Market Ends Lower In Choppy Session

Certainly, the stock market’s dominant mood continues to remain very gloomy with stocks turning lower again Monday. However, at the opening bell the major averages indicated, and had a positive start to the week’s opening session.

The initial upside was attributed to a $3 decline in crude prices, setting a session low of $139.50. The decline is worth noting – was unexpected given OPEC’s President Chakib Khelil comments on Sunday, stating that “surging oil prices aren’t likely to fall amid strong demand, especially from China and India”.

But, the enthusiasm was only short-lived as the markets slowly descended from their session highs, set shortly after the open. Comments in a speech in San Diego, by San Francisco Fed President Janet Yellen may have been a damper. Fed Yellen stated that “core inflation will likely rise as businesses pass on higher costs to consumers and home prices will likely fall well into 2009″. She also added: ” the unemployment rate may rise further this year” while forecasting weak growth for the rest of 2008.

This prompted the Dow and Nasdaq to give up all early gains and turn lower at midsession. As this bad news wasn’t enough as the main catalyst for taking all the indices down, news reported by Bloomberg – that “Freddie Mac (FRE) and Fannie Mae (FNM) plunged on concern that the two largest mortgage-finance companies may need to raise more capital”, prompted the Dow (INDU) and the S&P 500 (SPX) to trade to new 52-week intraday lows while the NASDAQ 100 index (NDX) was fighting to hold the key 1,800 level.

It is obvious that the month long selloff has created a high level of fear among investors, resulting in a lot of sellers and lack of buyers. However, while this market aspect suggests weakness and a low level of greed – it is rather systematic and quite characteristic of short-term bottoms. Even though our hypothesis remains to be validated, these levels may have the preconditions in place for a reflex, oversold rally.

Trading volumes were relatively low this Monday session. Investors/Traders, as is always the case under these type of market conditions, took to the sidelines and fled to the safety of Treasury bonds.

In Other News

General Electric’s (GE) NBC Universal is joining Blackstone Group (BX) and Bain Capital to purchase The Weather Channel. The Weather Channel, can be seen by 97 percent of U.S. cable subscribers. Financial terms on the deal are not yet disclosed.

General Motors Corp. (GM) is considering job cuts and may get rid of some brands. GM stock has printed-to-tape below $10 levels ($9.96) and hit lows last seen since 54 years ago.

InBev is planning to replace the Anheuser-Busch (BUD) board of directors. Belgian-Brazilian InBev will file a consent solicitation statement with the U.S. Securities and Exchange Commission seeking to remove each member of the board of directors.

Meanwhile, Yahoo-Microsoft saga continues. Dow Jones reported that Microsoft (MSFT) has indicated its willingness to talk with Yahoo! (YHOO) and that Carl Icahn has been in talks with Microsoft regarding a transaction with Yahoo!.

The Federal Reserve and the Securities and Exchange Commission announce Monday an information-sharing agreement which aims at better detecting potential risks to the U.S. financial system.

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