Traders returned after the holiday shortened week only to find more fireworks in the financial complex. Capital fears rocked GSE’s Fannie Mae (FNM) and Freddie Mac (FRE) dragging down the whole banking index. Tuesday’s relief rally quickly was erased later in the week leaving the bulls scratching their collective heads as the eldest sister, the DJIA, reached a two year low.
Despite the heightened level of anxiety, the Four Sisters have reached a fairly oversold area. Some of the biggest rallies occur within the context of a bear market so we would not be surprised to see the Four Sisters snapback sharply when the financial gains traction. Overhead resistance on the SPX is 1300 with support at the important “psych” level of 1200.
Top Headlines
Fears of the government rescuing Fannie Mae (FNM) and Freddie Mac (FRE) became a distinct possibility this week as shares reached levels not seen since the early 1990s. Investors are worried that their stakes in the companies will be worthless if the government is forced to step-in. (7.11)
Apple’s (AAPL) new iPhone hit stores Friday in a much anticipated 22 nation debut. The tech giant continues to grab more market share in the wireless space. (7/11)
Software giant Microsoft (MSFT) said it is willing to reopen negotiations in regards to its proposed buyout of Yahoo (YHOO) only if Yahoo’s current board is revamped. (7.7)
Tensions are rising in the Middle East after Iran test-fired nine missiles and warned the United States and Israel it was ready to retaliate if attacked. (7/9)
Belgium based InBev (INTB.BR) and Anheuser-Busch (BUD) have begun discussions for a friendly merger after InBev raised its previous bid from $65 to $70 per share. A deal could be inked by this weekend. (7.11)
Industrial and financial conglomerate General Electric (GE) reported a 6% dip in quarterly profit. However, this drop was in-line with expectations. (7.11)
Crude prices spiked again to new highs Friday over supply threats and a possible strike next week from the Brazilian oil workers. (7.11)
Winners & Sinners for the Week of 07/07/2008
Click here for complete PDF.