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| 2009-06-22 01:39 |
WORLD BANK SPOOKS MARKET
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NEW YORK, NY The market stumbled out of the gate today and there doesn't seem to be a shot in Hades that it
will be able to reverse course. The hot, or should I say "formerly" hot, sectors continue to get hammered and there seems to be a flight to the safety
of utilities and some buying in homebuilders. With respect to the latter, I mentioned in this morning's comments there could be nibbles ahead of
housing data that begins tomorrow before the open. What seems to be hurting the market more than anything is that after a few weeks of looking for a
new catalyst(s) there is a certain amount of reality checking going on...the economic turnaround is going to be much more difficult and painful than
the fawning media would have you believe.
The World Bank set off a roadside bomb with its revised estimates on the growth (or lack thereof) for
the global economy. Here are the latest estimates:
* Global GDP: -2.9% or the first contraction since World War II (previous estimate was a
1.7% contraction)
* GDP for developing nations: 1.2%, down from 5.9% 2008 and 8.1% 2007
* GDP for developing nations excluding China and India:
-1.6%
* GDP for high income nations: -4.2%
* Net private capital inflows to developing countries: $707.0 billion from $1.2 trillion
* Global
trade: -9.7%
The market is off on this disturbing news. But, the report also said the "most likely scenario is that global equity markets
regain momentum and credit markets heal." Unfortunately, this has not been the case today!
Stocks started the session by falling off a cliff
just like last week. However, unlike a week ago weakness has persisted. Perhaps there will be some support north of 896.0 on the S&P 500 for the
reminder of the day. Bulls have pointed to the mountain of money on the sidelines as the safety net for the market so it would be heartening to get
some buying late in the session that lifts the S&P 500 above 902.0.
Of course, if that doesn't happen then the index would be extremely
vulnerable. I continue to see the key support point at 880.0 on the S&P 500, although I would prefer if it wasn't tested.
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Disclaimer: Securities Operations Forum is providing this research to assist investors in determining when to buy and when to sell. All investment decisions are yours and as a result you could make or lose money. Securities Operations Forum, its employees and/or its affiliates and family members may from time to time take positions in the open market or otherwise with respect to the securities discussed, but not have stock ownership equal to or greater than 1% of the outstanding stock of the covered company nor does any employee of Securities Operations Forum sit on the Board of Directors of any covered company. The statements made herein include information obtained from sources believed to be reliable, but no independent verification has been made and we do not guarantee its accuracy or completeness. The statements made herein contain general information and do not constitute an offer to buy or sell any security. |
