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Posted by: thepinetree on 10/08/2010 11:54 AM
Updated by: thepinetree on 10/08/2010 12:28 PM
Expires: 01/01/2015 12:00 AM
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Weekly Market Update Week of October 4, 2010 SPECIAL EDITION – 3Q CLOSE & FLASH CRASH REPORT ~ Donna M. Stevenson
Copperopolis, CA...THE MARKETS: Thursday marked the end of a quarter and the end of a month. Both turned out to be favorable for equity markets. Although September is historically one of the slowest months of the year, this September wasn’t slow at all. Last week’s slight drop followed four straight weeks of gains that allowed the month to go down as the strongest September since the days of World War II – 1939 to be exact. For the month, the S&P gained 8.8%, the Dow rose 7.72%, and the Nasdaq advanced 12.04%. For the quarter, the S&P gained 10.7%, the Dow added 10.4%, and the Nasdaq rose 12.3%, even as the U.S. economic recovery remained tepid...
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Source: cnnmoney.com
Meanwhile, in a report released Friday, the Securities and Exchange Commission and
the Commodity Futures Trading Commission said that a large investor – left unidentified
– used automated trading software to sell futures contracts called E-minis at a time in
the afternoon when the markets were already stressed, and that this action sparked the
"flash crash" of May 6. The report indicates that this selloff in the futures market then
spilled over into the market for individual stocks. As conditions worsened, the liquidity in
the market dissolved because automated systems used by many firms paused when
prices began falling severely. The ensuing plummet sent the Dow Jones industrial
average down nearly 1,000 points, and briefly erased $1 trillion in market value. It was
the largest one-day point drop on record.
The SEC-CFTC report detailed technical factors that led to the market turmoil, but it did
not contain any specific policy recommendations that would prevent another flash crash
from happening. The report has been submitted to a special advisory committee, which
will eventually make recommendations to Congress related to market structure issues
and incongruent trading rules across various markets.
Back in May, as an initial response to the crash, the SEC adopted a rule instituting a
circuit-breaker “pilot” program for all exchanges to halt or slow down trades of a
particular stock if the price moves 10% or more in a five-minute period. In September,
the agency expanded the circuit-breaker program to all stocks of the Russell 1000 index
as well as 344 specified ETFs. The SEC is expected to use the results of this new
report to justify additional measures.
If you’re feeling ambitious, you can read the full 104 page report from the SEC here:
http://www.sec.gov/news/studies/2010/marketevents-report.pdf
Or you can check out the edited summary from MarketWatch here:
http://www.marketwatch.com/story/text-of-flash-crash-reports-summary-2010-10-01
As your financial advisors, we consider it our responsibility to understand factors that
have affected, are affecting, or could affect your financial future. We also aim to educate
you about such factors so that you can feel comfortable with the recommendations we
make. If you ever have questions about this or any other matter, please don’t hesitate to
reach out to us. We consider it an honor and a privilege to be good stewards of the
assets you have entrusted to our care.
Key things to watch this week: Monday – Factory Orders, Tuesday – ISM Non-Manufacturing Index Thursday – Jobless Claims, Consumer Credit Friday – Employment Situation
Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources:
Yahoo! Finance, Google Finance, Barron’s, djindexes.com, MSCI Barra. Past performance is no guarantee of future
results. Indices are unmanaged and cannot be invested into directly. N/A means not available.
HEADLINES:
Beijing warned Washington on Thursday that economic ties might be damaged after
American lawmakers escalated the conflict over China's currency controls, inching the
two economic giants closer to a trade war.
Americans bought cars and trucks last month at the strongest pace since 2009's
cash-for-clunkers program, giving Chrysler and Ford sharp increases – a trend that
could give the industry and consumers a psychological boost in the year's final quarter,
executives and economists said. U.S. auto sales jumped 28.5% in September, helping
to lift year-to-date sales 10.3%.
The federal government is looking to raise corporate average fuel economy
requirements to something between 47 and 62 miles per gallon by 2025, according to
documents released Friday by the National Highway Traffic Safety Administration and
the Environmental Protection Agency.
Personal income rose 0.5% in August, the largest increase this year, while spending
by individuals remained steady, according to a government report released Friday.
Personal income increased $59.3 billion, or 0.5% last month, the Commerce
Department said. That's more than the 0.3% rise economists expected.
The dollar fell Friday, hitting a six-month low versus the euro, after a report showing
weakness in the U.S. manufacturing sector supported investors who expect the Federal
Reserve to resume large-scale bond purchases in coming months to boost the U.S.
economy.
QUOTE OF THE WEEK:
“Associate yourself with people of good quality, for it is better to be alone than in bad
company” – Booker T. Washington
RECIPE OF THE WEEK:
Grasshopper Cookie Pie
Ingredients:
1 package (8 oz.) cream cheese, softened*
1/3 cup sugar
3 drops green food coloring (optional)
1 tub (8 oz.) frozen non-dairy whipped topping, thawed
1 cup Cookies (Keebler Fudge Shoppe Grasshopper Fudge Mint)
1 Chocolate Ready-to-Bake Pie Crust
Directions:
1. In large mixing bowl beat cream cheese on medium speed of electric mixer until
fluffy. Add sugar and food coloring, if desired. Beat until combined.
2. Fold in whipped topping and cookies. Spread in crust.
3. Refrigerate at least 3 hours or until set. Garnish as desired. Store in refrigerator.
*Soften cream cheese in microwave at high for 15 to 20 seconds.
GOLF TIP OF THE WEEK:
Move Up
Having trouble achieving a mental breakthrough? Try playing from the forward tees, in
order to alter your comfort zone and lower your scores. Playing a shorter course will
instill a "go-for-par" or birdie mindset that will stick with you when you return to your
accustomed tees. If you can't score any better from the forward tees, consider it a
message that you need extra work on your short game.
Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues. If you would like us to add
them to our list, simply click on the "Forward email" link below. We love being introduced!.
Securities offered through Pacific West Securities, Inc., Member FINRA/SIPC.
Sources:
Marketwatch
The Wall Street Journal Online
Barrons
CNN Money
http://technews.tmcnet.com/topics/associated-press/articles/106097-china-warns-us-currency-bill-might-harm-ties.htm
http://www.freep.com/article/20101002/BUSINESS01/10020307/1322/Automakers-post-solid-Sept.-gains
http://money.cnn.com/2010/10/01/autos/2025_fuel_economy/index.htm
http://money.cnn.com/2010/10/01/news/economy/personal_income_spending/index.htm
http://www.marketwatch.com/story/dollar-weakness-continues-on-fed-fears-2010-10-01
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss
in periods of declining values.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in
general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and
the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance
in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen
as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future
performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or
named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker
dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its
completeness or accuracy. Please consult your financial advisor for further information.
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