Smart Investing/Trading for the week ending November 21 2008

Weekly US markets update and outlook

Stocks look for respite in holiday-shortened week
Obama's picks of Geithner, Clinton, Richardson seen reducing uncertainty

Marketwatch: U.S. stocks will start next week with investors looking for some respite after reports of key nominations to the administration of President-elect Barack Obama helped stem heavy selling that had slammed the market to 11 year lows.In particular, the nomination of Tim Geithner, currently the head of the New York Federal Reserve, as the next treasury secretary, seemed to find immediate approval from Wall Street, judging by a market rally that saw the Dow industrials jump nearly 500 points Friday. "That's good news," said Robert Pavlik, market strategist at Oaktree Asset Management. "Now we have a team that can come together and start coming up with a plan. The foundation has been laid to start addressing the situation." The New York Times reported that Sen. Hillary Clinton has accepted Obama's nomination to be secretary of state. NBC news reported that besides Geithner, the president-elect has selected Bill Richardson, a former energy secretary under President Bill Clinton, as his nominee for commerce secretary.

An avalanche of reports on the economy next week, which will be shortened by the Thanksgiving holiday on Thursday, could also provide further evidence of the depth of the recession. But "there's a possibility that we have a decent week because there won't be many people at their trading terminals," said Paul Nolte, director of investments at Hinsdale Associates. On Friday, the Dow Jones Industrial Average jumped 494 points, or 6.5%, to 8,046, following the reports. But the rally still barely made a dent in the week's heavy losses, which left the Dow 6.5% lower, the S&P 500 index down 6.3%, and the Nasdaq Composite, off 8.7%.

On Thursday, stocks took a nosedive, with the S&P 500 ending at its lowest level in more than 11 years, battered by mounting worries about the fate of U.S. automakers and Citigroup Inc. Citigroup shares plunged 50% over the past week, slumping 20% on Friday alone, even after reports that the bank might put itself for sale.

"When a major institution has to consider selling itself up or selling assets at a discount value, that's not a good sign," Pavlik said. Financial stocks have taken another round of hits after current Treasury Secretary Henry Paulson said he would not spend more of the $700 billion from the Trouble Assets Relief Program. Meanwhile, Congress postponed debates on aid to the Big Three automakers -- General Motors Corp., Ford Motor Co. and Chrysler Corp. -- further fueling fears about the economy just a day after Federal Reserve officially said the U.S. was in recession.

Following Thursday's plunge, the S&P, the market benchmark most followed by professional investors, had lost nearly 52% since its record high close on Oct. 9, 2007. "Have we discounted the worst? I hope so," Nolte of Hinsdale Associates said. "But I don't know. Not only when you look at the problems in banking, but the technical picture in the market is not yet healthy." Investors scrambled for a safe haven as concerns mounted about the health of financials and the economy, sending gold futures back above $800 an ounce, up 6.6% for the week. On the other hand, economic concerns drove oil futures to plunge 13% on the week.

Economic data

Of particular interest for the market next week will be housing data -- October existing home sales on Monday, new home sales on Wednesday, and the S&P/Case-Shiller home price index for September on Tuesday. Tuesday will also bring the Conference Board's consumer confidence index for November. Wednesday will be data-heavy, with weekly jobless claims, another reading of third-quarter growth, personal income data, a manufacturing survey from the Chicago region in November, and durable goods order for October. "Worries about automakers, the weak economy, massive layoffs and weak consumer spending, it will still be the same next week," Pavlik said. "But [the market has] declined so much, that some people might be willing to step in just because stocks seem cheap."

Weekly KLSE CI Technical update and outlook

ICap on daily KLSE CI. The increased level of volatility has been seen across the global markets and when it is coupled with weakening fundamentals, it makes it extremely hard to predict when the bear will end. Meanwhile, its daily MACD's bullish signal is now waning, accompanied by its stochastic oscillator that has turned down amid the declining trading volume. The KLSE CI is unlikely to move out from the downtrend soon.

* Do the predominently Muslim countries like Indonesia, Middle East, Pakistan or Turkey allow their Muslim countrymen practice Yoga?? (read here for Malaysia's top Islamic body's ruling)

* Bloomberg: The Aussie/NZ dollars dropped to their 5 year and 6 year low respectively. 1 AUd: 60.76 US cents, 1 NZD: 52.39 US cents. The RBA has been active lately in the money market. In fact for the month of October, almost USD2b worth of AUD was bought to prop up the currency.

* Argentine Senate approves takeover of USD24B in pensions resulting opposition crying out "cash grabbing" by the government.

* BT: Bruce Willis to sue Vinod Sekhar(Petra) and Imran Tunku Jaafar saying USD900,000 of the USD2m he invested in a "green rubber" venture wasn't returned to him! He seems to be of the opinion, "If you don't sue and make it public, you will not get your money back"!

* Japan's central bank has left its key interest rate unchanged at 0.3%.

* First Dr M, now Najib?......Call for changes in the world financial markets architecture....via another Bretton Woods. Yes, details please????(discussed here before)