Monday, June 23, 2008

Sleepy Trade Ahead of Fed Meeting

Equity markets hugged the flatline for the better part of the trading day as investors awaited word on the direction of interest rates from the Federal Reserve.

Due to make a policy statement on Wednesday, the FOMC of the Federal Reserve is widely expected to leave rates unchanged after a series of cuts which began last August and have dropped the key federal funds rate to a multi-year low of 2%.

However, even the absolute lack of any economic news didn't help the indices from taking a negative turn during the last hour of the session, but recovering in the final ten minutes, thanks to some creative buying by the PPT.

Dow 11,842.36 -0.33; NASDAQ 2,385.74 -20.35; S&P 500 1,318.00 +0.07; NYSE Composite 8,841.89 +12.64

The NASDAQ took the brunt of the selling, as it has lagged the other indices on the way back down lately, but is catching up quickly. Tech stocks, of which many are on the NASDAQ, have been more immune to the housing and finance mini-panics which characterized trade in August of '07 and January and March of this year.

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After the massive downturn last week, Monday served as a bit of relief for harried traders, though there's little doubt that the US economy is in a very tough spot. Once again, political powers in control (Republicans) are doing all they can to deny the recessionary environment prior to the important November elections, though there's not much they can do about it except contain losses or pump prices into the close, like today.

Oil dipped just a little, losing 34 cents, to $136.40, following a weekend conference of oil-producers and users which failed to accomplish anything of substance. More hearings were held on Capitol Hill surrounding the issue of oil and gas prices, though there too will likely not have any impact. Laughably, congress is trying to blame oil speculators (partially correct) instead of placing the blame where it belongs, on the worldwide cartel of major oil companies which have conspired effectively to raise prices beyond any reasonable level.

Gold dipped 20 cents to $887.00 and silver lost a penny, to $16.78. It was a slow day everywhere.

Despite the somewhat ambivalent headline numbers, internals told a distinctly different - and negative - story. Decliners led advancers by a healthy 5-2 margin, 4326-2012, while new lows expanded their margin over new highs, 639-132.

Volume, however, was dismal - lower even than last week's pitiful efforts.

NYSE Volume 1,040,348,000
NASDAQ Volume 1,907,013,000

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