Daily US Market Comments 17 July 2006 by MastersoEquity.com
FUNDAMENTALS
We all know the big news by now, don't we? Isreal continues to enforce its military might on Syria and Lebanon which resulted in oil prices making record highs. In fact, it was at one time trading at $78.40 last Friday! Analysts are looking at a possible $100 per barrel coming up soon and should put quite a bit of pressure on the stock markets as corporate profitability comes under pressure. All indicators are also pointing toward a slow down in the US economy due to consumers cutting back on spending. Consumers now have to put up with higher living expenses as gas and power costs rises. This along with a slow down in corporate earnings made it less possible to see broad based pay rises. This forms a vicious cycle which increases the risk of recession to nearly 50% according to some analysts. The CPI numbers and Mr B's testimony at the end of the week needs to cast some optimism into the markets. The last straw that could truly kill the camel right now is the prospect of another rate hike.
TECHNICALS
The markets continued through its drop with resolve. NASDAQ has broken its price channel to downside and the Dow is fast approaching its June lows. All in all, there are no indications whatsoever that hints at a bottom as there is still a great deal of momentum to downside. NASDAQ should start to accumulate at 2000 and form a support level, if not, then there is really no telling how low it can go. The Dow still does look hopeful should it accumulate at the June Lows.
We all know the big news by now, don't we? Isreal continues to enforce its military might on Syria and Lebanon which resulted in oil prices making record highs. In fact, it was at one time trading at $78.40 last Friday! Analysts are looking at a possible $100 per barrel coming up soon and should put quite a bit of pressure on the stock markets as corporate profitability comes under pressure. All indicators are also pointing toward a slow down in the US economy due to consumers cutting back on spending. Consumers now have to put up with higher living expenses as gas and power costs rises. This along with a slow down in corporate earnings made it less possible to see broad based pay rises. This forms a vicious cycle which increases the risk of recession to nearly 50% according to some analysts. The CPI numbers and Mr B's testimony at the end of the week needs to cast some optimism into the markets. The last straw that could truly kill the camel right now is the prospect of another rate hike.
TECHNICALS
The markets continued through its drop with resolve. NASDAQ has broken its price channel to downside and the Dow is fast approaching its June lows. All in all, there are no indications whatsoever that hints at a bottom as there is still a great deal of momentum to downside. NASDAQ should start to accumulate at 2000 and form a support level, if not, then there is really no telling how low it can go. The Dow still does look hopeful should it accumulate at the June Lows.
posted by Jason Ng at 8:18 PM
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