Market Summary 10-24-07

Index	Last	Change	% Chg
DJ Industrials	13675.25	-0.98	-0.01%
Nasdaq Comp	2774.76	-24.5	-0.88%
S&P 500	1515.88	-3.71	-0.24%
DJ Wilshire 5K	15337.7	-48.59	-0.32%
Russell 2000	810.85	-7.68	-0.94%
Nasdaq 100	2188.59	-16.59	-0.75%

Comments:
I sure thought the dramatic afternoon comeback seemed might suspicious. Looking at the QQQQ chart, it appeared that once the double bottom was put in (restest of the low), the market rallied strongly in short order. Was it a combination of short sellers getting out and program trades kicking in? Or was it market manipulation by the big boys? Hmmmm...

The news from MER and housing was plain BAD. With more bad news to come in future quarters ahead. Mortgage reset, talk of using bankruptcy to delay foreclosures, SIV bail out fund, falling dollar, high oil prices, high commodity prices (but still no inflation..hahaha!!). Things don't look good going forward. Financial sector layoffs are just starting. BofA made a cut of 3,000 today. The mortgage industry has already made their cuts. If employment really hits the skids then outright recession is highly likely.

As for tomorrow, the highlight could be MSFT's earnings which might prop up the Nasdaq. On the economic calendar tomorrow offers Initial Claims, Durable Goods Orders, Existing Home Sales, New Home Sales. These numbers could bode well or ill for the market depending how they turn out. Weakness in employment or durable goods order could hurt the market. Next week the big even is Oct. 31 when the Fed meets and decides if it will cut rates some more. The Fed Futures are expecting a .25% or even .50% cut. Today there was rumor even of a "pre-emptive" cut BEFORE the meeting. I doubt Bernanke would go that far. What if there is no cut? Is that a possibility? IF NO CUT HAPPENS...WATCH OUT BELOW!!!

Issues	NYSE	Nasdaq	Amex
Advancing	1,220	976	484
Declining	2,069	1,992	722
Unchanged	104	140	94
Total	3,393	3,108	1,300
New 52 Wk High	73	49	36
New 52 Wk Low	136	152	30
Total Volume	1,572,199,280	2,751,727,078	42,834,482
Advancing Vol	595,363,440	598,423,162	13,706,370
Declining Vol	950,838,630	2,133,537,430	26,039,912
Unchanged Vol	25,997,210	19,766,486	3,088,200

Futures	Last	Chg
Crude Oil	87.63	0.53
Natural Gas, Dec	7.67	0.013
Gold, Dec.	767.1	1.5

From Briefing.com:

Moving the Market		Sector Watch
Merrill Lynch reports larger third quarter loss than expected, $7.9 bln in write-downs; rating lowered by S&P Rating Services and Moody's Investors Service Amazon.com Q3 EPS beats by a penny, but fails to satisfy market's higher expectations Existing home sales down 8% in September Crude oil rallies due to an inventory draw when a build was expected Successful re-test of morning lows fuels late comeback effort		Strong: household appliances; oil & gas refineries; auto parts & equipment; building products; education services; oil & gas storage; coal & consumable fuel; construction & farming; industrial gases; auto retail Weak: internet retailers; IT consulting & services; semiconductors; healthcare services; thrifts & mortgages; computer storage & peripherals; human resources & employment services; agriculture products; communication equipment

	Some disappointing earnings developments, a weak existing home sales report, and a spike in oil prices precipitated a sharp decline in the major indices in the early-going. A late-day rally, however, made things look a lot better by the closing bell than they had been. Once again, there was a host of companies reporting quarterly results. The two reports that drew the most attention, and which were most responsible for the early declines, were the ones from Amazon.com (AMZN 88.73, -12.09) and Merrill Lynch (MER 63.22, -3.90). In the case of Amazon, it actually beat the consensus EPS estimate by a penny and issued in-line guidance. With shares of AMZN up 49% from their July low, though, momentum accounts wanted more and sold the stock aggressively when they didn't get it. In turn, underlying concerns about Amazon's profit margins also drove the selling interest. The strikingly negative response to Amazon's report got the better of a lot of high-flying technology stocks, as investors moved to secure profits. Those losses weighed heavily on the broader market and culminated in a 79-point drop for the Nasdaq Composite at its lows for the session. The Dow and S&P suffered considerably, too, with declines of 205 points and 30 points, respectively, at their worst levels. A dreadful third quarter report from Merrill Lynch, which posted a net loss of $2.85 per share from continuing operations after recording a massive $7.9 billion write-down for collateralized debt obligations and U.S. subprime mortgages, served as a driving catalyst. Merrill Lynch's stock held up reasonably well initially, but when the news hit that Standard & Poor's cut its debt ratings for the investment bank, and noted a negative outlook, losses in the stock accelerated. The financial sector (-0.8%) was taken along for the ride on pressing concerns that Merrill's bad news suggests more write-downs will be coming in the fourth quarter. In brief, the realization hit that the third quarter may not have been the bottom for the financial sector as many pundits had claimed. Compounding the selling activity was the indication from the National Association of Realtors that existing home sales fell 8.0% in September to an annualized rate of 5.04 million units (consensus 5.25 mln) while median prices dropped 4.2%. Soon after the existing home sales report, the Dept. of Energy's inventory report showed sharp declines in stockpiles versus the market's expectations for a build in inventory levels. The surprising drawdown led to a 2.2% increase in crude prices to $87.10 per barrel. After suffering the early pounding, the stock market attempted to recover the lost ground in halfhearted fashion. The initial recovery try failed and the indices eventually rolled over again. However, when the indices retested their early morning lows around 2:00 pm ET and held, buyers stampeded back into the market and drove the Dow back to positive territory an hour later. The successful rebound effort most likely prompted some short-covering activity that contributed to the expeditious recovery. Separately, there was some speculation that the Fed might be on the verge of cutting the discount rate, but a Fed spokesman declined to comment on that speculation. Even so, the prospect of further rate cuts and the successful retest of the morning lows were motivating factors that spurred the renewed buying interest. The Treasury market for its part benefited from the stock market's volatility and the weak housing data. The 10-year note gained a half point and saw its yield drop to 4.34%.