Week in Review
Take a look back at the week that was...
Caution was the main theme this holiday-shortened week as inflationary concerns resurfaced coupled with renewed tension in the Middle East and worries over the subprime mortgage market. The DJIA and the S&P 500 both hit their top-end channels as mentioned in the Morning Cup of 'Jo. This area of resistance could also be responsible for some profit taking.
While the "Four Sisters" do appear tired, it is important to realize there have been NO significant breaks in the major market indices. However, if the bottom-end of the channels is broken, 12,600 & 1,440, on the DJIA and S&P 500, then probabilities increase for a multi-month consolidation.
Commodities, namely gold, soared this week behind higher than expected CPI numbers and fund flows out of the bond market. Gold market bulls were pleased with the yellow fellow's close over $675 as mentioned in last week's Week in Review and $700 appears to be the new hurdle. The attractive technical condition of the gold market has been a point of focus for my firm for awhile (please refer to January 24th's Cup of 'Jo). A close over $700 will almost certainly bring last year's high into the "line of fire."
The Four Sisters' Performance
Tony Blair confirmed British troop withdrawal saying, "What all this means is not that
Investors saw value in the XM Satellite Radio (XMSR) & Sirius (SIRI) merger, as the conglomerate would potentially provide better offerings and eliminate competition. Regulatory hurdles are keeping investors from falling head over heels for the deal. (Wed 21)
CPI (Consumer Price Index) data was hot, giving gold futures a lift to a seven month high on Wednesday. Investors flocked to gold to hedge potential inflation. (Thu 22)
Hedge funds dodged stringent regulation, as regulators decided the current system is working well, and there is no need for further transparency. (Fri 23)
Iran ignored the U.N.'s wishes refusing to discontinue its nuclear program. (Fri 23)
Wal-Mart (WMT) saw its stock gap up close to 4% Tuesday, as the retail giant posts higher than expected 4Q profits due to successful cost strategy. (Tue 20)
Clear Channel (CCU) stock was unaffected by disappointing earnings, as shareholders' concerns were aligned with potential private equity buyout. (Fri 23)
Home Depot (HD) profits declined in 4Q due to a housing market slow down, leaving investors to re-evaluate the share price. While Lowes (LOW), the other home improvement leader, saw its shares appreciate as its earnings exceeded the Street's expectations. (Fri 23)
Dow component Hewlett-Packard (HPQ) gave a cautious forecast which dragged down shares nearly 5% Wednesday. (Wed 21)
Market Movers: Winners and Sinners
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