Friday, April 11, 2008

GE, Consumer Sentiment Savage Stocks

The forecast for Friday was fair, but it turned gloomy as General Electric reported 1st quarter earnings well below analyst estimates and the University of Michigan Consumer Sentiment Survey recorded its lowest reading in 26 years, plunging to 63.2 after checking in at 69.5 in March.

Investors did what anyone would rightly expect, they sold as fast and as much as they could. Shortly after the 10:00 release of the Michigan survey, the Dow was off more than 175 points. It never got much better than that as the Dow recorded its first loss of more than 200 points (a common occurrence in January) since March 18, a span of 17 sessions.

Dow 12,325.42 -256.56; NASDAQ 2,290.24 -61.46; S&P 500 1,332.83 -27.72; NYSE Composite 8,936.11 -160.75

The double dosage of damming economic news was exactly what the market needed to shed its overbought position, leaving the Dow less than 600 points from it's near-term closing low from March 10. With new lows being put in place just about every two months, the markets are in a condition of flux and should remain so unless quarterly reports begin to come in worse than expected. Even if that's the case, a few headline stocks meeting or exceeding expectations will surely fuel big rallies.

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The market in equities continues to be highly volatile, which is a trader's dream or nightmare, depending on how well one reads the tea leaves in the news, economic reports and earnings releases.

As expected declining issues trounced advancers, 4893-1334, or nearly 3-1. New lows expanded their edge over new highs, 201-56. This particular indicator is pointed intensely towards the negative, flashing a bright neon sell sign which should not be missed. After relinquishing the lead to new highs for two days this week, the new lows are beginning to expand once again.

Oil barely moved, gaining only 3 cents to close the week at $110.14. Gold lost $4.80 to $927.00. Silver continues to take larger losses, relative to cousin gold, dropping 35 cents to $17.69 the ounce.

For the week, all of the major indices were lower by roughly 2%. The bear remains in a growling, angry, ravenous mood and with earnings due in force next week, the grizzly one may whet his appetite aplenty.

NYSE Volume 3,693,357,500
NASDAQ Volume 1,918,384,125

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