robo
Well-known member
Wednesday, July 26, 2006
Rally Fizzles on Third Day
The prospect of a third day up was just too much for stocks as the market faded badly toward the close. Most indices closed lower, although the majority of stocks actually advanced.
One of the more amazing things about this market is its ability to rise in the face of a Mideast war going very poorly and threatening to spread. After starting in the victim role and with world opinion sympathizing with their plight, the Israelis have already turned public opinion mostly against their cause and are likely going to lose the war in some fashion. This apparent victory for Hizbolla comes as a complete surprise and suggests the risk of an Arab oil embargo cannot be dismissed as lightly as it could have been just last week. The effect of such an embargo would be immediate and could send the markets into tailspins. Thus, the near term risk is far higher than it has been.
On the bright side, even if the Israelis fail to achieve their goals, Arab oil is still likely to flow freely to the West. If a settlement can be worked out, the markets would certainly celebrate, so the risks are about equally distributed between the bulls and the bears right now. Near term, the bears have the ball. If they can't drive to new lows, they will have lost their golden opportunity.
Rally Fizzles on Third Day
The prospect of a third day up was just too much for stocks as the market faded badly toward the close. Most indices closed lower, although the majority of stocks actually advanced.
One of the more amazing things about this market is its ability to rise in the face of a Mideast war going very poorly and threatening to spread. After starting in the victim role and with world opinion sympathizing with their plight, the Israelis have already turned public opinion mostly against their cause and are likely going to lose the war in some fashion. This apparent victory for Hizbolla comes as a complete surprise and suggests the risk of an Arab oil embargo cannot be dismissed as lightly as it could have been just last week. The effect of such an embargo would be immediate and could send the markets into tailspins. Thus, the near term risk is far higher than it has been.
On the bright side, even if the Israelis fail to achieve their goals, Arab oil is still likely to flow freely to the West. If a settlement can be worked out, the markets would certainly celebrate, so the risks are about equally distributed between the bulls and the bears right now. Near term, the bears have the ball. If they can't drive to new lows, they will have lost their golden opportunity.
