goods, side of retail). My argument against that is with sliding oil prices, and nice tight labor markets you will still have the middle middle, to upper middle class consumer driving consumption and spending. Look at technology, just because gas prices WERE high and food prices increasing, it didn't stop them from buying nice expensive gadgets like the iphone, or hard good electronics, as reflected in the strength of the technology sector which has been buoying the industrial side.
Though interestingly i see some conflict with Northrop Grumman and United Technologies, which problem only has to relate with one of the 6 segments dragging in down United Technologies, opposed to it reflecting its sector on whole, as a conglomerate status.

With todays mixed news, it seems bears have taken a slight footing, though to the significance is hard to say since overall fundamentals have not changed, though i would argue apparent perception is what will be driving todays markets.

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