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Market Commentary for October 22, 2007

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PostPosted: Mon Oct 22, 2007 5:35 pm    Post subject: Market Commentary for October 22, 2007 Reply with quote

After the sharp sell off on Friday, investors and day traders were skeptical on how the first trading day of the week would turn out. Trading activity was volatile today amidst moderate trading volume. Early on in the trading session, the Bears seemed to have the upper hand but, into the afternoon session, the Bulls took control with the major indices moving into higher territory, closing near the highs for the day. During the session, the DOW was in the red by triple digits.

At the closing bell, here is how the major indices ended the session: the DOW (Dow Jones Industrial Average) posted a gain of 44.95 points on the day to end the session at 13,566.97; the NYSE (New York Stock Exchange) posted a gain of 10.51 points to end the session at 9.930.78; the NASDAQ posted a gain of 28.77 points for a close at 2,753.93; the S&P 500 moved higher by 5.70 points to end at 1,506.33 and the RUSSELL 2000 moved higher by 11.29 points to close at 810.08. The FTSE All-World Index ex-US (top Large/Mid Cap aggregate from over 2,700 stocks from the FTSE Global Equity Index Series (GEIS) which covers 90% of the world’s investable market capitalization) posted a loss of 2.69 points to close at 266.46 and the FTSE RAFI 1000 posted a gain of 23.70 points to close at 6,181.03.

Chicago Fed September National Activity Index fell by 0.45 versus a drop by 0.68 in August and Chicago Fed Index 3-Month average fell 0.31 in September versus a drop by 0.20 in August.

Randall S. Kroszner, Member of the Federal Reserve Board comments released: says recovery in structured credit to be gradual; price discovery broke down in structured-credit markets; says U.S. equity markets seeing greater volatility; should weigh economic effects of market-pricing problems and Fed to 'act as needed' to ensure smooth U.S. Markets.

Frederic S. Mishkin member of the Federal Reserve Board comments from October 20 released: 2nd-Round Price Effects From Energy Gains Unlikely; Most Analysts See Energy Price Gains As Permanent; Recent Oil Price Gains Show Shocks Can Linger; Focus On Core Inflation Helps Avoid Policy Errors and Tightening In Response To Energy `Bad' Policy.

Former Federal Reserve Chairman Alan Greenspan’s comments from October 21 released: Global Trade Imbalances No Cause For `Undo Alarm'; Debt Level, Not Financing Source, Matters Most; U.S. Current Account Gap Reflects Waning Investor Home Bias and Protectionism Could Spark Painful Trade Adjustment.

Treasury Secretary Henry M. Paulson Jr.’s Plenary Remarks at the Annual International Monetary Fund and World Bank Meetings
Welcome to Washington. I'm pleased with the new leadership we have at the World Bank and the IMF. I have great confidence in Bob Zoellick and he has clearly hit the ground running. I am really looking forward to working with Dominique Strauss Kahn, a proven leader and a big thank you to Rodrigo de Rato for his leadership over the last few years. I wish him the best in his future endeavors.

The Changing Global Economic and Financial Landscape
The context to these annual meetings is continued strong global economic conditions and the recent financial turbulence. This context reminds us of the changing and challenging financial landscape and how imperative it is that we adapt ourselves and our institutions to meet these challenges. Let me hit on a few of the key changes we see. First, deeper, more sophisticated, more globally-interconnected capital markets have helped underpin growth in both developed and developing countries, but have also created new complexities. Second, global growth and financial soundness depend increasingly on dynamic emerging market economies, rather than overwhelmingly on industrial countries. Finally, accelerating globalization has heightened our awareness of the links between energy and environmental policies and longer-term global economic prospects. International capital markets have become more efficient and offer a growing array of innovative financial instruments. The volume of cross-border financial flows has expanded substantially in just the last five years, as has the daily volume of foreign exchange transactions. Innovation brings important economic benefits, promoting growth through the efficient allocation of capital, increasing access to credit and helping spread risks more broadly. But innovation has also brought increased complexity, new risks, new challenges and some new problems, which are now being examined by policymakers and regulators. We need to continue to be vigilant, because all of our capital markets are not yet functioning normally. As we move to address current problems, we must also address policy issues to prevent a repeat of recent excesses. Cooperative bodies like the Financial Stability Forum, the Basel Committee on Banking Supervision and the International Organization of Securities Commissions have a key role to play internationally, complementing domestic regulatory responses. Global economic trends are increasingly impacted by developments in emerging markets. China, India and Russia presently account for half of global growth. Emerging markets as a whole are growing more than twice as fast as industrial economies, and account for a rising share of global trade and investment. Such realities need to be reflected in international financial and economic institutions, both in the focus of their work, and in their governance structures. Any long-term view of global economic prospects must take into account energy security, deal with the global challenge of climate change and address environmental impacts for future generations. The cross-border nature of this challenge points to the need for international approaches. President Bush's major economies initiative, to work with the world's largest producers of greenhouse gas emissions to reach agreement by 2009, and his proposal for an international clean technology fund are important steps in this direction.

Modernizing the International Financial Institutions
To remain relevant in this changing landscape, the international financial institutions must better define their core missions, and align staff and other resources accordingly. Future credibility of the institutions also requires that governance structures evolve to reflect new global realities.

International Monetary Fund
A defining issue for the IMF is how to exercise effective surveillance over member country exchange rate policies in a world of fixed and flexible exchange rate regimes. The recent updating of the IMF's exchange rate surveillance mandate was an essential step, and implementation is equally critical. IMF staff needs to roll up their sleeves, undertake thorough analysis, and put forward their judgments. Without meaningful exchange rate surveillance, governance and management reform will ring hollow. Fundamental changes to the IMF's governance structure to reflect the growing role of dynamic emerging markets in the global economy must remain a priority. While such changes are not easy to achieve, a strong, credible IMF is in all of our interests. On behalf of the U.S., it is time that we ask emerging markets to take on greater responsibility in the international financial system. But it is fair for them to ask for a greater share in representation in return. Changes are also needed to put IMF finances on a sustainable footing. One part of the solution must be to reduce expenditures by re-evaluating the IMF's core mission and making difficult decisions on priorities. Hand-in-hand with this, we recognize that we need to consider longer term sources of income for the IMF over the next year.

Multilateral Development Banks
Multilateral development banks also must adapt while continuing to focus on their core missions of economic growth and poverty reduction. On the one hand, there is the challenge of their continuing relevance in countries whose economic success means they no longer need MDB finance. On the other, the poorest countries, especially in Africa, continue to need concessional assistance that is results-oriented, performance-based and focused on each bank's comparative advantage. We look forward to a successful replenishment of IDA to help meet those needs. Fighting corruption, a fundamental challenge to growth and development, must continue to be central to World Bank operations and policies, as the Volcker committee has recently reminded us. In addition, access to energy and the consequences of climate change have clear implications for growth in the developing world, and the World Bank can and must respond. The World Bank must also enhance coordination among the World Bank Group itself to serve as one institution on behalf of its clients. At the same time, it must maintain a rigorous focus on defining, managing for, and achieving the desired results. Addressing these multifaceted challenges is no small task, but one that shareholders are demanding and deserve. I look forward to working together to advance this important agenda.

Commodities Markets
The trend was lower across the board again today for the Energy Sector: Light crude moved lower today by $1.04 to close at $87.56 a barrel; Heating Oil closed lower by $0.02 again today at $2.33 a gallon; Natural Gas moved lower today by $0.20 to close at $7.53 per million BTU and Unleaded Gas moved lower today by $0.04 to close at $2.13 a gallon.

Metals Market ended the session lower across the board today: Gold moved sharply lower today by $8.40 to close at $760.00 an ounce; Silver moved lower by $0.08 to close at $13.56 per ounce; Platinum moved sharply lower today by $8.80 to close at $1,439.80 an ounce and Copper closed lower by $0.07 today at $3.49 per pound.

On the Livestock and Meat Markets, the trend was mixed across the board today: Lean Hogs ended the day lower by $0.03 to close at $56.90; Pork Bellies ended the day lower by $0.68 at $82.73; Live Cattle ended the day higher by $0.28 at $97.58 and Feeder Cattle ended the day higher by $0.43 at $111.58.

Other Commodities: Corn moved lower today by $5.75 to close at $364.50 and Soybeans moved lower today by $7.50 to end the session at $993.75.

Bonds were lower across the board today: 2 year bond moved lower by 4/32 today to close at 100 8/32; 5 year bond moved lower by 8/32 to close at 100 23-32 today; 10 year bond moved lower by 6/32 today to close at 102 20/32 and the 30 year bond closed lower by 1/32 at 104 28/32 for the day.

The e-mini Dow ended the session today at 13,623 with a gain of 63 points on the trading session. The total Dow Exchange Volume for the day came in at 284,968 which are comprised of Electronic, Open Auction and Cash Exchange. Traders should review workshops available at the CBOT (Chicago Board of Trade) Educational in-person seminars schedules available on CBOT (Chicago Board of Trade) website.

The end of day results for the CBOT (Chicago Board of Trade) which is comprised of the total Exchange Volume for Futures and Options (EVFO) including Electronic, Open Auction and Cash Exchange ended the day at 4,624,563; Open Interest for Futures moved higher by 44,143 points to close at 9,597,085; the Open Interest for Options moved higher by 160,786 points to close at 8,995,478 and the Cleared Only closed lower by 130 points at 9,317 for a total Open Interest on the day of 18,601,880 for a total Change on the day with a gain of 204,799 points.

On the NYSE today, advancers came in at 1,796 decliners totaled 1,486; unchanged came in at 102; new highs came in at 34 and new lows came in at 193. Gainers and losers for the day as well as active day trading stocks on the NYSE: PetroChina Company Limited (PTR) roared higher during the session to tack on 16.31 points with a high on the day o $250.58, a low of $238.07 for a final trading price at $249.29; Rio Tinto plc (RTP) moved lower on the day with a loss of 6.84 points with a high on the session of $334.61, a low of $325.56 for a final trading price of $334.30; China Petroleum & Chemical Corporation (SNP) continued its trend into lower territory with a loss of 4.17 points with a high on the session of $151.00, a low of $146.60 for a closing price of $150.56 and Oceaneering International Incorporated (OII) moved lower for a loss on the day of 5.78 points with a high on the day of $73.18, a low of $68.42 with a closing price of $69.35.

On the NASDAQ today, advanced totaled 1,769; decliners totaled 1,236; unchanged came in at 103; new highs came in at 32 and new lows came in at 220. Gainers and losers for the day as well as, active day trading stocks on the NASDAQ: Radiation Therapy Services Incorporated (RTSX) soared higher on the session for a gain of 9.40 points to climb higher by 43.60% for a closing price at the bell of $30.96; Apple Incorporated (AAPL) moved higher during the regular trading session with a gain of 3.94 points for a close of $174.36 however, during aftermarket trading session, AAPL was trading higher by over 13 points; Ceragon Networks Limited (CRNT) moved higher by 3.59 points with a high on the day of $19.98, a low of $15.79 with a final trading price of $19.84; Astec Industries Incorporated (ASTE) plummeted on the trading session with a loss of 12.55 points to shed 22.00% with a high on the session of $49.03, a low of $43.32 with a closing price of $44.50; L.B. Foster Company (FSTR) sunk on the day by 6.35 points for a loss of 14.27% with a high on the day of $43.14, a low of $37.63 for a closing price at $38.15 and Google Incorporated (GOOG) tacked on 8.55 points with a high of $655.00, a low of $636.28 with a closing price at the bell of $653.26.
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