August 20, 2008
Despite the winds and heavy rains brought to us by Tropical Storm Fay (over 17” worth in 36 hours) we, nonetheless, press on to provide you with the daily market analysis.
So today’s market action was predominantly driven by some short covering late in the day mostly in the financials, which isn’t that surprising, considering how much they have been driven down in recent days. Think for a second all of the negative news that has come out in recently concerning this all important sector; we’ve had a rumors of another major bank meltdown, a huge sell off in Lehman Brothers, and jitters surrounding a government bailout of Fannie and Freddie. With that said, how much more bad news could come to light (assuming that none of the rumors do come true in the near term), and having a few days to play out all of this bad news, one would reckon that the bad news is now priced into stocks, including renewed concerned about inflation.
We are not saying that the markets cannot go lower due to the above mentioned factors, but on a very short term basis, it would make sense that the market attempts to see a rally of sorts after all the heavy selling that we have seen in the past couple of days. No better time to find out then when the opening bell rings.
We have been exercising caution in recent days due to the unpredictable nature of the market over the past week. We would like to see the market regain its footing before committing any more capital.
Now to the NASDAQ and S&P charts…