MARKET COMMENT
November 28, 2006
The “talking” began today and should continue throughout the
week. Prepare yourself for more
volatility, be patient, and watch your step.
Sometimes there’s not a lot to write about, but I’m always
comforted when the NAR [National Assn of Realtors] makes comments. David Lereah, their
chief economist must burn the candle late coming up with tidbits like:
- “As
expected, existing home sales appear to be stabilizing, fingers and toes
crossed…”
- “Falling
prices are a good thing.”
- “Inventories
have stabilized.”
- “That’s
a segment of the marketplace that’s experiencing some pain.” [Referring to
unsold condos]
Chairman Bernanke chimed-in
stating that things are going according to plan. The economy is slowing and excluding the
ailing housing and auto sectors [gag], “economic activity has, on balance, been
expanding at a solid pace.”
On the other hand, Charles Plosser
of the Philly Fed stated that current levels of inflation are unacceptable and
that interest rates may need to be increased.
These sentiments are tentatively dollar supportive and are part of a
strategy to keep the dollar from falling out of bed.
“Turnaround Tuesday” was revived today as economic releases
pressured stocks early but some well-timed program trades hit the markets after
10 AM to stem the selling and lift stocks.
And, as the day chugged toward the finish line more buy programs lifted
stocks. It’s not a big surprise since we’re
approaching end of month and a little window dressing is common. It’s not like we undid Monday’s big decline
in any fashion, but using “realtor speak”, prices have “stabilized” for today
anyway.
Let’s focus on issues that dominate investor’s attention
again—the dollar, precious metals and commodities.
First, more money has been lost over the past year trading
currencies than any other market and that includes investors like Buffett and Soros and typical
hedge fund managers. So there’s no “lock”
on the notion that “this is it” and much money will be made in currency trading
going forward. There are plenty of
forces ready to take markets in a completely different direction.
Let’s look at even more volatile markets.
This week will require investor patience as the market is
probably at a more dangerous and volatile point since last summer. So “watch your step” but be patient at the
same time. More potentially market
moving “talk” from officialdom will take place.
Further, Thursday is the last day of November so window dressing will
continue barring other news.
Have a pleasant evening.
Disclaimer: Among
other issues, the ETF Digest maintains positions in: QQQQ, SPY, PZJ, FXE, FXF,
GLD, SLV, CEF, GDX, ILF, FXI, IFN, TRF and IEF.