每日市场点评 --- November 19, 2007

The Dow just keeps extending its 150+ point swing day to its record. I’m sure the record will end pretty soon, if not just this week as US will have its Thanksgiving holiday. However, by that time the damage probably is already made. Most indices are now below their 200 day moving average line, which is a very important indicator to define bull/bear market. On the other hand, I have a feeling that we are pretty close to the real capitulation day. All we need is some really bad news from the financial sector or homebuilding sector (for example, a Chapter 11 filing) and a sharp sell off followed by a strong reverse. We are going to get the Fed minutes tomorrow. Currently the market is factored in a 98% chance that the Fed is going to cut another 25bps at its Dec 11th meeting. Apparently, Wall Street is trying to force the Fed to do what they are not willing to do, i.e., cut more interest rates. Treasury bonds rallied sharply today as more investors try to use it as a risk-free heaven. The spread between the risk-free T-bond and the average junk bond is now beyond 600 bps, a level not seen since 2003. The yen unwinding trade is still ongoing and this can also serve as a good indicator for market bottom.