The market finished the final session of the week in a mixed fashion after recovering most of its early losses. For the week, both the Dow and the S&P 500 managed to gain around 1%, ending its 4-week losing streak. China surprised the world market this morning by increasing its bank reserve ratio for the second time this year and the news sent the Dow lower by as much as 160 points in early trading. As we noted in other market comments, the Chinese economy is red hot and is likely to grow much faster than what the policy makers would like to see. More tightening will be on the way for sure. In other economic news, January retail sales rose 0.5%, better than 0.3% expected. Excluding auto sales, it jumped 0.6% vs. 0.5% expected. The market will be closed on Monday in observation of the President’s Day holiday.

Most major sectors finished the session lower led by utilities and industrials. The CRB commodity index dipped 0.7%. The US dollar was mixed against most major currencies. Treasury yields dropped. The three-month US LIBOR was unchanged at 25 bps. The VIX index dropped more than 1 point. The market breath was negative on both NYSE and Nasdaq. The volume was a little heavier compared to the previous session.

The market rebounded sharply on Thursday with all three major indexes finishing the session higher by around 1%. Investors seemed to feel relieved that both the European debt issue and the Chinese economy issue are partly solved, at least for the time being. During a Thursday summit, European leaders said they would take steps to guard financial stability in Europe but did not offer details. China, meanwhile, saw its CPI index unexpectedly dipped a little to 1.5%, which eased concerns of more tightening in its monetary policy. But the dip is related to the shift of the Chinese New Year this year compared to last year and CPI will for sure jump in the month of February. In other economic news, initial weekly claims fell by 43K to 440K, the lowest level in a month. Economists had expected a smaller drop.

All 10 major sectors finished the session higher led by materials and energy. The CRB commodity index rose 1.3%. The US dollar was mixed against most major currencies. Treasury yields rose. The three-month US LIBOR was unchanged at 25 bps. The VIX index dropped more than 1 point. The market breath was positive on both NYSE and Nasdaq. The volume was a little heavier compared to the previous session.

The market dropped slightly on Wednesday after recovering most of its early losses. Investors chose to focus on the Fed Chairman Bernanke’s testimony in the Congress instead of the European debt issue. In his testimony, Bernanke detailed how the US central bank would execute its exit strategy. According to Bernanke, the Fed would likely begin tightening monetary policy by increasing the discount rate it pays to the banks before it turns to raise the benchmark short-term interest rates. Before the current financial crisis, the discount rate was 1% higher than the benchmark rate. Currently, it is at 0.5% compared with the Fed funds rate that is between 0% and 0.25%. The market expects the Fed to hold the Fed funds rate steady until the final quarter of the year.

Most major sectors finished the session lower led by materials and utilities. The CRB commodity index rose 0.4%. The US dollar was higher against most major currencies. Treasury yields rose. The three-month US LIBOR was unchanged at 25 bps. The VIX index was little changed. The market breath was negative on both NYSE and Nasdaq. The volume was a little lighter compared to the previous session.

The market rebounded sharply on Tuesday with all three major indexes finishing the session higher by more than 1%. Once again the European debt issue was the focus of today’s trading. This time, though, investors were optimistic that a deal is imminent. In my view, the recent correction is inevitable whether we have the Greece debt issue or not. Historically, even in great bull markets, it would have a correction in the size of 5% to 10% from time to time and sometimes the drop can be as much as 20%. But as long as valuation is reasonable (as is the case now) and monetary policy is accommodating, we should see the market move higher over time.

All 10 major sectors finished the session higher led by materials and energy. The CRB commodity index rose 1.4%. The US dollar was lower against most major currencies. Treasury yields rose. The three-month US LIBOR was unchanged at 25 bps. The VIX index was little changed. The market breath was positive on both NYSE and Nasdaq. The volume was a little heavier compared to the previous session.

The market extended its four-week slide in the first session of the new week. The Dow, down more than 100 points, finished below 10,000 for the first time in more than three months. There are two issues hovering around investors’ minds now. First is the European debt issue. For those that had just experienced the 2008 financial crisis, the last thing they want is another credit crisis stemmed from the European sovereign debt problem. I think eventually the debt issue will be solved both financially and politically. Ironically, the issue may prove to be favorable to the US dollar and hence the US equities as more investors would realize that EU lacks the flexibility enjoyed by the US. The second issue is about China slowing down its credit expansion. One of the main reasons that the central bank in China has to put a brake to economy is the bubble in the real estate market, which has become a real concern to the leaders in the country. Since China has contributed greatly in the current global economy recovery, investors fear that a potential slowdown would impact many emerging markets, especially those commodity-rich ones. Although it is still too early to tell whether such concerns are legitimate, I think in the short-run the Chinese economy will continue to grow above what the government likes to see.

All 10 major sectors finished the session lower led by materials and financials. The CRB commodity index rose 1.2%. The US dollar was mixed against most major currencies. Treasury yields were mixed. The three-month US LIBOR was unchanged at 25 bps. The VIX index was little changed. The market breath was negative on both NYSE and Nasdaq. The volume was a little lighter compared to the previous session.