Sunday, June 8, 2008

Entry for June 09 2008

It seems that I have underestimated market psychology and sentiment. Resistance level of 1375 were broken at the close June 6 at 1360.68. Considering the tone of the close I would not be surprised for continued momentum to carry the markets to lower levels this week. Pending home sales will certainly not help current sentiment unless investors were able to price in much of the bearish news last Friday. The oil report on Wednesday will be a important as to keying in whether or not prices will head higher. I would not be surprised to see crude oil hit around 145 by the end of the week. Trying to think about the weaknesses in the economy, is possible to see many industries slowed growth from lessened consumer demand. In part, by higher oil prices but, much of these affects will not be seen in the month of June. With the Job's report for this week, I don't think there will be a significant increase in jobless claims, though I don't see the situation improving much either (as another better than expected decline might happen). Core CPI numbers probably will not be significant, though there seems to be more of a hoorah these days on fighting "high energy and food prices," so it begs the question if central banks will continue to focus on core numbers or will start to factor in headline inflation as well, as current policy is critical for sustained growth or a prolonged recession. Retail sales, i expect maybe better than expected, though i hate to attribute to "tax rebate," and its limited multiplier effect. I would expect most of money to help pay down debt or for people to hold on to money considering poor economic conditions and poor consumer sentiment. If better retail sales are indeed from tax rebates primarily I would certainly expect extended poor performance for the 3rd quarter.

Though considering my performance in the short term, perhaps one would do well by taking a contrarian perspective on my analysis ;)

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