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Stock Market Summary - July 17th 2008 - Google and Microsoft say "oops"

Today was another wild day with a rally right out of the gate to only be quickly killed when the Philadelphia Fed data was released at 10:00am. It showed a continuing decline in the manufacturing industry with more layoffs and lower outlook for the future. That news sent the markets quickly and then they rallied once again. These bear market rallies can end in an instant.

And the bear market rally may have hit a big speed bump tonight when Google (GOOG) and Microsoft (MSFT) released their earnings and they were not liked one bit by Wall Street. Nasdaq and the S&P 500 futures dropped significantly upon the release of the news. At this time it appears that Friday’s open will be significantly lower. But, we are likely to see some extremely wild swings with options expiration put in the mix as well.

Merrill (MER) also reported and they experienced losses of $9.75 Billion is the second quarter. And it was not long before another CNBC reporter said that this must be the ‘kitchen sink’ thrown out the window. I have lost count of how many times the phrase "kitchen sink" has been reported by the media.  Merrill closed today at $30.79 and after they reported their significant losses they dropped to $28.65 in after hours trading. One other bit of news out of Merrill was that they have sold their prized stake in Bloomberg LP for $4.4 Billion. They must be having a hard time if they are having to sell their prized possessions to raise cash. I wonder how long it will be before we see office furniture and coffee pots for sale on Ebay from other financial institutions to raise capital.

Capital One Financial (COF) also reported and here again it was not a rosy picture. The CEO stated during the conference call that losses in just about all divisions of their business would see additional declines as the year progresses. What does their television commercial say "What’s in your Wallet?" I guess we should turn the tables and say to them "What’s in THEIR wallet?  Apparently less then they want.. ha ha

We are at the early stages of a possible bear market rally. A lot has happened over the past few days with the Fannie and Freddie catastrophe in the making, the incredibly stupid attack by the SEC on the ‘naked short’ issue, and wild price swings in the currency markets. It is enough to make ones head spin.

There was also a report today by the media that "we have left the bear market". They are referring to the magical 20% number that has been tossed around for many decades as the criteria for a bear market. The fact is we have been in a bear market since last November and we are still in that same bear market to this day. Bear market rallies do not negate the primary trend of the market which remains down.

Charts to follow shortly…

Some market humor: