Free Market Update for the Week of August 30, 2010

Presented by Mark Lund, The Investor Coach.

WEEKLY QUOTE
“When there is an original sound in the world, it makes a hundred echoes.”
– John A. Shedd

BERNANKE REASSURES WALL STREET
At the annual Federal Reserve summer retreat at Jackson Hole, WY on Friday, Fed chairman Ben Bernanke said that the central bank “is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly.” Translation: we are ready to do what it takes to support the economy. Bernanke stated that the Fed still had plenty of tools to fight deflation, with buying more Treasuries a prime option. He did not mention buying private assets. The Dow rallied for a gain of 164.84 Friday.^1,2

BREATHTAKING DROP IN HOME SALES
In July, demand in the housing market is usually at its highest. So the July housing numbers were confounding even with the absence of taxpayer credits: new home sales down 12.4% from June, existing home sales down 27.2% from June. In year-over-year terms, the rate of new home purchases was 32.4% below July 2009 while sale prices were -4.8% from last year’s median. (Analysts polled by Thomson Reuters had forecast July new home sales to be flat.) The National Association of Realtors said residential resales were down 25.5% from a year ago; however, the median sale price was 0.7% higher than in July 2009. ^3,4

SLIGHT GAIN IN DURABLE GOODS ORDERS
The 0.3% July increase underwhelmed analysts, who had expected a 3.0% gain. Excluding transportation orders, durable goods orders were -3.8% last month.³

CONSUMER SENTIMENT IMPROVES
The final August consumer sentiment poll is in from the University of Michigan and Reuters. The 68.9 index reading is an improvement from the final 67.8 mark in July; we are still a long way from seeing this index above 80, which was common before the recession.⁵

GOLD & OIL PRICES RISE
In fact, gold was up for the fourth week in a row – futures gained 0.72% last week to settle at $1,236.00 Friday. Gold is up 4.60% across that four-week stretch. Oil futures advanced 2.47% on Friday to pull off a 1.83% weekly gain and settle at $75.17 per barrel on the NYMEX.⁶

STOCKS SLIP DESPITE FRIDAY RALLY
The Dow actually closed below 10,000 on Thursday; fortunately, it regained that level, settling Friday at 10,150.65. The NASDAQ and S&P 500 also had slight weekly declines, respectively settling at 2,153.63 and 1,064.59 at week’s end.⁷

Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov – 8/27/10^7,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.

WEEKLY RIDDLE
A woman walking along a canal sees a boat full of people, yet there isn’t a single person on board. How could this be?

Last week’s riddle:
The more of them you take, the more you leave behind. What are they?

Last week’s answer:
Footsteps.

Citations.
1 – swampland.blogs.time.com/2010/08/27/bernanke-gets-forcefully-vague/ [8/27/10]
2 – marketwatch.com/story/bernanke-talks-tough-on-deflation-2010-08-27 [8/27/10]
3 – nytimes.com/2010/08/26/business/26econ.html [8/25/10]
4 – realtor.org/press_room/news_releases/2010/08/ehs_fall [8/24/10]
5 – bloomberg.com/news/2010-08-27/u-s-consumer-sentiment-rises-to-68-9-from-an-eight-month-low-index-shows.html [8/27/10]
6 – blogs.wsj.com/marketbeat/2010/08/27/data-points-energy-metals-349/ [8/27/10]
7 – cnbc.com/id/38789911 [8/27/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F27%2F09&x=0&y=0 [8/27/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F27%2F09&x=0&y=0 [8/27/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F27%2F09&x=0&y=0 [8/27/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F26%2F05&x=0&y=0 [8/27/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F26%2F05&x=0&y=0 [8/27/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F26%2F05&x=0&y=0 [8/27/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=8%2F28%2F00&x=0&y=0 [8/27/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=8%2F28%2F00&x=0&y=0 [8/27/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=8%2F28%2F00&x=0&y=0 [8/27/10]
9 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [8/27/10]
9 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [8/27/10]
10 – treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative’s Broker/Dealer. This information should not be construed as investment advice. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards.