The Day that Was - September 24th 2007

Today the big event bringing down the markets is the continued weakness in the financial sectors. Even now that we are approaching the one week point since the FOMC cuts the discount window and the Fed Funds rate the financials are still declining overall. While some stocks are appearing to be doing well it is only a matter of time before they exhaust themselves and fall hard. We are concerned about people "loading the boat" as some refer to it as and buying heavy long positions.

Even Apple is already showing signs of a fall coming. When you analyze the volume patterns on the AAPL chart it showed that today's gap up at the open and the trading throughout the day was on slightly lower volume than some previous sessions. A gap up on lower volume is a warning sign of a drop coming. If we had Apple in our portfolio we would be sellers now to capture this profit before it gets away. Then look to enter again down the road when conditions say it is time. Holding on to something that makes you a profit "too" long is just setting yourself up for a disappointment later. Never fear taking a profit!

During the after hours Lowes (LOW) home supply stores issued a warning for their FY07 EPS. Says they may miss their original earnings estimates for the year.

Also, Target (TGT) issued a warning for their same stores sales figures. Yes, Target. The darling of Wall Street that everyone seems to push is cutting their sales estimates. This will likely have an impact on the retail sector tomorrow.

Also of note today, 10 year T-note yields showed 'flight to safety' is building again. While is was not a huge amount it still is signalling a "second guessing" by some in the markets. Perhaps the rate cut party has fully exhausted itself now and money is going back under the bed. We will see.

In the pre market tomorrow Lennar Home Builders (LEN) reports earnings. We must see what they say about the market conditions. Any more bad news about housing and the financials and home builders will continue to weigh the markets down.

See ya in the morning!