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Inside Markets

Inside Markets

Switzer Daily
16 June 2009

Wall Street doesn’t want to sell off despite there being many reasons why it should have a pullback. And while there could be some triggers this week for many to press the sell button, there’s still a lot of cash on the sidelines looking for better returns than fixed interest.

The Dow eked out a gain on Friday, bumping it into positive territory for the year as Bank of America shares rallied. But techs, energy and commodities retreated as crude oil slipped.

The Dow rose 28 points to 8,799.
 
The Nasdaq lost 3 points to 1,858.
 
The S&P 500 gained 1 point to 946.

The Dow is now up 0.26% for the year while the Nasdaq has put on 17.8% and the S&P 500 has added 4.7%.

Locally, the S&P/ASX 200 is 9% higher for the year and, get this, 29.1% higher since the March lows!

One of the scary indicators we watched closely after Lehman Brothers failed — the VIX or fear index — is now at 28.08. That’s down 5.2% for the month and a whopping 29.8% for the year! That’s progress.

On the economics front, the Reuters/University of Michigan consumer sentiment reading went to 69 this month from 68.7 in May, and that’s a nine-month high.

Another confidence indicator that could also spoil the rally party is the price of oil which is $US72.68 a barrel, its highest close since October 20.

There are plenty of economic statistics this week that could excite the market, and Friday brings the quadruple witching hour that could create some market action.

The quadruple witching hour happens on the third Friday of the end of the quarter — March, June, September and December — and it means that contracts for stock index futures, stock index options, stock options and single stock futures all expire. This can lead to a lot of action as people who have lost money and vice versa respond to their positions.

We get information that will tell us more about the housing construction industry and the RBA minutes and Bulletin will give us hints about what their views on interest rates are.

Another interesting week ahead, but the optimists and bulls still look in a strong position. I am now noting many bears tipping a pullback on the market but admitting that they think the March lows are behind us!

Have a great day,

Peter 

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