Tuesday, May 27, 2008

Week Begins with Low-level Markup

There was nothing startling about today's market gains. One can read absolutely nothing into the low volume rally following a three-day weekend except that it is unlikely to last through tomorrow's midday trading.

In fact, today's trade was more evidence of the PPT (Plunge Protection Team a/k/a the President's Working Group on Financial Markets) remaining active in the markets as the upward trajectory was largely the result of two separate, abrupt 50-point moves on the Dow - both between 12,500 and 12,550 - which occurred at 10:00 am and again at 2:30 pm.

The sad part of the manipulation plan for the markets is that both moves failed to create or sustain momentum.

Following the 10:00 am move, the Dow backed off 100 points by noon. The 2:30 pump resulted in the highs of the day an hour later, though by the close, the 12,550 target was not realized.

Dow 12,548.35 +68.72; NASDAQ 2,481.24 +36.57; S&P 500 1,385.35 +9.42; NYSE Composite 9,314.02 -1.76

News was largely inconsequential, as the Conference Board reported that their Consumer Confidence Index dropped to 57.2, from a revised 62.8 in April, it's lowest level since 1992.

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And while new home sales increased 3.3% in April, home prices fell by 14.1% in the first quarter of 2008.

Oil fell on the NY Mercantile Exchange, losing $3.34 on new concerns over - get this - demand - to 128.85. This is not unexpected and it would be no surprise if oil prices stabilized over the summer and subsequently fell in autumn, just in time for energy prices not to be an issue in the November elections.

Since Republicans have been so accommodating to Big Oil, a concerted trading and talking effort will coordinate to keep gas prices below $4.00 in the fall of 2008, and likely under $3.50. Republicans don't want to give Democrats an issue, and this is surely one over which they have control. It's a scandal, a sham and a shame. If a new administration is brought to bear in November, investigations should begin early in 2009.

The average price of a gallon of gas hit an all-time high of $3.93 over the just-concluded Memorial Day weekend. The price is as artificial as an office-lobby fern and should vacillate between $3.60 and $4.00 for the balance of summer, or, as oil execs and politicians on their payroll are fond of calling it, the peak driving season.

Gold lost $19.20 to $906.60. Silver finished 83 cents lower at $17.47.

Market internals were on opposite axes, as advancing issues outpaced decliners, 3976-2289, but new lows continued to dominate new highs, 182-103.

With little corporate news and a dearth of economic releases this week, expect stocks to vacillate with a slim bias to the upside. Investors are still very much in the dark as to the true strength or weakness of the economy and are desperate for gains. Anyone on the buy side over the next few weeks is likely to find eventual disappointment as the indices will retest March lows at some point in the near term.

NYSE Volume 1,129,459,000
NASDAQ Volume 1,720,927,000

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