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Week in Review: October 19, 2007

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A look back at the week that was...

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Market Update

The Four Sisters suffered a setback this week as the true state of the U.S. economy came into question after a mixed bag of earnings, further housing woes, and credit concerns. Last week, I warned that more than likely a short-term top was established and investors need to be cautious. After setting a record weekly close, the SPX slid to its "Fed day" support level of 1515. A breach of this short term support level would bring the SPX's 50 dma into play which coincidently coincides with the psychologically important 1500 level.

Gold continued its upward path as the USD hit a record low against the euro over concerns of a troubled economy. Other safe havens like treasuries had great weeks as the yield on the 10-year reached its lowest level in 5 weeks. Crude oil reached on all-time high as Turkey threatened military action against Kurdish rebels located in northern Iraq. Next week, housing data and earnings will take center stage as investors begin to discount the economic picture.


The "Four Sisters" Performance




ETF Watch


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Top Headlines

The Consumer Price Index gained 0.3% in the month of September, led by higher food and energy prices. Core inflation rose by a slower than expected 0.2% for the month, giving more credence to the possibility of a Fed rate cut. (10/17)

Leading Indicators rose by 0.3% for the month of September, with seven of the ten leading indicators seeing an increase. This month`s increase has continued the indicator`s volatile trend, as the August number was revised to a decrease of 0.8%. (10/18)

Turkey's parliament approved the use of military force against Kurdish rebels in Northern Iraq . (10/17)

Banking giants Bank of America (BAC), J.P. Morgan (JPM) and Citigroup (C) announced that they have agreed to create a joint fund to ensure liquidity in the commercial-paper markets. Over the past few months the commercial-paper markets have been in a crunch, seeing the amount outstanding asset-backed commercial paper fall by nearly 24%. While no specifics about the fund have been confirmed, many are speculating that it could be valued at nearly $100 bln. (10/15)


Earnings Snapshot

Citigroup (C) shook the street this week as the banking giant reported a 57% decline in 3Q income from a year ago. The company cites the current credit market conditions for their poor performance. (10/15)

Yahoo (YHOO) surprised investors this week as they beat estimates. The online retailer expects to further profitability in the coming quarters as they complete many growth initiatives. (10/16)

eBay (EBAY) reported a 30% increase in 3Q revenue this week. The retailer saw improvements in marketplace listings, PayPal payments and international operations. (10/17)

Bank of America (BAC) struggled this week as the bank reported a 32% decline in 3Q net income. The corporation credits deteriorating credit market conditions for the substantial losses seen in investment banking operations. (10/18)

Google (GOOG) continued their dominance over the tech sector this week as the internet giant reported a 57% increase in 3Q revenue. Share prices soared to new highs on the announcement late Thursday afternoon. (10/18)


Market Movers: Winners and Sinners


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No positions in stocks mentioned.

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