Correction? Resurrection? or Just another Day?

Before I start today, I must confess I went overboard with my expected lows on the Dow. In the hindsight, I believe it should have been 10,500 instead of 11,000. And I base myself on my other assumption on the Indian stock market where I believe the lows maybe around 11,600 (with a remote possibility of 10,500). Considering that in the recent past, our markets have shown a penchent to scale up or retreat at approximately twice the rate of the Dow, a figure of 10,500 (with a remote possibility of 10,000) is perhaps more appropriate. Though as I have said for the BSE, and so also for the Dow I would say, my personal belief at this point is that it may be difficult breaking 10,500 if at all.

So now, Oil is down (10% in four days - is it a correction as they say?), Intel has scored a comfortable home run and Wells Fargo, one of the most troubled financial of the mortgage road shows of the past year has done well. Bodes well for the markets on the whole. The Dow was up 276 points. But is it sustainable?

Just yesterday, news was in that the greenback was on the decline on the back of speculation of a little more fallout of the sub prime saga. There has been no denial of that speculation so far. And there is no denial that inflation is denting pockets everywhere. Also, I hear today that the U.S. `Misery Index' (created by one gentleman named Arthur Okun) has Climbed to a 15-Year High. There is no certainity that Oil will not jump back (and I harbour the same view) though one of those macromenspeakmore comment from a very influential investor (Mr. Soros, was it you?) was that it may stabilise near 120 by early next year. 120?? Ummmmm, I disagree Sir. Firstly, demand for oil is always uphill (never mind the temporary slump in demand currently, we all wish to use more and more -don't we?), the supplies are limited (with a spike up every now and then - thanks OPEC, but still Mother Nature can't prepare even a percentage more in the time we would have depleted it by 90 percent), and early next year would be the peak of winter in most of the oil guzzling world. A mini peak time for oil demand as well (not as much as the summers though, I agree).

Doesn't bode too well for the US I would say. My outlook on the EUR and the Yen......remains more or less same as yesterday. Eur 1.57 to 1.59 with a bias on 1.59 and JPY levels upping to the 105 mark with a range of 104 to 106 .