Our indicators see the market opening slightly higher trading sideways on low volatility.
We car preparing a new quantitative analysis of the Dow components and what components tend to increase or decrease the Dow depending on the Dow futures trading.
The market is still uncertain of the Fed's interest rate cut. The cut of 50bps in both the Fed Funds Rate and the Discount Rate is causing the market to reflect on what is actually happening in the global economy.
The Dollar is at an all-time low against the Euro as oil made a new high last week on inflation fears. Gold is at a 24 year high on the weakness of the dollar causing inflation fears in long term interest rates.
It is our opinion that the Fed's actions will have little if any immediate effect on the market and the continued weakness in the housing sector will continue into 2008 due to the excess supply in housing units.
Even if Feddie and Fannie Mae increase the jumbo limits, beyond $417,000, the avaialble supply of new buyers is insufficient to increase demand for hte excess housing units.
The Dollar is trading at 141 to the Euro causing the exporters to MCD, KO, GE, BO and others to have a positive outlook as long as the Dollar is weak. As the Dollar weakens against the major currencies, European exporters’ sales will decrease relative to US exporters causing global markets to weaken.
