Weekly Recap - August 17, 2008

Crude oil slipped again to reach its lowest level in nearly four months, and the dollar rallied for the fifth straight week to extend its surge against the euro to 9%. After failing to about 20%, the percentage of stocks climbing above their 200-day moving average remains near a benign – and hardly overbought – 35%. These merely support “the notion that the recovery off the July 15 lows has been much more a sector-rotation affair than the beginning of a broad, sustained advance,” says Miller Tabak’s chief technical market analyst, Philip Roth.
The Dow Jones Industrial Average ended the week down 74, or 0.6%, to 11,600, and is 17.7% off its October peak. The Standard & Poor’s 500 barely eked out its fourth gain in five weeks and added 2, or 0.1%, to 1298. The Nasdaq Composite Index strung together its fifth weekly gain and rose 38, or 1.6%, to 2453. It has risen 9.5% in five weeks – the longest weekly streak since last October. The Russell 2000 climbed for a sixth straight week and added 19, or 2.6%, to 753. It has rallied 13.2% during this stretch, its first six-week streak since late 2005.
Commodities Update: Speculators led the rush to sell commodities, spurred by a surging dollar and dimming economic prospects. Gold fell $72.70, or 8%. Silver tumbled 16% to a 9-month low. Oil fell $1.43 to $113.77 a barrel. By Friday, the dollar had appreciated for 11 straight days against the euro, and it has never strung together a 12-day run. The euro fell 3.28 cents for the week to $1.4688, its lowest since late February. The dollar’s years-long decline had lured many speculators to buy oil, metals and other commodities.
Global Economy Cooling: As expected, Japan and the euro zone said their economies shrank in Q2 amid sluggish exports and weak domestic demand. Meanwhile, there were cooling signs in red-hot China, including industrial output, auto sales and oil imports. The reports helped push a big dollar rally and commodities sell-off.
Retailers Rise On Results: Wal-Mart and Urban Outfitters both beat Q2 views for higher profits, with the discount giant offering value on staple goods and the apparel chain staying fashionable. J.C. Penney’s and Kohl’s earnings fell, but shares continued to rise off lows, as lower oil prices fueled spending hopes. Also, overall retail sales fell 0.1% in July, up 0.4% ex autos.
Solar Firms Shine On News: Chinese solar wafer firm LDK surged 28% for the week after blowout Q2 results and a solid outlook. Photovoltaic cell firm JA climbed 9%, helped by its Q2 results. SunPower shot up 18% Friday on a big contract from utility PG&E.