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TMTT newsletter, The markets traded around the unchanged mark most of the day Mondays as traders lie in wait of the Wednesdays Federal Reserve meeting. The telecom sector turned in the best returns of the day but provided little in the way of leadership. Consumer Staples and Materials are also posting respectable gains but the lack of leadership from Financials, Industrials and Energy continue to keep market gains in check as a sense of reserve remains intact as investors brace themselves for a 16th consecutive interest rate hike.
There was no economic news or significant earnings to bolster direction. About the biggest news of the day was the report of Wachovia Bank (WB) buying Golden West Financial (GDW) for $26 billion and news that Thermo Electron (TMO) is hooking up with Fisher Scientific (FSH) in a reverse merger valued at $10.6 billion. I have said it before, but in the world of rising interest rates mergers and acquisition activity will increase, and small regional banks are prime candidates.
There was further consolidation in Energy, as crude oil prices closed below $70 a barrel. Oil prices, were off more than 2.0% and flirting with $68 a barrel at one point after Iranian President sent a letter to President Bush seeking ways to ease tensions. Crude closed down 0.6% to $69.75 a barrel.
With the Dow and other indices pushing new highs, a technical pullback or consolidation may be needed to gather strength for further upside movement. Adjust your trades accordingly. You don?t want to be overexposed going into the Fed meeting.
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