The Four Sisters had a relatively quiet week as continued dollar strength was the main focus. Concerns over the growth prospects of the Euro-zone sent the greenback to a two-year high against the pound and six month high against the Euro. Commodities continue to fall most notably crude, gold, and silver as the deflationary cycle moves forward.
The financial complex is still lagging the markets and will be a focal point to see if this rally has any more staying power. If the XLF can regain 22 on a closing basis, we think the SPX will continue higher with the next resistance level coming in the 1340/1350 range. However, if 1270 lets go, a retest of the July lows is highly probable.
Top Headlines
The dollar extended its recent gains this week hitting a two-year high against the pound and gaining further ground against the euro. Worries over the European economy have caused traders to unwind bearish dollar bets. (8.15)
Russia declared on Thursday that Georgia will not be allowed to regain its two breakaway provinces. U.S. Defense Secretary Gates says a full review is in order with our relationship with Russia. (8.14)
Consumer prices spiked in July by a greater than expected 0.8% fueled by high food and energy prices. However, given the recent decline in crude, consumer prices are expected to ease later in the year. (8.14)
CVS Caremark (CVS) announced it will make an offer for rival Long Drug Stores (LDG). Shares of Long Drug Stores shot up to a record high. (8.13)
Shares of online retailer Amazon (AMZN) soared Monday after an analyst boosted their sales forecast. (8.11)
LDK Solar (LDK) reported a three-fold increase in 2nd quarter profit and boosted guidance. This sent other solar companies higher as well. (8.12)
Shares of Deere & Co. (DE) slipped Wednesday after cited higher raw material costs will dampen results in 4th quarter. However, the firm boosted their sales estimates for the year. (8.13)
Winners & Sinners for the Week of 8/11/2008
