Tuesday, November 27, 2007

Investment in Citigroup spurs futures

The futures are sharply higher this morning (although, off there highs). Due to several factors: The Abu Dhabi Investment Authority will invest $7.5 billion in Citigroup, offering the nation's largest bank needed capital to offset big losses from mortgages and other investments. British bank Barclays said Tuesday that it expects earnings for the year to broadly match market expectations as growth in retail and commercial banking has helped it cope with the turbulent credit markets. On Monday, Pulte Homes (PHM) reaffirmed its fourth-quarter quarter pre-impairment earnings and cash position outlook, despite a weak housing market. I guess people think there is real value in the US financials. In any case, I have not trusted any of the recent rallies and have not been buying into them, but I am opening small positions in sell offs. I still believe we go to 12500 (INDU) before it’s all said and done.

Posted by prudentstockinvestor M.D. at 7:50 AM

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$BPCOMP

$BPCOMP
Extremely Oversold

Regarding Chart: BPCOMQ

This is the lowest close seen in years, usually a sharp and violent rally follows these moves enhanced by short covering, this is no time to short and start making a shopping list.

Bear-ly Hangin" In dustrials

Bear-ly Hangin" In dustrials
Dow Graph: 11/20/07
The Dow looks like its fighting for its life here at the level. It's no surprise there was a vicious bounce off the trend line as shown in the chart. Unfortunately, the last time we had that five hundred point reversal day was caused by the Fed stepping in, there has to be a similar event that helps the market or there is more pain ahead. The Fed minutes said nothing the market really liked, we sold off hard and bounced back hard as we hit support. This was just a reflex rally we may have to get one more really painful selloff to get around 12500.