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Dow and S&P managed to close in the positive territory while Nasdaq continued to drop for a seventh day. There was no major economic news scheduled to be released today but traders nonetheless hoped to get some clues from speeches by Bush and Paulson. However, both failed to deliver an immediate plan to bolster the economy. The market internals were not looking good with almost 800 companies hitting new 52-week lows on NYSE and Nasdaq. US dollar gained some ground against other currencies and most commodities ended the day lower. Oil price dropped by more than 2 dollars per barrel as traders feared that a slow down in US economy will lead to weakening demand for the commodity. Commodity stocks were among the biggest losers for the day. One of the biggest problems for the market is the lack of leadership. One sector that is hot in the previous week may be dumped just as quickly this week. Another problem is the lack of the so-called fear factor. Although many internal technical indicators were clearly broken down, the VIX index barely moved since mid December. From this perspective, the market still needs some time before reaching a bottom. One positive sign for the market moving forward is the continuing drop of the inter-bank rate after several central banks announced a concert effort to inject liquidity. For example, the 3-month EuriBOR is currently traded at around 4.62% vs. a high of 4.95% reached on Dec 17th. Tomorrow we are going to get news for pending home sales also two Fed presidents are scheduled to make comments about the economy.
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