Week in Review 8/17/07 – Uncle Ben to the Rescue

Two weeks ago the DOW closed up, but most didn’t feel good going into the weekend.  This week the DOW closed down and many feel renewed.  Go figure.  On Friday, the Fed cut the discount rate that it charges to banks by 50 basis points.  The DOW jumped 233 points on the news ending a six day losing streak.

The talking heads have been yapping about a 10% correction and the DOW finally accommodated them on Thursday. The DOW dropped 343 points, but finished the day almost flat.  Initially I thought the miracle recovery was simply program buying.  However, I wonder if insider news of a rate cut played a role. 

Whatever the reason – it appears as though the Fed is not going to let the market go into free-fall without a battle.  According to Jim Cramer, if the Fed hadn’t responded on Friday the market was setup to lose 1000 points over the next two days.  He might have been right.  The DOW Futures were down triple figures Friday morning before the move and Japan’s benchmark Nikkei closed down 5% .

Before getting too excited and start buying with both hands, keep this in mind. St. Louis Fed President William Poole said Wednesday on Bloomberg Television that he saw no need for Fed action amid the current market turmoil. “There’s no need for the Federal Reserve, unless there’s some sort of calamity taking place, to make a decision before the next meeting.” The board made a decision before the next meeting, so what does that mean?
 
DOW, S&P 500 and NASDAQ were down 1.2%, 0.5% and 1.6% respectively for the week. Semiconductors were down 3.3%. 

Commodities continued their poor performance as hedge funds sell their winners to meet margin calls.  Gold, silver and copper were down 2.2%, 8.3% and 6.3% respectively. Oil is being whipsawed by the weather.  For the week, oil was up 0.5%.  Gold stocks as measured by the XAU continued providing a world of hurt to investors closing down 10.4% for the week.

The TTaMG portfolios took it on the chin again.

  • Fab 4 -8.8% 
  • BBO       -6.5%
  • BRIC    -4.8%
  • Real Money    0.1%
  • TBS      0.3%
  • MDs Ag Play  -7.9%

The portfolios have been taking a beating over the last few weeks, but fortunately I am not a buy and holder.  Friends of TTaMG know my current allocations.  Become a Friend and make some dough trading stocks that are in the hottest sectors in the market.

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