December 13, 2007

Futures this morning provided a gloomy forecast for the day ahead. But fortunately for the bulls the rain clouds went away and the market finished the day in a mixed fashion, with the NASDAQ finishing in the red. With the recent volatility, today provided some relief for the market, enabling it to catch its breath.

News was minimal with Lehman Brothers beating Street estimates but providing poor future guidance. Not too surprising considering the problems that the market is facing. However, we did not experience the type of 10-20% selloff so common this past quarter for stocks that provided the smallest bit of bad news. There was also Honeywell that provided a positive future forecast. On the economic forefront, wholesale prices jumped by the highest amount in 34 years while retail sales was better than expected for the month of November.

You have to wonder how long consumers can keep on spending when money is really not there for them to be doing as much. Exuberant consumer spending is will eventually become a problem for the economy. Probably not one that we will have to face today or tomorrow, but eventually we are going to be faced with some major problems with consumer credit and it will probably pale in comparison to the subprime problems we are currently facing.

Let’s review the charts…

Out of the Big Three, the NASDAQ was the only index to finish in the red. The index spent most of its day recovering off of the open and almost finished in the positive. However, the tendency of this holding is still to the downside.

S&P like the Dow, finished in the green after a rally by the Bulls late in the day. Buying interest has clearly waned since the weeks leading up to the Fed decision. At this point we are very concerned about further selling in this market, due to there being very few positives able to affect the market.