Market Commentary for October 31, 2007


Happy Halloween to everyone and hope you all enjoy your fair share of trick or treating. The Bulls had control of the markets today holding nicely in positive territory through out the session. After the Fed announced the cut in short term interest rates by 25 Basis Points, the markets surged higher during the final hours of trading. Crude Oil surged over $94 a barrel today due to the drawdown of Crude Oil supplies. The economy continues to deal with the ongoing housing slump that initiated the first rate cut by the Fed at their last meeting. The drop in interest rates was an effort by the Fed to improve confidence in our ever slowing economic conditions that has struck not only the housing market but also the automotive and financial industries.

At the closing bell, here is how the major indices ended the session: the DOW (Dow Jones Industrial Average) posted a favorable triple digit gain of 137.54 points on the day to end the session at 13,930.01; the NYSE (New York Stock Exchange) posted a triple digit gain of 146.64 points to end the session at 10,311.61; the NASDAQ posted a gain of 42.41 points for a close at 2,859.12: the S&P 500 moved higher by 18.36 points to end at 1,549.38 and the RUSSELL 2000 moved higher by 11.87 points to close at 828.02. The FTSE All-World Index ex-US (top Large/Mid Cap aggregate from over 2,700 stocks from the FTSE Global Equity Index Series (GEIS) which covers 90% of the world’s investable market capitalization) posted a gain of 3.12 points to close at 279.36 and the FTSE RAFI 1000 posted a gain of 76.21 points to close at 6,354.91.

Federal Open Market Committee released their decision on short term interest rates today: Fed Cuts Discount Rate by 0.25 Basis Points to 5.00% ; Fed Cuts Fed Funds Rate 0.25 Basis Points to 4.50%; Growth, Inflation Risks Balanced; Voted 9-1 for Fed Funds Rate Cut, Hoenig Dissented; Housing likely to Slow Pace of Economic Expansion; Strains in Financial Markets have Eased "Somewhat"; Commodities, Energy put Upward Pressure on Inflation; Upside Inflation Risks Balance Downside Growth Risk; Rate Cuts should Protect Economy from Financial Market Turmoil; Some Inflation Risks Remain, will Continue to Monitor and Will Act "As Needed" to Foster Price Stability, Growth.

ADP Sees October U.S. Private Sector Jobs rise by 106,000.

U.S. Third Quarter Employment Cost Index rose by 0.8% compared to consensus of an increase by 0.9%; U.S. Third Quarter Employment Cost Index rose by 3.3% from year ago; U.S. GDP rose at rate of 3.9% Third Quarter compared to consensus of an increase by 3.2%; Real Final Sales rose 3.5% in Third Quarter; PCE Price Index rose at rate of 1.7% in Third Quarter and Domestic Purchases Price Index rose at rate of 1.6% in Third Quarter.

US MBA Market Index Rises 3.8% to 681.7 from 656.5; US MBA Purchase Index Falls 0.7% to 412.9 from 415.9 and US MBA Refinancing Index Rises 9.2% to 2249 from 2059.3.

Department of Energy released Crude Oil Stockpiles information today: U.S. Crude Oil Stockpiles fell by 3.9 Million Barrels in the week compared to expectations of a rise by 100,000 Barrels; U.S. Gasoline Stockpiles rose by 1.3 Million Barrels in the week compared to expectations of a drop by 400,000 Barrels and U.S. Distillate Stockpiles by 800,000 Barrels in the week compared to expectations of a drop of 1 Million Barrels.

U.S. Chicago Purchasing Management October Index came in at 49.7 versus September reading at 54.2; U.S. Chicago Purchasing Management October New Orders Index came in at 53.9 versus September reading at 56.2; U.S. Chicago Purchasing Management October Employment Index came in at 52.0 versus September reading at 52.0; U.S. Chicago Purchasing Management October Supplier Deliveries came in at 52.7 versus September reading at 50.6; U.S. Chicago Purchasing Management October Prices Paid Index came in at 74.7 versus September reading at 59.0 and U.S. Chicago Purchasing Management adjusted October Index came in at 49.7 versus September reading at 54.2.

European Central Bank Board Member, Guy Quaden commented today: Market Liquidity Remains Thin; Credit Losses in Euro Zone Appear Manageable; Strength of Euro a "Crucial Question" for Economy; Financial Market Turmoil has Clouded Euro Zone Future and Uncertainty for Euro Zone Economy has Increased.

Secretary Paulson Remarks Following Hope Now Meeting
Washington - Good afternoon. I've just met with the Hope Now alliance, to get an update on their efforts to reach struggling homeowners and avoid preventable foreclosures. Foreclosures are not only painful for homeowners, but are costly for servicer’s and investors, who in many cases are better off when they can modify or refinance a mortgage and keep the homeowner in his home. Early action by servicer’s and homeowners can preserve investor value and achieve sustainable results. There are two parts to the effort to avoid foreclosures first, making contact with a borrower who is in trouble, and second, determining if there is an affordable mortgage product for that borrower and taking action. The members of this coalition are doing a lot of great work on both fronts. Most of the servicer’s have aggressive programs underway to reach borrowers who are having trouble paying their mortgages. But they are finding that the response rate isn't high enough. As the alliance is announcing today, they are producing a single letter on the Hope Now letterhead, providing at-risk borrowers a phone number to call for help. They are incorporating lessons each has learned from their individual mailing strategies, and they expect a stronger response from this unified approach, which could have a big impact in reaching homeowners who need help. Letters begin to go out on November 19th. We in government also have a role to play - urging borrowers who receive this letter to act on it. I will do that, as will other senior Treasury officials, and I will urge members of Congress to highlight the letter to their constituents, so they know where they can find help if they need it. The second piece of the puzzle, after making contact with struggling borrowers, is to determine if there is a mortgage they can afford. Many servicers’ today are already stepping up their efforts here as well. A few of the leading servicer’s have developed specific criteria for quickly assessing a borrower's financial situation, categorizing borrowers who qualify for loan modifications or refinancings and taking action. Today members of the alliance told me they are developing methods, criteria and metrics that any industry participant can use to systematically evaluate borrowers' ability to pay resetting adjustable rate mortgages. For example, borrowers who are current on payments at the lower rate might be candidates for fast tracking into a refinance or a loan modification. Others who struggled even with payments at the teaser rate may not have these options. I am calling on industry participants to review their existing practices and adopt specific criteria that will quickly identify borrowers who can keep their homes and follow up with a refinancing, a loan modification or other flexibility. This approach will be the most effective means of handling the expected volume of inquiries. And developing clear criteria now will allow us to gauge the success of these efforts in avoiding preventable foreclosures. I look forward to hearing an update from the alliance at the earliest possible time. I am pleased to see that more industry participants have joined the alliance and adopted their commitments. I encourage other industry participants to join this effort. Just as the alliance members expect to be more successful in reaching troubled borrowers, I am confident that working together through Hope Now, counselors and servicer’s can streamline and systematize their processes to more quickly meet the needs of more borrowers. I want to help as many able homeowners as possible. To do that requires continuous learning. We must deepen our understanding of how many borrowers can be helped and the most effective mortgage solutions for them. As I have said before, this housing and mortgage market decline is still unfolding. Resetting ARM rates are one factor which will play out over the next 18 months. Declining home values will also significantly affect default rates going forward. We've also learned that default rates are far higher on mortgages made in 2006 and 2007, due to lax underwriting standards. We have work to do to understand how many of these borrowers are able to afford their homes. I view the housing and mortgage market decline as the most significant current risk to our economy. Even so, today's GDP numbers reinforce my belief that we have a healthy, diversified economy that will continue to grow. I am eager to work with Congress, with HUD, with mortgage counselors and with mortgage market participants to take all reasonable steps to avoid unnecessary foreclosures and minimize the impact of recent market turmoil on homeowners and on our economy.

Commodities Markets
The trend was higher across the board today for the Energy Sector: Light crude moved sharply higher today by $4.15 to close at $94.53 a barrel; Heating Oil closed higher by $0.09 today at $2.53 a gallon; Natural Gas moved higher today by $0.31 to close at $8.33 per million BTU and Unleaded Gas moved higher today by $0.09 to close at $2.34 a gallon.

Metals Market ended the session mostly higher across the board today: Gold moved higher today by $8.20 to close at $796.00 an ounce; Silver moved higher by $0.13 to close at $14.46 per ounce; Platinum moved nicely higher today by $6.70 to close at $1,447.60 an ounce and Copper closed lower by $0.01 today at $3.47 per pound.

On the Livestock and Meat Markets, the trend was mostly lower across the board today: Lean Hogs ended the day lower by $0.03 to close at $53.88; Pork Bellies ended the day higher by $1.00 at $84.05; Live Cattle ended the day lower by $0.80 at $94.93 and Feeder Cattle ended the day lower by $1.45 at $108.40.

Other Commodities: Corn moved higher today by $5.25 to close at $375.50 and Soybeans moved sharply higher today by $16.50 to end the session at $1,025.75.

Bonds were lower across the board today: 2 year bond moved lower by 8/32 today to close at 99 12/32; 5 year bond moved lower by 17/32 to close at 99 22/32 today; 10 year bond moved lower by 22/32 today to close at 102 6/32 and the 30 year bond closed lower by 1 6/32 at 104 for the day.

The e-mini Dow ended the session today at 13,932 with a gain of 110 points on the trading session. The total Dow Exchange Volume for the day came in at 106,638 which are comprised of Electronic, Open Auction and Cash Exchange. Traders should review workshops available at the CBOT (Chicago Board of Trade) Educational in-person seminars schedules available on CBOT (Chicago Board of Trade) website.

The end of day results for the CBOT (Chicago Board of Trade) which is comprised of the total Exchange Volume for Futures and Options (EVFO) including Electronic, Open Auction and Cash Exchange ended the day at 2,942,363; Open Interest for Futures moved higher by 5,293 points to close at 9,784,792; the Open Interest for Options moved higher by 210,053 points to close at 8,533,664 and the Cleared Only closed higher by 1,171 points at 11,110 for a total Open Interest on the day of 18,329,566 for a total Change on the day with a gain of 210,517 points.

On the NYSE today, advancers came in at 2,404 decliners totaled 878 unchanged came in at 85; new highs came in at 263 and new lows came in at 79. Gainers and losers for the day as well as active day trading stocks on the NYSE: MasterCard Incorporated (MA) soared higher on the trading session to post a sharp gain of 32.76 points to rise higher by 20.85% with a high on the trading session of $194.78, a low of $174.10 for a final trading price at $189.91; PetroChina Company Limited (PTR) pounded the street to climb higher today by 16.90 points with a high on the day of $263.47, a low of $250.45 for a closing price at the bell of $262.60; FTSE/Xinhua China (FXI) bolted higher on the day to post a gain of 7.09 points with a high on the session of $219.56, a low of $212.40 with a closing price of $218.51; China Petroleum & Chemical Corporation (SNP) posted a sharp gain on the day of 15.79 points for a gain of 10.52% with a high on the day of $169.00, a low of $150.60 for a final trading price at the bell of $165.91 and CommScope Incorporated (CTV) posted a loss today of 5.03 points with a final trading price at $47.17.

On the NASDAQ today, advanced totaled 1,937; decliners totaled 1,068; unchanged came in at 114; new highs came in at 123 and new lows came in at 122. Gainers and losers for the day as well as, active day trading stocks on the NASDAQ: Equinix Incorporated (EQIX) roared higher on the trading day to post a nice gain of 15.72 points for a gain of 15.78% with a high on the trading day of $121.13, a low of $112.00 for a closing price at the bell of $115.24;

Shutterfly Incorporated (SFLY) posted a loss on the session of 3.08 points for a closing price at the bell of $33.32; Wynn Resorts Limited (WYNN) moved sharply lower on the trading day for a loss of 8.04 points with a high on the day of $162.75, a low of $155.00 with a final trading price of $159.85; SiRF Technology Holdings Incorporated (SIRF) moved nicely higher on the day with a gain of 6.52 points to climb higher by 27.98% for a closing price at $29.82; FARO Technologies Incorporated (FARO) posted a heavy loss of 9.32 points for a move lower by 24.47% with a high on the day of $31.10, a low of $25.25 for a final trading price of $28.76; Buffalo Wild Wings Incorporated (BWLD) took a sharp dive on the session with a loss of 8.25 points to shed 21.20% for a closing price of $30.66; Huron Consulting Group Incorporated (HURN) fell hard today with a loss of 10.28 points to shed 12.82% with a high on the session of $70.50, a low of $58.35 for a final price at the bell of $69.88; Garmin Limited (GRMN) shed 13.08 points on the day for a loss of 10.86% with a high on the day of $116.00, a low of $106.88 for a final trading price at $107.40 and DryShips Incorporated (DRYS) made a nice rebound today to tack on 9.86 points with a high on the day of $119.25, a low of $110.16 for a closing price of $117.86.

Thanks for reading
Millennium-Traders