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Week in Review: January 18, 2008


A look back at the week that was...


Market Recap

The Four Sisters were battered again this week sending the SPX to its lowest level in 13 months. After trying to bounce Monday, stocks headed sharply lower the rest of the week on the heels of poor holiday sales, hot inflation readings, awful Citigroup earnings, and a Philly Fed number that the bulls would like to soon forget.

These are anxious times for many investors as they watched all of 2007's gains on the eldest Sister quickly erased in the first 3 weeks of trading. Bulls were hoping for an emergency rate cut but it now appears that they will have to wait until the Fed meets again at the end of the month. On the technical front the SPX support now stands at 1300, with our previous support level of 1380 now standing as resistance. As mentioned in my firm's Market Note on Wednesday, the DJIA support is now at 12,000 after breaking its intermediate support of 12,500. Given the extreme oversold nature of the tape we would not be surprised to see a tradable rally within the coming sessions.

The Four Sisters Performance

ETF Watch

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Top Headlines

Futures moved higher in early trading on Monday as growing anticipation of a rate-cute and IBM's (IBM) upbeat guidance raised investor sentiment. (1/14)

Retail Sales were down 0.4% for the month of December, led by slower car and gasoline sales. This decline marks the indicator's first decline in six months. (1/15)

Consumer prices also disappointed in December as higher energy prices drove CPI up by 0.3%, with Core CPI rising by 0.2%. (1/16)

Fed chairman Ben Bernanke urged congress to implement an economic stimulus package in a speech he delivered on Thursday. He also reinforced the fact the Fed is standing at the ready to ease interest rates if necessary. (1/17)

The Philly Fed manufacturing index plummeted for the month of January, reaching its lowest level since October 2001. The index fell from -1.6 in December to -20.9 for this month. (1/17)

Earnings Snapshot

Citigroup (C) displayed the continuing weakness in the financial sector as the banking giant saw a 4Q loss of $9.83 bln, coupled with an $18.1 bln pre-tax write-down. (1/15)

Intel (INTC) reported a 51% surge in quarterly profits this week, but saw shares fall as investors remain wary over the semiconductor's outlook. (1/15)

JPMorgan Chase & Co. (JPM) reported a 21% decline in 4Q EPS, though was still able to mark record full year income of $15.4 billon on top of a record $71.4 bln in revenue. (1/16).

IBM (IBM) got a boost this week as the tech giant reported a 24% rise in quarterly EPS. In addition to strong earnings, the company also pleased investors with a strong outlook for 2008. (1/17)

General Electric (GE) gave the market a slight boost on Friday at the open as the Dow component reported a 4% rise in 4Q earnings. (1/18)

Market Movers: Winners & Sinners

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No positions in stocks mentioned.

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