-- Tuesday, October 27 --
RUMOR AND FACT
Reflecting hopes and fears of international fact and fiction, the Dow rides an intraday trading range of 180 points.
It may appear that after a few placid trading days, volatility returned to the securities markets today, but the truth is more complex. Thought the Dow spiked upward and downward in a wide trading range, the major indices were more aligned in their traditional relationships than they have been recently. The Nasdaq expressed its historically cozy correspondence with the Dow and S&P, while the Russell 2000 finally yielded to broad market forces for a loss on the day.
Italy's interest rate cut yesterday fueled this morning's rally, which catalyzed the Dow upward as much as 100 points. Later, rumors that Brazil would devalue its currency infused a panicky pessimism into the exchanges. That rumor was roundly denied and discredited, but the market, while rebounding somewhat, remained jittery.
The most recent monthly survey of consumer confidence, released today, revealed dropping confidence for the fourth consecutive month. Investment momentum in US Treasury bonds, perhaps spurred by the survey results, was strong today.
** FLASH: America Online (AOL) released its much-anticipated quarterly earnings report, claiming 26 cents per share, beating official expectations by 3 cents. AOL traded down for the day, and gained sharply in after-hours trading.
** FLASH: eBay (EBAY), which in the last two days had gained about 35 points (almost 70 percent of its value), released its first quarterly earnings report. The earnings figures are open to interpretation, but eBay appeared to have missed expectations by one penny, causing a skid of 6 points in early after-hours trading.
TIDBITS: Yahoo! (YHOO) wasn't so jubilant today, for once failing to lead the Internet sector. The bellweather online company lost 2 1/2 points.
SECTOR WATCH: Banks suffered the most from today's Brazil devaluation scare (see above). Technology and Internet stocks remained strong and relatively unaffected by today's blue-chip gyrations.
TECHNICAL ANALYSIS: The OEX index (oil and oil service companies such as refining and drilling firms) is nearing completion of a classic, beautiful "W" pattern. Such a pattern lends confidence to the speculation that the sector has found its bottom, and is in a trustworthy recovery. See chart at
bradhill.com
LOOKING AHEAD:
Wednesday: About 330 companies release quarterly reports. Watch for Cooper Cameron (RON), LandAmerica (LFG), Integrated Health Services (IHS), Hershey Foods (HSY), Fidelity National (FNF), DTE Energy (DTE), Dollar Thrifty (DTG), Chubb (CB), Conseco (CNC), Anheuser Busch (BUD), American General (AGC).
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Thank you for reading, and good luck to everyone.
Brad Hill
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