Monday, January 29, 2007

A market most boring

I had to laugh today.

Yesterday I observed that with all the news out this week the market behavior might tell us how the market mood is. Today that mood was... boring? Perhaps a better word would be "uncertain" as the market did almost nothing. Apparently everyone is waiting to see what will happen, nobody wanting to move until they see what the herd is doing. That suggests that volatility could rise as investors clamor to get on whatever bandwagon forms next.

Guest commentators via WSJ

  • George Gutowski isn’t so thrilled with Mattel’s earnings report. “The provision for taxes dropped dramatically from $235 million to $91 million. I almost never believe huge drops in income tax when they happen and fully expect some restatement in the future,” he writes. “This low level of taxation will probably not hold in future quarters. Management essentially makes no comment about it in the press release and probably does not want to talk about it.”
  • Strategist Andrew Crowder is among those who believe a correction could be in the offing soon. “The bounce off of today’s intraday oversold reading was not nearly as powerful as what we have witnessed recently,” he writes. “This could be the initial signs of intermediate-term weakness going forward. The market is still in an uptrend so the bears should not yet rejoice, but a few more weak buying attempts off of oversold by the bulls could lead to a decent correction.”
  • Justin Lahart points out in Ahead of the Tape that the rise in corn prices due to a desire to find alternative energy sources could hurt consumers’ wallets anyway. “With Washington newly enamored with homegrown energy sources, despite the recent drop in oil prices, corn prices could head higher still. In time, this could push its way into food prices broadly,” he writes. [Note from FW: corn prices already rose after the ethanol craze started then started drooping as oil prices dropped and reduced the fuel value of ethanol]
  • Writing in TheStreet.com, Aaron Task points out the divergence between the Dow industrials and the Dow transports. “The Dow Jones Industrial Average slid Thursday, but even after a 100-plus-point drop it is less than 1% below its all-time closing high,” he writes. “That is why it’s more concerning to some market watchers that the Dow Jones transportation average, which fell 1.4% Thursday…is now 5.6% below its all-time high set in May.”
  • Mortgage broker Dan Green usually writes about economic issues on his Mortgage Reports blog. But with mortgage rates jumping dramatically recently, he takes some time to discuss what’s going on in his business, speaking of new clients who, for reasons he understands, couldn’t shake the impression he was trying to pull a fast one. “I watched their dollars just float away while they looked at me as if I were a high-pressure salesperson. It’s really a shame. I don’t know how else to say ‘YOU’RE MAKING A BAD DECISION BY WAITING’ other than to just say it,” he writes. “Can I blame the first-timers for not trusting me? It really does sound ‘high-pressure’ — regardless of the trust that we may have already built together. Sad, but true.”
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