Monday, October 17, 2005

Sentiment and Technicals align

"Protect your health. Without it you face a serious handicap for success and happiness." - Harry F. Banks

Morning News of Note:
  • RFX Refco in advanced discussions with J.C. Flowers for sale of futures brokerage biz (7.90 ) -Update- Co announces that it is in advanced negotiations with a group of investors led by J.C. Flowers & Co for the sale of RFX's futures brokerage business conducted through Refco LLC, Refco Overseas Ltd, Refco Singapore Pte Ltd, and certain related subsidiaries and other assets. The co expects that it will reach a memorandum of understanding with The J.C. Flowers & Co shortly and will execute definitive agreements soon thereafter.
  • Fed Tracker: Chairman Greenspan was in Japan this weekend talking on the global economy with BoJ's gov Fukui, while also meeting with PM Koizumi. He will conclude his visit with a speech to business leaders tonight. Philly's Fed pres Santomero will be discussing monetary policy at 4:30 in North Carolina.
  • WMT Wal-Mart maintains Oct sales forecast of up 2-4%
  • Tropical storm Wilma forms in Caribbean: Tropical Storm Wilma formed in the Caribbean Sea on Monday and could move into the oil-rich Gulf of Mexico by the end of the week, the U.S. National Hurricane Center said. Wilma is the twenty-first named storm of the 2005 Atlantic hurricane season, making this the equal most active year on record, the NHC said.

Market Comments: The market is bouncing at the open. I just hope it doesn't sell off and close down like it did so many times last week. GM is up on news of improvement on its healthcare talks. Refco is in talks with JC Flowers, which should take some pressure off the markets. And Citi reported good earnings this morning. Also, MO got a favorable ruling, which is lifting the tobacco stocks.

Technically, the market is heavily oversold, with many indicators now showing signs of a bottom. The sentiment indicators continue to reflect extreme levels of bearishness. I think that the combination of the two supports a tradeable bounce in the short-term.

long C, MO


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