Market Summary 11-30-07

Index	Last	Change	% Chg
DJ Industrials	13371.72	59.99	0.45%
Nasdaq Comp	2660.96	-7.17	-0.27%
S&P 500	1481.14	11.42	0.78%
DJ Wilshire 5K	14932.67	109.66	0.74%
Russell 2000	767.77	1.71	0.22%
Nasdaq 100	2089.1	-13.32	0.63%

COMMENTS: So did Nov. 26 really mark the bottom and now the end of the correction is nigh? Will the markets now rally through year-end? These are some of the questions on traders/investor's minds going into next week. Nasdaq got hit by Goldman downgrades on Friday, but the N-100 still managed to eke out a gain while the broader Nasdaq composite drifted lower. The S&P 500 surge continued on bottom fishing in the financials and rate cut expecations. Despite the postive %'s on the day, the larger surge came on selling. SKF, the Ultrashort Financials ETF was a good indicator. While it appeared that SKF lost 5.86% on the day (due to the gap open), it actually gained 3.85% intra-day. This accounted for a negative divergence of almost 10%! This tells you that financials are nowhere near bottoming yet.

Issues	NYSE	Nasdaq	Amex
Advancing	2,333	1,658	774
Declining	985	1,358	480
Unchanged	71	103	79
Total	3,389	3,119	1,333
New 52 Week High	83	53	14
New 52 Week Low	63	75	43
Total	1,856,575,770	2,522,488,085	44,894,609
Advancing	1,365,199,020	1,035,262,768	26,116,710
Declining	476,219,550	1,469,687,770	16,779,299
Unchanged	15,157,200	17,537,547	1,998,600

COMMENTS: Declining volume into week's end does not bode well for the rally. On a positive side the NYSE saw its first new highs exceed new lows in a while. Nasdaq came close, but its still in the red.

Futures	Last	Change
Crude Oil	88.7	-2.31
Natural Gas	7.32	-0.132
Gold, Feb	790.3	-12

COMMENTS: The big news on the week was the nearly 10% drop in oil prices from last Friday. I keep hearing commentators saying that there is a big supply/demand imbalance and that is why oil prices are high and will remain high. I doubt it. The reason why oil was approaching $100 was entirely due to speculators driving the futures higher. A realistic oil price, may in fact be in the high $70's-low $80's? But if the global economy goes into a recession lead by the US economy, oil prices could drop sharply. And if a warm winter from La Nina comes true, then the oil market could really collapse.

WEEKLY & MONTHLY SUMMARY

Index	1W	2W	1M
DJ Industrials	3.01%	1.48%	-4.01%
Nasdaq Comp	2.48%	0.90%	-6.93%
S&P 500	2.81%	1.54%	-4.40%
DJ Wilshire 5K	2.85%	1.39%	-4.73%
Russell 2000	1.69%	-0.22%	-7.28%
Nasdaq 100	2.97%	1.98%	-6.69%

COMMENTS: November was truly a sea change in the markets. A 10% correction was quickly booked and then reversed. The correction date of Nov. 26 was erased in 1-day. But there is underlying fundamental weakness in the markets and the Nov. 26 lows will most likely soon be re-tested and probably exceeded in the weeks and months ahead. As telegraphed by Bernanke and Kohn's comments this week, the Fed will probably continue to cut interest rates but as Carter Worth said on CNBC's "Closing Bell" on Friday "Can you solve the sins of excess liquidity with more liquidity? I think not." His recommendation: "I would short the financials and short technology". Not a bad idea I believe. Goldman Sachs is indirectly suggesting the same thing (as to technology) when they cut estimates and effectively downgraded the entire tech sector on Friday.

From Briefing.com:

Moving the Market		Sector Watch
Fed Chairman Bernanke hints at Dec. 11 rate cut Core PCE, personal income and spending mostly in-line with expectations Reports that the White House and banks are near a deal to curtail rate hikes on adjustable rate mortages Tech sector a drag after Dell reports earnings and outlook that disappoints		Strong: thrifts & mortgages; homebuilding; healthcare facilities, diversified banks; airlines; trucking; other diversified financial services; apparel retail; consumer finance; auto manufacturers; office REITs Weak: gold; computer hardware; photo products; health care tech; computer storage & peripherals; semiconductors; application software; home entertainment software

The stock market got a nice boost Friday morning from a series of positive developments that included a drop in oil prices below $90 per barrel, a report that a bailout plan is in the works for subprime borrowers, and a tacit signal from Federal Reserve Chairman Ben Bernanke that interest rates will likely be cut again at the December 11 FOMC meeting. That assemblage of good news overshadowed a disappointing third quarter earnings report and outlook from Dell (DELL 24.54, -3.60) and a smattering of economic data that again skewed to the weak side of things. At their highs of the morning, the Dow, Nasdaq and S&P were up 155, 28 and 19 points, respectively. The rate cut expectation, which stemmed from Ben Bernanke's acknowledgment in a speech to the Charlotte Chamber of Commerce that renewed turbulence in the financial markets over the past month has affected the economic outlook, was the primary catalyst for the early rally. Buying efforts, though, soon faded and stock prices followed suit as participants looked to secure some profits from this week's rally that saw the S&P 500 surge 5.9% from its low on Monday to its high on Friday. Despite the pullback, both the Dow and S&P 500 still finished well above the unchanged mark and even benefited from a late burst of buying activity. The Nasdaq ended with a modest loss as Dell's weakness pulled the tech-heavy composite lower. The Nasdaq still ended the week up 2.5% while the Dow and S&P registered gains of 3.0% and 2.8%. The financial sector (+2.9%), which rallied on the rate cut expectation and the notion that the reported bailout plan for subprime borrowers will help stabilize the credit market, was the best-performing sector once again. Its leadership was reassuring as every sector traded higher with the exception of the technology sector (-1.0%). As has been the case throughout the week, today's economic data didn't elicit much enthusiasm as it relates to the economic outlook. Although the Chicago Purchasing Manager's Index was stronger than expected at 52.9 (consensus 50.5), construction spending in October declined 0.8% (consensus -0.3%). Personal spending, meanwhile, rose just 0.2% (consensus +0.3%) and was flat after taking the deflator into account. Core-PCE, which is a favorite inflation gauge for the Fed, was a bright spot of sorts as it was up 0.2% in October, an increase that translated to a 1.9% jump year-over-year, which is within the Fed's comfort zone of 1.0% to 2.0%.