Market Summary 10-29-07

Index	Last	Change	% Chg
DJ Industrials	13870.26	63.56	0.46%
Nasdaq Comp	2817.44	13.25	0.47%
S&P 500	1540.98	5.7	0.37%
DJ Wilshire 5K	15581.48	63.36	0.41%
Russell 2000	821.72	0.33	0.04%
Nasdaq 100	2203.42	8.83	0.40%

Comments: Weakness in the Russell 2K small caps today. Nasdaq 100 gapped up, the worked its way down filling the gap, then rebounded to close near its open.

Issues	NYSE	Nasdaq	Amex
Advancing	1,882	1,482	819
Declining	1,346	1,470	442
Unchanged	120	128	86
Total	3,348	3,080	1,347
New 52 Wk Hi	292	171	143
New 52 Wk Lo	53	115	26
Total Volume	1,217,814,440	2,087,716,250	43,458,769
Advancing	771,804,090	1,283,905,998	30,852,579
Declining	424,386,550	738,453,519	10,618,690
Unchanged	21,623,800	65,356,733	1,987,500

Futures	Last	Change
Crude Oil	93.65	1.79
Natural Gas, Dec	7.978	0.17
Gold, Dec.	793.5	6

COMMENTS: Oil continues to rise... $100 coming soon, then what? Gas prices shoot up (they haven't moved much yet) and the economy tanks? Or oil finally rolls over and price collapses? Do you get the feeling, or is it just me...that the market is just a wee bit too positive in the face of reality. If the Fed does not save the day on Wednesday, I think this market will sell off by week's end. Even if the Fed meets expectations and cuts by 25 bp, the market will no doubt not react like it did last month with the surprise 50 bp cut.

From Briefing.com:

Moving the Market		Sector Watch
Oil closes at record $93.53 Investors await Wednesday's FOMC policy announcement Carryover momentum Financial sector lags		Strong: forest products; aluminum; auto parts & equipment; investment banks & brokerages; real estate management & development; computer storage & performance; healtcare tech; photo products; motorcycle manufacturers; apparel Weak: thrifts & mortgages; oil & gas refineries; specialty stores; biotech; tires & rubber; specialty REITs; home entertainment software; diversified REITs; education services; industrial REITs

	The dollar was weak and oil prices were up on Monday. Those developments might lead one to assume that the stock market went down. That assumption, though, would be wrong. The equity market basically picked up where it left off last week and traded higher in the face of these seemingly negative developments. Regular readers of Briefing.com know that we don't put much stock in the weak dollar-weak stock market argument. In fact, we have argued that a moderate downtrend in the dollar is bullish for the stock market since it boosts the earnings of multinational companies and makes U.S. exports more competitive. Granted the weak dollar is contributing to the rise in oil prices, but thus far, the consumer has been pretty impervious to the high prices thanks to rising personal incomes that are a byproduct of a tight labor market. There are lingering concerns, of course, that rising oil prices will soon undercut the consumer given the housing sector recession, but those concerns were tabled on Monday as the stock market extended recent gains with oil prices topping $93 per barrel. The latest move in oil (+1.8% to $93.53) followed news that Mexico shut down a fifth of its production (600k barrels per day) due to bad weather in the Gulf of Mexico. Not surprisingly, the energy sector (+0.7%) was a relative strength leader today. The transports, on the other hand, trailed the action in noticeable fashion, but strikingly, the consumer discretionary sector (+0.3%) managed a gain on Monday thanks to many retailers and homebuilding stocks. The resilient showing by the equity market can be attributed in part to the market's optimism that the FOMC will cut interest rates again at this week's meeting so as to prevent a recession from occurring. Briefing.com sides with the expectation that the fed funds rate will be cut by 25 basis points on Wednesday to 4.75%. Despite the rate cut hopes, the financial sector (-0.1%) was a laggard in Monday's trade. Weakness in the thrifts & mortgage (-2.8%) industry group, though, was largely offset by strength in the investment banking group (+2.6%). Merrill Lynch (MER 67.42, +1.33) was a standout again as investors rallied around reports that CEO Stanley O'Neal may be on his way out. The materials sector (+1.2%) was Monday's best-performing area as the decline in the dollar index (-0.3% to 76.84) continued to prop up stocks of companies that benefit from increased commodity prices/demand. Separately, Dow component Verizon (VZ 45.99, +0.39) reported better-than-expected third quarter earnings that lent added support to the broader market. Cereal maker Kellogg (K 53.11, -1.33), on the other hand, weighed on the proceedings following an FY08 earnings forecast that noted food cost inflation concerns and which was disappointing relative to the current consensus view.