Wednesday, August 15, 2007

Pre Market Update

The markets in Asia collapsed overnight with the Jakarta composite down over 6%. The European market are very bearish and the trend looks to continue when Wall Street opens despite a benign Consumer Price Index report.With inflation easing there is a greater chance of a Fed rate cut.

This morning, Merrill Lynch has cut the nations largest mortgage lender Countrywide Financial to a sell and raised the possibility of bankruptcy. Personally I feel CFC will make it through this crisis and the chances of bankruptcy are slim.

Deere & Co.'s fiscal third-quarter net income rose 23%, topping expectations, amid strong sales gains for agricultural, commercial and consumer equipment. DE is probably a bargain here in this market environment.

Whats Buffett been buying and selling ? Very strange how Berkshire takes a stake in Dow Jones & Co. right before Ruport Murdochs buyout offer. Insider trading or is Warren just very lucky ......

Judging by stock index futures, the US markets will open substantially lower. Will this set the stage for a rally or are we going to melt downwards ? We could see 12,700-12,800 on the Dow today. I would be very cautious though the extreme bearishness in sentiment makes me a believe a strong rally is near.

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