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The market finally had a rebound after two straight down days. However, bulls didn’t have much to cheer about because for all three major indices, they closed below where they opened. The market opened in a positive tone following the overnight news that ECB injected 500 billion liquidity into its banking system. Most other news this morning was neutral to slightly positive. Earnings from Goldman and Best Buy handily beat expectation. Housing starts and building permits data also came pretty much in line with expectation. However, uncertainties about Q4 earnings and the general economic outlook for 2008 quickly erased early gains and at one point, Dow was down by more than 70 points. Then at around 1:30pm, it appeared that some program buying activities were kicked in and turned the market back into positive territory (some attributed the trigger to a program buy activity in General Motors but I don’t put too much credit to such a rumor). With only seven and a half days left for 2007, chances are we are going to see more this kind of confusing market behavior due to continuing window dressing. One final note, according to the fund flow research firm TrimTab, investors pulled out more than 50 Billion out of US equities while pouring around 130 Billion into international markets in 2007. Since the general public is usually a good contrarian indicator, there is a good chance that next year may not end as bad as some investors have feared. |
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