An Ugly Day for Stocks
July 26th, 2007
The stock market dropped like a rock Thursday as investors weighed mixed earnings news and continue to worry about credit markets after financing was pulled from a big buyout deal.
At midday on Thursday, the Dow Jones industrial average was down 207.12 points, or 1.5%, to 13,577.95. The broader S&P 500 moved below the 1,500 mark, down 1.79%, or 27.12 points, to 1,490.97. The tech-heavy Nasdaq Composite was off 1.62%, or 42.94 points, to 2,605.23.
Stocks were broadly lower, with 28 stocks lower for every three higher on the New York Stock Exchange. On the Nasdaq, the ratio was 22 to 5 negative.
On Wednesday, bankers postponed the sale of $12 billion in debt to fund the purchase of an 80% stake in Chrysler Group by Cerberus Capital Management. The deal will still go forward, but the move raised questions about credit market’s willingness to buy riskier corporate debt, and what that might mean for the ongoing boom in buyout activity (see BusinessWeek.com, 7/25/07, «www.businessweek.com»).
Traders are also worried about rising oil prices and the possibility the weak housing market will hurt consumer spending, according to John Wilson, chief technical strategist at Morgan Keegan. “The Dementors seem to be circling around sucking all the joy out of the market,” he wrote in his morning note.
While Apple («www.businessweek.com») and Ford («www.businessweek.com») reported strong earnings, other companies’ earnings reports fell short. More than a third of the S&P 500 report earnings this week.
At 10 a.m., investors learned that new home sales plunged 6.6% in June. Wall Street was expecting a 1.6% drop. May and April new home sales numbers were revised lower.
Also, U.S. durable goods orders Thursday were up 1.4%, less than many had expected, after a 2.3% decline in May. Action Economics says that despite the headline gain, many of the subcomponents fell.
It has been a volatile several days on Wall Street, which is in the heart of earnings season. Stock indexes moved higher on Wednesday, following a sell-off on Tuesday, but the broader market was mostly down. “Yesterday’s rally, while a welcome relief, didn’t have the feel of a significant reversal,” Wilson wrote.
Adding to market worries, oil prices were pushing higher. Following a big spike on Wednesday, Thursday’s September NYMEX crude oil futures were up 99 cents to $76.87 a barrel.
Among the earnings news, Exxon Mobil’s («www.businessweek.com») profits fell 1% in the second quarter. The world’s largest company reported earnings of $1.83, up from $1.72 because fewer shares are on the market due to a buyback program. Analysts were expecting earnings of $1.96 per share, according to Reuters Estimates.
Apple reported third quarter revenue of $5.41 billion and net profit of $818 million, or $0.92 per share, up from revenue of $4.37 billion and profit of $472 million, or $0.54 per share a year ago. Gross margin was 36.9%, up from 30.3% a year ago. The stock was up 7%.
Ford Motor Co. surprised Wall Street by posting a profit in the second quarter of 31 cents. Revenues rose 6% as the company lost 17 cents a year ago.
3M («www.businessweek.com») earned $1.25 per share in the second quarter, up from $1.15 per share and above analyst expectations of $1.18 per share.
U.S. Airways («www.businessweek.com») was down after reporting earnings of $2.77 per share, vs. $3.25 a year ago. Revenues were slightly lower and the firm reported higher non-fuel expenses.
Dow Chemical («www.businessweek.com») was trading lower after reporting earnings of $1.07 per share, vs. $1.05 a year ago. Revenue rose 6%.
Black & Decker («www.businessweek.com») disappointed investors with earnings of $1.75 per share, vs. $1.98 a year ago.
Harrods chief ‘devastated’ by poisoning of rare birds
July 26th, 2007
MOHAMED al-Fayed, the chairman of Harrods, yesterday said he was devastated by the poisoning of three rare birds of prey which were reared on his Highland estate.
Another eight birds are unaccounted for and are also feared to have been killed.
The birds were among 16 red kites brought to the Black Isle as chicks last year as part of a programme to reintroduce the species to Scotland.
They were later taken to Mr Fayed’s Balnagown Estate in Ross-shire, where they were kept under controlled conditions before being released at three-months-old after being fitted with radio transmitters to track their progress.
One bird was found dead near Tomintoul in May in a case investigated by Grampian Police. Another two have been discovered in Strathspey and Lochaber.
All were poisoned with the insecticide carbofuran, which was banned in 2001.
The Royal Society for the Protection of Birds (RSPB) said the deaths highlighted a major persecution problem, with 40 per cent of young red kites in the Highlands being poisoned.
This is the third year the birds have been reared at Balnagown, and Mr Fayed has taken a personal interest in the project.
His spokesman said: “He was really pleased to help in this project. The birds were on the point of returning to nests in the area from where they were released.
“He is extremely sad about this. However, he will continue with the project.”
Gordon Robertson, the estate factor, added: “I don’t know what planet people who poison the birds are on. Red kites are carrion eaters, they don’t kill. I thought the Victorian days of killing everything with a hooked beak were gone.”
Brian Etheridge, the RSPB’s red kite project officer, said the red kite population in the north of Scotland had remained static at about 40 pairs for the last five years, despite 600 chicks being produced since 1992, including 80 last year.
He added: “At least 40 per cent have been deliberately poisoned on sporting estates, which is a shocking statistic. The people who are putting out this poison know it’s illegal and have complete disregard for the law. It may be a criminal minority, but they are having a profound effect.”
Mr Etheridge said the eight missing birds could be in areas where the transmitter signal cannot be picked up, but could also be dead.
Alex Hogg, chairman of the Scottish Gamekeepers’ Association (SGA), said: “When the perpetrators of this crime are brought to justice, the SGA will be the first organisation to condemn them, bearing in mind people out there with a grudge against sporting estates could be up to all sorts of mischief.”
Last month, a report found that the number of animals or birds killed by pesticide misuse in 2006 was at its highest level since 1994.
The Scottish Agricultural Science Agency said poisons were deliberately misused in 39 cases, with carbofuran detected in 82 per cent of incidents.
Related topic
- «news.scotsman.com»
http://news.scotsman.com/topics.cfm?tid=270
Daily Report: Focus on New Homes Sales and Durables, Kiwi Tumbles after RBNZ Hike
July 26th, 2007
Action Insight | Written by ActionForex.com | Jul 26 07 08:09 GMT |
Forex Daily Technical Report Focus on New Homes Sales and Durables, Kiwi Tumbles after RBNZ Hike
Dollar is generally firm and sets to continue the current recovery as markets are turning focus to today’s new home sales and durable goods orders data. As pointed out before, the greenback was in extremely oversold condition and the current correction is inevitable. Even if today’s data disappoints, reaction could be muted as the more important Q2 GDP is on the card for release tomorrow. Though, Euro should also be provided some support by stronger than expected M3 growth which reaccelerated to Mar’s peak of 10.9%. Germany Ifo dropped to 106.4, slightly below expectation of 106.5 but remains health.
Overnight, RBNZ raised OCR again by 25bps to 8.25%. In the accompanying statement, Governor Bollard pointed to the recent strength in the economy and growing capacity constraints to justify today’s move. Also, he once again mentioned the overvalued Kiwi currency. Conditionally, RBNZ believed that this would be the last rate hike in their cycle if no surprises come in with the next round of data. Kiwi tumbled after the news as markets believe that RBNZ will at least be on hold to assess the impact of the prior successive rate hikes before making another move. EUR/USD
Daily Pivots: (S1) 1.3667; (P) 1.3749; (R1) 1.3803; «www.actionforex.com»
EUR/USD’s correction from 1.3851 is still in progress today. Outlook remains unchanged. A short term top is likely in place at 1.3851, with bearish divergence condition in 4 hours MACD and RSI, and after failing to sustain above 1.3822 projection target. Intraday bias is currently still on the downside and further decline should be seen towards support zone of 1.3567 to 1.3658, with 38.2% retracement of 1.3262 to 1.3851 at 1.3626. On the upside, above 1.3711 will turn intraday outlook consolidative first and could probably bring recovery to 4 hours 55 EMA (now at 1.3770). But sustained break of 1.3851 is needed to confirm recent rally has resumed. Otherwise, risk remains on the downside.
In the bigger picture, the current development dampened the original view that rise from 1.3262 is the last advance in a five wave structure that started at 1.2483. Firstly, the current momentum of the rise from 1.3262 is seen stronger than the prior rally from 1.2865 to 1.3681. Secondly, the falling trend line in both daily MACD and RSI were broken, negating the bearish divergence conditions. In other words, the underlying bullishness in EUR/USD could be much stronger than we originally thought.
Focus remains on 1.3822 resistance. Sustained trading above this level will add much weight to the case that whole medium term rally from 1.1639 is indeed resumption of multi-year up trend from 0.8223 (00 low). That is, further rise should be seen in medium term towards 95 high of 1.4523 with much chance to extend further to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004.
On the downside, as long as 1.3481 cluster support (61.8% retracement of 1.3262 to 1.3851 at 1.3487) holds, any pull back will still be treated as correction to rally from 1.3262 only and another rise is still in expected after completion. However, break will put 1.3262 low into focus. And break will indicate that medium term rally from 1.1639 has likely completed after being limited by 1.3822 resistance as originally expected.
GBP/USD
Daily Pivots: (S1) 2.0470; (P) 2.0550; (R1) 2.0615; «www.actionforex.com»
Cable’s correction from 2.0652 is still in progress and continues to press 4 hours 55 EMA (now at 2.0485). As discussed before, a short term top is in likely place at 2.0652, with bearish divergence condition in 4 hours MACD and RSI. Intraday bias is still on the downside and further decline is expected to be seen to short term rising trend line (now at 2.0400). On the upside, above 2.0652 will indicate an intraday low is formed. But sustained break of 2.0677 fibo resistance is needed to confirm recent rally has resumed. Otherwise, risk remains on the downside.
In the bigger picture, the sustained break of 2.0207 projection target confirms underlying upside momentum is still strong. Also, it added much credence to the case that whole up trend from 1.7047 is resumption of multi-year up trend from 1.3680. In such case, further rally should then be seen to 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677 first. Sustained trading above 2.0677 will target 2.1 psychological resistance.
On the downside, in case of a pull back, downside should be contained by support zone between 2.0056 and 2.0206 and bring another rally. Break of 2.0056 will suggest that lengthier consolidation will come first with the prospect of another test the medium term rising trend line (now at 1.9823) But medium term outlook will be neutral at worst at long as 1.9621 support remains intact.
USD/CHF
Daily Pivots: (S1) 1.2048; (P) 1.2107; (R1) 1.2192; «www.actionforex.com».
USD/CHF’s correction from 1.1960 is still in progress today. Intraday bias remains on the upside as long as 1.2114 minor support holds and further rebound should still be seen. On the downside, below 1.2114 will turn intraday outlook consolidative fist. Also, since a short term bottom is in place at 1.1960 with bullish convergence conditions in 4 hours MACD and RSI, firm break of 1.1960 is needed to confirm fall from 1.2467 has resumed. Otherwise, consolidation could still extend further.
In the bigger picture, USD/CHF has likely completed a medium term triangle consolidation already, which started at 1.1919 with five waves to 1.2467. Firm break of 1.1993 will confirm this case. 1.1878 (06 low) will be the initial target. And since, in such case, fall from 1.2467 is viewed as resumption of medium term down trend from 1.3283, further weakness should be seen to 100% projection of 1.3283 to 1.1919 from 1.2768 at 1.1404, with much chance to extend to retest 1.1288 (04 low).
On the upside, break of 1.2232 resistance will mess up the short term picture a little bit. In such case, chance is swung to the case that the triangle consolidation indeed started at 1.1878. In other words, the overall outlook didn’t change and just that another rally should be seen before completion. Hence, even in such case, upside should be limited below 1.2467 high and bring another medium term decline.
USD/JPY
Daily Pivots: (S1) 119.99; (P) 120.31; (R1) 120.81; «www.actionforex.com»
4 hours MACD’s cross above signal line suggest that a short term low is possibly in place at 119.76. But still, break above 190.95 resistance is needed to confirm. Otherwise, intraday bias remains on the downside and further decline is still in favor towards 118.35/57 cluster support zone (38.2% retracement of 108.99 to 124.13 at 118.35 and 61.8% retracement of 115.13 to 124.13 at 118.57).
On the upside, above 120.95 will indicate a short term bottom is formed and turn into consolidation. But a break above 120.60 resistance is still needed to indicate fall from 124.13 has completed. Otherwise, risk remains on the downside after finishing recovery.
In the bigger picture, rise from 115.13 has made a top at 124.13 and turned into consolidation since then. But still, rally from 108.99, which is treated as resumption of whole up trend from 101.66, is in progress. Even in case of a deeper correction, downside is expected to be contained by 118.35/57 cluster support zone (38.2% retracement of 108.99 to 124.13 at 118.35 and 61.8% retracement of 115.13 to 124.13 at 118.57) and bring rally resumption. Next medium term upside target will be resistance zone of 100% projection of 101.65 to 121.38 from 108.99 at 128.72 and 100% projection of 108.99 to 122.17 from 115.13 at 128.31.
However, break of 118.35/57 cluster support argue that rise from 108.99 has possibly completed and put 115.13 low into focus.
EUR/JPY
Daily Pivots: (S1) 164.57; (P) 165.44; (R1) 166.18; «www.actionforex.com»
EUR/JPY turns sideway after reaching as low as 164.70. At this point, correction 168.93 is still in progress and intraday bias remains on the downside as long as 166.18 minor resistance holds. Next downside target will be 164.23 cluster support (61.8% retracement of 161.49 to 168.95 at 164.34). On the upside, above 166.19 will indicate a temporary low is formed and bring consolidation, probably with recovery to 4 hours 55 EMA (now at . But break of 167.32 resistance is needed to indicate fall from 168.93 has completed. Otherwise, risk remains on the downside even in case of recovery.
In the bigger picture, break of the short term rising trend line suggest that rally from 150.75 has possibly completed with bearish divergence condition in daily MACD and RSI. Deeper correction could not be seen to 161.49 support first. And break will confirm that a medium term top is in place at 168.93 and bring deeper correction, possibly with a retest of medium term trend line support (now at 155.67
However, with medium term trend line remains intact, whole medium term rally from 130.60 is still treated as in progress and the interpretation remains unchanged. First wave up ended at 143.60, subsequent correction ended at 137.167. The third wave up ended at 159.63 while fourth wave correction has ended at 150.75. Rise from there represents the final advance in this structure. With 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64 taken out decisively, next medium term upside target will be 100% projection of 137.16 to 159.63 from 150.75 at 173.22.
Forex News Digest
«c.moreover.com»
Thu, 26 Jul 2007 03:18:00 GMT from Daily Telegraph Australia
«c.moreover.com»
Thu, 26 Jul 2007 02:45:00 GMT from Nine MSN
«c.moreover.com»
Thu, 26 Jul 2007 02:38:00 GMT from Bloomberg
«c.moreover.com»
Thu, 26 Jul 2007 02:38:00 GMT from Sympatico MSN Finance
«c.moreover.com»
Thu, 26 Jul 2007 01:27:00 GMT from Bloomberg
«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
21:00 NZD RBNZ’s rate decision 8.25% 8.25% 8.00%
23:50 JPY Japan CSPI Y/Y Jun 1.40% 1.40% -0.30%
6:00 GBP U.K. N’wide hse prices M/M Jul 0.10% 0.50% 1.10%
6:00 GBP U.K. N’wide hse prices Y/Y Jul 9.90% 10.60% 11.10%
8:00 EUR Euro-Zone M3 sa Y/Y Jun 10.9% 10.70% 10.70%
8:00 EUR Euro-Zone M3 sa 3 Mth Jun 10.60% 10.70%
8:00 EUR Germany IFO index Jul 106.4 106.5 107.0
12:30 USD U.S. Durable goods orders Jun 1.80% -2.40%
12:30 USD ex. defence Jun 1.00% -2.80%
12:30 USD ex. transportation Jun 0.50% -0.40%
12:30 USD U.S. Jobless claims 310 K 301 K
14:00 USD U.S. New home sales Jun 895 K 915 K
14:00 USD U.S. New home sales M/M Jun -1.60% -1.60%