This is The Wall Street Digest Hotline Update for Tuesday, July 22, 2008, at 6:00 p.m. EST.
Stock prices were up today because oil prices were down. This is still an oil-driven market. At the closing bell, the Dow jumped 135 points, closing at 11,602, while the Nasdaq gained 24 points, closing at 2,303. The S&P 500 closed 17 points higher at 1,277. Oil closed $3.09 lower at $127.95 per barrel, and gold closed $15.20 lower at $948.50 an ounce.
Oil prices fell again today, as hurricane Dolly in the Gulf of Mexico will miss the oil platforms south of Louisiana.
The dollar was up today and oil prices were down, which helped stock prices rise. If oil continues to fall as I expect, financials and the banking sectors could become the new market leaders. Wachovia Bank reported a $6.1 billion write-off of sub-prime debt. However, Wachovia Bank shares were up today and so was the banking sector. That is very encouraging. Interest rates are rising--there is no reason to own bonds.
But, trillions of dollars in debt must still be written off. Let's continue to avoid the banking and financial sectors, until we are sure of a final bottom.
The housing sector is still deflating. I don't see a housing bottom until late 2009, at the earliest.
I will continue to trim positions from our portfolio of recommendations. New market leadership will emerge over the next week or so. Stay close to our Tuesday/Friday Hotline Updates.
The next Hotline Update will be on Friday, July 25, 2008, at 6:00 p.m. EST.