Tuesday, 10/29, Market WrapUp (Consumer Confidence Plunges)

Financial Sense Online ^ | 10/29/2002 | Scott Middleton

[rohry]

 
Weekday Commentary
from Scott Middleton

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Consumer Confidence Plunges

Source: CNN/Money

STORM WATCH UPDATE Bubble Troubles Part I Double, double, toil and trouble; fire burn and cauldron bubble. Bubble Troubles Part II Yes, Virginia, There IS a Housing Bubble

Bubble Troubles Part III It Ain't Over Yet for the Stock Market

Tuesday Market Scoreboard  October 29, 2002
Dow Industrials		0.90	8368.94
Dow Utilities		0.14	194.36
Dow Transports		31.25	2248.23
S & P 500		8.08	882.15
NASDAQ		15.29	1300.54
US Dollar to Yen			123.16
Euro to US Dollar			.9828
Gold		2.50	318.10
Silver		0.10	4.510
Oil		0.43	26.86
CRB Index		0.80	227.36
Natural Gas		0.07	4.261
All market indexes	10/29	10/28	Change
HUI (Amex Gold Bugs Index)
Close  YTD	112.79	112.73	0.06 72.99%
52week High	147.82	06/03/02
52week Low	59.86	11/26/01
XAU (Philadelphia Gold & Silver)
Close  YTD	64.50	64.44	0.06 18.50%
52week High	88.65	05/28/02
52week Low	49.23	11/19/01

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 Market WrapUp for the Week 
Monday  l  Tuesday  l  Wednesday  l  Thursday  l  Friday

Week in Graphs Storm Watch Geopolitical News Energy Precious Metals Raw Materials

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^{Tuesday, October 29, 2002}

Confidence Lost
Recording its first back-to-back decline in three weeks, the S&P 500 Index fell, after the Conference Board said its index of consumer confidence fell to 79.4 from 93.7, posting its lowest reading in nine years and the fifth straight decline.

Energy shares such as Exxon Mobil Corp. and ChevronTexaco Corp. declined after BP Plc, Europe’s largest oil company, lowered production forecasts. Computer related stocks were dragged down by Cisco Systems Inc. amid concern a rebound in earnings will be delayed by a stalling economy.

All three of the major indexes spent most of the day in the red with the Dow being down as much as 169 points during the session. However, before the day ended, Procter & Gamble was given all the credit for the turnaround in the Dow as they posted a 33% profit increase this afternoon. The results were attributed to increases in sales of many of P&G’s product lines along with additional restructuring savings.

Without P&G the Dow would have finished down 22 points today. Before P&G’s announcement the market was telling us that the confidence numbers were something to be concerned with. The fading consumer confidence is an indication of a lack of confidence in the ability of this economy to grow and generate jobs, and if there are concerns about the economy, there is going to be doubts on corporate profitability.

Financial Markets
The S&P 500 Index fell 8.08, or 0.9% to 882.15, with energy and computer stocks contributing half the loss. The Nasdaq Composite Index shed 15.18, or 1.2% to 1300.65, and the Dow, helped by P&G, rebounded from a 2% drop and closed with a gain of 0.90 to 8368.94.

Volume totaled 1.42 billion on the NYSE and 1.56 billion on the Nasdaq Stock Market. Losers led winners by an 18 to 14 on the NYSE and 18 to 15 on the Nasdaq.

Overseas Markets
European stocks slid after consumer confidence plunged to a nine-year low in the U.S., the biggest customer for the region's products. DaimlerChrysler, which makes half its sales in the U.S., had its biggest drop since September 2001. Royal Philips Electronics NV, which sells flat-screen televisions in North America, also declined. The Dow Jones Stoxx 50 Index fell 4.5% to 2459.87, the most in almost a month. All eight major European markets were down during today’s trading.

Japanese stocks fell, led by automakers, after Honda Motor Co. lowered its full-year profit forecast. The nation's second-largest carmaker had its biggest drop in four years. The Nikkei 225 Stock Average fell 0.6% to 8708.76.

Treasury Markets
The 10-year Treasury note skyrocketed 1 5/32 to yield 3.95 percent while the 30-year government bond soared 1 1/4 to yield 5.025 percent. Separately, Moody’s Investors Service noted that corporate bonds have not responded favorably to the stock market’s three-week rally. In fact, investment grade bond yield spreads remained wide as Corporate bond investors have refused to bid aggressively for most corporate debt obligations.

Copyright © Scott Middleton
October 29, 2002

[rohry]

"The buy signal is pretty strong right now. The markets have hit their bottom and there will be a decent bull market over the next year or so."

Man, what a dream world you live in...

[arete]

Interesting that Bernie Schaeffer has turned more bullish on this rally. I like Bernie -- he's a straight shooter so you have to take him seriously.

Bernie Schaeffer: A Bullish Trade in the Making

Richard W.

[Always Right]

Man, what a dream world you live in...

And what a sorry-ass doomsday hell-hole you live in...

[rohry]

"And what a sorry-ass doomsday hell-hole you live in..."

Okay Mr big expert, we'll see who comes out on top of this race. You have been wrong several times before and you will be wrong again...

[Always Right]

Oh please, spare me the 'you've been wrong before' bs. You have been predicting sub-5000 Dow for some time now.

[rohry]

"Oh please, spare me the 'you've been wrong before' bs. You have been predicting sub-5000 Dow for some time now."

Where did I ever say that? Show me a quote please...

[Tauzero]

Bernie might be right. Perversely, if he is, even more damage will be done to most people's portfolios, in the long run.

...can't have all that money sitting in money market funds -- gotta suck it back in, the bear is hungry.

[Always Right]

Where did I ever say that? Show me a quote please...

OK, just a few days ago on 10/25 you stated the following:

Historically, bear markets end when P/E gets well ensconed below the average (13). Wake me up when we get there...

If P/E go below 13 with present earnings, the DOW would be way below 5000....Now I know you don't think earnings will rise substantially anytime soon, so what are you predicting if it's not a sub-5000 Dow???????????

[rohry]

"If P/E go below 13 with present earnings, the DOW would be way below 5000....Now I know you don't think earnings will rise substantially anytime soon, so what are you predicting if it's not a sub-5000 Dow???????????"

Awfull lot of assumptions here. Did I say that anything about the Dow? NO!

Good try, though...

[rohry]

Oh please, spare me the 'you've been wrong before' bs. You have been predicting sub-5000 Dow for some time now.

Where did I ever say that? Show me a quote please... "OK, just a few days ago on 10/25 you stated the following..." This is your evidence that I have been predicting a "sub-5000 Dow for some time now?" Wow, you need to brush up on your analytical skills. October 25 does not constitute "a long period of time", I was not refering to the Dow, and I NEVER stated any speculation on future earnings...

Try again?

[AdamSelene235]

Awwww. You guys are just tooo technical. Any gut feels out there ?

Halfway through Gulf War II.

[AdamSelene235]

And what a sorry-ass doomsday hell-hole you live in...

Oh, leave rohry alone. He's one of the nicer guys on free republic. I've never seen him speak unkindly of another freeper without provacation.

Furthermore, just because one is bearish doesn't mean you're a doomster. If the GSEs melt down and take the real estate market with them, I will be grinning from ear to ear (and taking a rather long vacation).

There are plenty of reasons to be bearish right now and a couple of glimmers of hope for the future as well.

[raygun]

Actually, if one follows the principles of trend analysis there's money to be made in the stock market, no matter what the market index's are doing. Today 52 out of 209 market sectors increased in value. Obviously this is a huge money making opportunity for short sellers (at least they'd have an easier time at it), and to a lesser degree (but not impossible) those going long.

Even the worst performing sector (anathema for those going long) - Telecommunications (Processing Systems & Products) - which declined 6.82% in value today, contains a gem. Global Systems, Inc. (GCOM)has been trending up since the 11 Oct (the day price crossed the 20 day exponential MA). It opened at $2.85 on that day, and closed at $4.50 today. Foreshadowing of the trend was on 27 Sep when the 17 period, 3 period %K, 3 period %D stochastic crossed above 20. Confirmation of this signal was made by the extreme narrowing of 20 period, 2 standard deviation Bollinger Bands. On the 11 Oct the stock broke out on the upside, with a present unrealized gain of 58% in 18 days. This is an effective annual yield of 3824%. Not a bad return in the worst performing sector in a general bear market.

By the way, the 26 week price performance for that sector is 205 out of 209. That means that it is performing better than 1.9% of all market sectors. Without doubt there are a whole lot more gems such as that if one looks in those sectors in the top 25% of price performance for the last 26 weeks. With the aid of a good stock charting program (such as TC2000), you too could make money in the stock market no matter what it does.

[imawit]

Ok. Do I talk to you to get this TC 2000 or who/where do I call and how much does it cost ? Oh, and what is it, I haven't heard of it before.

[imawit]

If the GSEs melt down and take the real estate market with them, I will be grinning from ear to ear (and taking a rather long vacation).

I take it you're trying to tell me your short the GSE's.

[AdamSelene235]

I take it you're trying to tell me your short the GSE's.

Its getting a bit late in the game for that....Maybe if FNM hits 75 again.

You might check the mortgage insurers....Perhaps they're still up and ripe for shorting...Been meaning to look into that but have been too busy making the world safe for technocracy and such.

[imawit]

My honest opinion is Bernie is trying to put too much tech into opinion and emotion.

Hey, how'd you like that scap...a haymaker to the midsection and roundhouse to the temple..clinch & hold...rabbit punch to the left ear...oooooh a jab to the schnozher....now some rope a dope.

THANKS ROHRY & ALWAYS RIGHT. May the best man win. Just what this site needed, some action !

[lainde]

bttt

[Always Right]

Try again?

Actually my first try did it already, but let's look at several others....

10/15--Tauzero accurately called this market rebound a week ago. I'm hoping it continues up through the election before it continues its decline to 6000 (or less)...

10/14--And, what stocks do you recommend in the midddle of the biggest Bear market since 1930?...

9/30--It's just that I believe that the market is ready for a decline...

9/29--The Dow should have reached 6500 last year. After that happened we could have built a new base. Now, I think that the Dow has to go MUCH lower to reach a bottom.

9/24--The "current reality" is that the stock market is going down... BIG TIME.

8/29--This market is vastly overvalued and will continue to come down even if some naive souls decide that it is somehow "patriotic" to ride it to the bottom.

7/22--Stocks are going down, big time...

7/21--I'm not shorting anything, but I'll notify you when we hit 7,000, 6,000, and 5,000...

7/11--If I said how low they really have to go I'd be flamed endlessly, so I'll stick with a number that is probably way too high but indicates to everyone that we are nowhere near a bottom.

7/11--I figure that we've got another 35% more to go (down) before we get close to fair market value. After that the real recovery can begin...

Besides your almost daily doom and gloom quotes, on 7/21 you specifically indicated below 5000 and on 7/11 you said 35% more decline (which you thought was way to high still). On July 11, the market closed at 8,812.10, let's see, a 35% decline would put us below 5728. Of course that was only your very conservative guess, which then you state if you said how low you really thought it would go you would really get flamed.

So are you denying you are not a doom and gloomer? Are you denying you don't think the DOW is headed below 5,000? Are you denying you don't think the DOW has to reach a PE of 13 to recover? Are you denying you haven't been posting this stuff for months and months? If I am wrong, what are you predicting then, or are you too afraid to tell us your doom and gloom forcast. I think calling you a sub-5000 Dow doom and gloomer is a downright fair characterization of your posts.

[AdamSelene235]

So are you denying you are not a doom and gloomer? Are you denying you don't think the DOW is headed below 5,000?

Now why would a DOW meltdown be bad thing? *If* the Dow hits 5 grand, the birds will still sing, the sunrise will still be breathtaking, heck some property might even be returned to its Rightful Owners.