Tuesday, September 25, 2007


Consumer confidence for September dropped to 99.8, after registering a revised 105.6 in August; existing home sales dropped to a 5 year low according to the National Association of Realtors. The markets barely budged.

It is entirely possible that the news was expected or hardly damning enough to put a major dent in investor confidence. There's also the suggestion that if the economy continues to struggle, the Fed will simply rate cut its way out of any possible problems.

Then again, maybe the market is suffering from paralysis and inertia, manifestations of the deeper illiquid conditions in the credit markets. Apprehension and fear have the effect of freezing the target - deer in the headlights syndrome.

Dow 13,778.65 +19.59; NASDAQ 2,683.45 +15.50; S&P 500 1,517.21 -0.52; NYSE Composite 9,933.82 -12.60

Market internals show a much different and more bearish picture. Declining issues led advancers by better than a 3-2 margin for the second straight day. More importantly, new lows took the lead from new highs - flipping the previous short-term position - 244-163. That's significant because it's indicative of weakness at the bottom of the market, and weakness usually spreads itself upward. Once the worst positions are eviscerated, the sellers move up the ladder, inducing indecision on a more widespread platform. Without any catalyst to take markets higher (outside of an emergency rate cut) stocks should drift lower the rest of the week.

Intensifying the concept that markets are becoming more and more torpid, November crude contracts fell by a whopping $1.42 to $79.53, but gold and silver maintained their positions of strength. Gold dropped just 50 cents; silver lost 2 pennies.

There was little ambiguity in the Dow stocks, split right down the middle with 15 higher and 15 lower. Wal-Mart (WMT) and Home Depot (HD) led the decliners, while defense stocks, Honeywell (HON), United Technologies (UT) and Boeing (BA) paced the winners.

The rest of the week includes a modest economic calendar, with reports on Durable Orders on Wednesday; Final 2Q GDP, New Home Sales and initial unemployment claims on Thursday.

Ho-hum. We're going nowhere fast.

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