7 replies to this topic

[redfoliage2]

Market could rally on the release of the Fed minutes in the afternoon.

[arbman]

I took some profits, the liquidity is good for the morning, look at the resilient RUT, the oils are also slightly bouncing, another indication of liquidity --either remnants or injected doesn't matter. The energy should continue to bounce, I think we had a mini sector cycle. If so, it means once it gets completed, there is likely to be an acceleration down in the next few days. I wonder whether this rally was all the 5 wk cycle had to deliver. A mid week low and a rally or bounce until the week end is more likely...

[esther231]

I gave up and went flat at AM pricing on Rydex. If the CPI and Japan can't pull this down, then it's beyond me to figure out what will.

[arbman]

The energy should continue to bounce

http://ichart.finance.yahoo.com/z?s=^GSPC&t=1d&q=&l=off&z=m&c=^IXY,^IXR,^IXE,^IXM,^IXT,^IXV,^TXV,^IXB,^IXU&.png

Now, let's see whether the rest of the prophecy will come true...

- kisa

[KCScott]

From Briefing.com

Before the bell, total CPI for January rose 0.2%, reflecting the fact that falling energy prices remain a factor in pulling down overall inflation rates. More notably, however, core CPI rose 0.3%, the biggest increase since June. That pushed the year-over-year increase in the core rate to 2.7%, clearly above the Fed's desired range.

Even though the 0.3% rise in Jan. core CPI may prove to be a one-month aberration, since the core rate had been up just 0.1% in each of the prior three months, it does signal that inflation pressures may not have moderated as much as the market had hoped, especially following Fed Chairman Bernanke's surprisingly dovish commentary last week.

Diminishing hopes of the Fed easing anytime soon has also taken a toll on Treasuries, which in turn has made rate-sensitive areas like Utilities and Financials less attractive. The latter and more heavily-weighted Financials sector is under additional pressure amid more evidence of subprime lending woes. Albeit not an S&P 500 constituent, NovaStar Financial (NFI 10.96 -6.59) losing a third of its value after posting an unexpected loss and putting its REIT status in jeopardy is acting as an added source of nervousness for other mortgage lenders.

Technology, though, has been the focal point today since all eyes last night were on Hewlett-Packard's (HPQ 41.35 -1.78) Q1 report. However, the Dow component's Q2 outlook barely exceeding analysts' expectations has given shareholders an excuse to lock in recent gains. Fellow Dow component Intel (INTC 20.78 -0.40) is also under pressure following downbeat commentary out of Prudential while analyst downgrades on Motorola (MOT 18.90 -0.27) and Qualcomm (QCOM 41.95 -0.74) are also removing notable leadership from the S&P 500's second most influential sector.

I think we see a sell off after the Fed comments this afternoon - The rate cut is off the table

[arbman]

The equity P/C is 0.8 and the total P/C is 1.23, I don't think there will be a quick reversal this afternoon with these high numbers. The dollar is stable with the sell off in the treasuries, I don't think the inflation is anymore damaging than it already is. OTOH, it means there is a lot of liquidity in the system and it will probably blow off again before the Fed can do anything about it...

[arbman]

So much liquidity, but so much, yet no growth!?! The liquidity that started the rally from last week so far had a strange sector cycle skipping right over the techies today and going straight into the materials and energy. If this rally manages to turn into another IT advance, it will be one of the rare ones. The market can really get a swift pull back at least after the energy tops... - kisa The Fed had $34B pumped in at the moment with the temporary repos, I wonder how these inflation readings with the ramp up in the energy will affect their decision about the expiring $23B tomorrow. I bet if they don't pump tomorrow, the market can get a decent pull back... - kisa

[arbman]

BTW, Fed reserviced the temp repos back in for $23.75B, they don't want to see the market decline at this juncture. About $17B will expire on March 8th, the rest is overnight...

Edited by kisacik, 22 February 2007 - 10:37 AM.