The market traded in a narrow range before finishing the session modestly lower. Volume, despite option expiry related activities, came again on the light side. The S&P 500 posted losses in four out of the five trading sessions and were lower by 5% for the week, essentially erasing gains from the previous week. For now, the pullback this week should be viewed as a consolidation as long as volume didn’t pick up. Most economic news for the session came in-line or slightly better than expected. The April CPI hit right on expectations by coming in flat while core CPI rose 0.3%, slightly more than expected. Industrial production for April fell 0.5%, a better reading than consensus. Consumer confidence, meanwhile, surged to the highest in eight months. Separately, Fed Chairman Bernanke told a member of Congress that “In the past several weeks, investors appear to have become more willing to participate in the (TALF) program” and “Early indications are that demand for TALF loans in June will be even higher.” As we stated earlier, TALF program is critical in boosting the lending in the so-called “Shadow Banking System”, which accounts for as much as 50% of the funding requirements in the economy. After a slow start in March ($4.7 billion) and April($1.7 billion), activities appear to pick up significantly in May($10.9 billion).
Let’s take a look at the three key indicators: 1. VIX: closed at 31.37 compared to 33.65 yesterday; 2. The euro/yen cross: closed at 131 compared to 130 yesterday; 3. The TED spread: closed at 70 bps compared to 71 bps yesterday.
Most major sectors finished the session lower led by financial and energy. The CRB commodity index dropped 2.3%. The US dollar was higher against most major currencies. Treasuries were little changed. The three-month US LIBOR dropped to 83 bps, another record low. The VIX index climbed 2 points. The market breath was negative on both NYSE and Nasdaq. The volume was on the light side at this OE session.

The market rebounded modestly on Wednesday after the S&P 500 posted three straight losses. For the second session in a row, economic data came worse than expected. Weekly initial claims came at 637K vs. 610K expected. Continuing claims rose to a fresh record high of 6.56 million while economists were looking for a number around 6.4 million. One key question I think the market will spend most of the next few weeks or even months pondering is whether we are at the turn of a new bull market. It always feels like a bear market rebound at the beginning of a bull market. Considering several false hopes placed during the current bear market, investors will be more cautious than ever in calling a new bull market. Housing and the health of the financial system remain critical in determining the nature of the current rebound. As for the latter, we should note the sharp drop in the LIBOR, which hit fresh record low levels in each of the trading sessions this week. If the credit market continues to improve, chances are we may have something different this time.  
Let’s take a look at the three key indicators: 1. VIX: closed at 31.37 compared to 33.65 yesterday; 2. The euro/yen cross: closed at 131 compared to 130 yesterday; 3. The TED spread: closed at 70 bps compared to 71 bps yesterday. 
Most major sectors finished the session higher led by financial and industry. The CRB commodity index rose 0.4%. The US dollar was lower against most major currencies. Treasuries were little changed. The three-month US LIBOR dropped to 85 bps, another record low. The VIX index dropped 2 points. The market breath was positive on both NYSE and Nasdaq. The volume was on the light side ahead of tomorrow’s OE session.

The market dropped sharply on Wednesday with all three major indexes finishing the session lower by at least 2%. It was the third consecutive session that the S&P 500 posted a loss. But unlike the previous two instances, investors did find some legitimate excuse to book profits in today’s trading. For the first time in a while, we received economic data that came worse than expected. April retail sales decreased 0.4% compared to a flat reading expected. Excluding auto sales, it declined 0.5% while economists on average were looking for a modest increase. The disappointing reading in retail sales report reminded investors of the severity of the recession we are currently experiencing. The worst part of the recession probably is over but we shouldn’t be surprised if news reports continue to indicate a weak economy for a while. Part of today’s selloff can also be attributed to caution taken by traders ahead of tomorrow’s initial jobless claims report, which may come worse than expected as it will fully incorporate the effects of plant closings at Chrysler. 
Let’s take a look at the three key indicators: 1. VIX: closed at 33.65 compared to 31.8 yesterday; 2. The euro/yen cross: closed at 130 compared to 132 yesterday; 3. The TED spread: closed at 71 bps compared to 73 bps yesterday.
All 10 major sectors finished the session lower led by financial and industry. The CRB commodity index declined 1.1%. The US dollar was higher against most major currencies. Treasuries rose across the board. The three-month US LIBOR dropped to 88 bps, another record low. The VIX index climbed 2 points. The market breath was negative on both NYSE and Nasdaq. The volume was neutral compared to the previous session.

The market recouped most of the early loss and finished the session mixed. Similar to yesterday, there is little earnings or economic news. Investors moved money out of sectors that performed well since the rally started in March and moved into sectors that lagged during the current rally. Financial and consumer discretionary were among the former while healthcare and consumer staple belonged to the latter. In terms of economic data, the US trade deficit widened to $27.6 billion in March. It should be noted that February’s $26.1 billion deficit was the narrowest deficit since 1999. Meanwhile, RealtyTrac reported that the number of US households faced with losing their homes to foreclosure jumped 32% in April compared to last year. The number, however, was less than 1% above that in March. The March data was up 17% from February and 46% from a year earlier. Considering other recent reports related to housing industry, the troubled sector may indeed start to bottom out.
It has been eight months since my China trip started and I’m heading back to Toronto late this week. Other than the financial crisis, which coincidentally kicked off during the weekend that I arrived in China with Lehman Brothers filing for bankruptcy, it is an incredibly wonderful trip. After travelling over 10,000 miles and visiting more than 20 cities including the top 4 – Shanghai, Beijing, Guangzhou and Shenzhen. I am so shocked by how China has changed over the past decade and the business opportunities that still exist. In fact, if there is one sentence to summarize, it is “If you want to know how to invest in the next 5 to 10 years, come to China!” For the next couple of weeks, I’m going to write what I see, what I hear and what I think of about China from time to time in the daily comments. Stay tuned!
Let’s take a look at the three key indicators: 1. VIX: closed at 31.8 compared to 32.87 yesterday; 2. The euro/yen cross: closed at 132 compared to 132 yesterday; 3. The TED spread: closed at 73 bps compared to 77 bps yesterday.
Most major sectors finished the session lower led by financial and transportation. The CRB commodity index rose 0.4%. The US dollar was lower against most major currencies. Treasuries were little changed. The three-month US LIBOR dropped to 91 bps, another record low. The VIX index declined 1 point. The market breath was neutral on NYSE and negative on Nasdaq. The volume was neutral compared to the previous session.

The market retreated on Monday after gaining almost 6% in the previous week. Volume was on the light side, indicating today’s drop is more related to profit taking. The session has little economic or earnings news while the schedule is getting busy towards the end of the week. Financials took the biggest hit today as the sector surged over 20% last week and several banks announced plans to raise capital from the private market. Some market participants feel that the rally over the past two months is too fast and a sharp pullback will be inevitable. Although I agree that the market will face some profit taking like today’s from time to time, the overall trend should be up as long as the credit markets stay stable. The current rally may turn out to be more than just a “bear rally” and stock market usually needs to climb a wall of worry at the turn of a new trend.
Let’s take a look at the three key indicators plus the iTraxx CDX composite spread: 1. VIX: closed at 32.87 compared to 32.05 last Friday; 2. The euro/yen cross: closed at 132 compared to 134 last Friday; 3. The TED spread: closed at 77 bps compared to 78 bps last Friday; 4. The iTRaxx composite spread: closed at 445 bps, the lowest since last October, compared to 553 bps in the previous week.
Most major sectors finished the session lower led by financial and transportation. The CRB commodity index declined 0.3%. The US dollar was higher against most major currencies. Treasuries rallied across the board. The three-month US LIBOR dropped to 92 bps, another record low. The VIX index advanced less than 1 point. The market breath was negative on both NYSE and Nasdaq. The volume was lighter compared to the previous session.