ZLBT Chats

Saturday, November 13, 2010

WALL STREET >>> Bulls Surrender Last Week's Post Election and QE2 Gains

DJIA Drops 90 Points on China Rate Hike Fears
Potential monetary tightening in China prompted a pullback
Stocks continued to sag today, with traders once again taking their cues from overseas. Speculation is heating up that Chinese officials will raise interest rates, after the country reported on Thursday that inflation surged to its highest level in more than two years in October. Additionally, news hit the Street that Beijing is attempting to limit foreign investment in commercial real estate. The prospect of slower growth out of the rapidly emerging economy pressured stocks and commodities lower, with many market watchers expecting the central bank to announce tightening measures as soon as this weekend. Meanwhile, both Boeing (BA) and Cisco Systems (CSCO) continued to weigh on the Dow, as the former earned yet another Dreamliner-related downgrade, and the latter extended Thursday's post-earnings decline.
"The thing to remember is that we've seen this before," said a Technical Strategist, offering some chicken soup for the weary trader's soul.

"Every few months we sell off due to concerns about China trying to slow its economy, and every time we've bounced back.

No bull market since World War II has ever died before its second birthday, and this bodes very well for the bulls going into March of next year." .... unquote

The Dow Jones Industrial Average (DJIA – 11,192.58) ended on a drop of 90.5 points, or 0.8%, as all but four of its 30 components closed lower. The Walt Disney Co. (DIS) led the advancing blue chips higher on the heels of its latest earnings report, while Boeing set the pace for the 26 decliners. The Dow gave up 2.2% this week, and ended the session beneath its 20-day moving average for the first time since Sept. 1.

The S&P 500 Index (SPX – 1,199.21) swallowed a loss of 14.3 points, or 1.2%, to settle on the south side of 1,200 for the first time since Nov. 3. Unlike the Dow, though, the SPX found intraday support at its 20-day trendline. Finally, the Nasdaq Composite (COMP – 2,518.21) gave up 37.3 points, or 1.5%, to settle just a hair's breadth above its own 20-day moving average. The SPX ended the week down 2.2%, while the COMP shed 2.4%.

Crude futures took a spill today, as traders cast a wary eye toward China. The threat of a rate hike for the world's No. 2 oil consumer sparked concerns about weaker energy demand, just one day after traders cheered data showing record-high oil demand from the nation. Thanks to today's slide, in fact, oil futures erased all of their weekly gains. Crude oil for December delivery ended on a deficit of $2.93, or 3.3%, at $84.88 per barrel. For the week, the contract shed 2.3%.

Gold futures also took a hit today, despite the malleable metal's safe-haven appeal. Concerns about the global economy have been mounting all week, and those anxieties culminated today in a widespread bout of profit-taking in stocks and commodities. As a result, December-dated gold shed $37.80, or 2.7%, to close at $1,365.50 per ounce. On a weekly basis, gold kept pace with crude by giving up 2.3%.


No comments:

Post a Comment