GOIH Capital Markets: Market Overview--10-02-07

GOIH Capital Markets’ market overview sees the market opening basically flat to slightly higher in the major market indices, Dow and NASDAQ. Monday’s Dow record closing is being commented on as an aberration in the market.
The flow of funds suggest that the money that went into the market on Monday was from foreign sources looking to boost their earning power with the weak US Dollar at an all time low against most major currencies.


Our market models and indicators suggest a sector rotation into large cap multinational exporters: MCD, KO, BA------technology: AAPL, INTC, CSCO and commodities.

High End Consumer Spending:

Reports are circulating that the high end consumer is starting to feel a little uneasy in their consumption patterns. The wealth of the high end consumer is composed of financial assets: stocks, bonds, equities and house equity.


The home equity refinance market is all but shut down and the financial market have exhibited volatility and the possibility of recession cramping their spending habits.

We see the major brokers GS, MER, LEH, MER, BSC being strong on another projected Fed rate cut at the next FOMC meeting in November.

McDonalds (MCD) and Coke (KO) Target (TGT) as market indicators.

Our models indicate that the above stocks are leading market indicators as food and basic consumer items for the household.

Both MDC and KO generate a majority of their earnings outside of the US and benefit from the weak dollar as well as being part of the consumer staples sector. Regardless of the economy the consumer has to eat and cloth themselves.


We see continued market trending based on economic data pending the next Fed meeting in November. The direction of the trend in the short term will depend on the money flow from external sources and reallocation into different sectors rather than a general market trend.


Market Forecast:

We see strength in the Dow components with exposure to the weak dollar and strength in technology with the capital expenditures of industrial companies exporting more and upgrading their infrastructure to produce more goods and services.