Wall Street Sector Selector Reports 2nd Quarter Profit

June 30, 2007

Wall Street Sector Selector Reports 2nd Quarter Profit


Hi, Friends,

Well, the 2nd Quarter is in the books and I’m happy to report that Wall Street Sector Selector recorded a second quarter profit of 6.73%, including both realized and unrealized gains.

The 2nd Quarter is history, and so it’s on to the “dog days of summer.”

The View from 35,000 Feet

Overall, the market is exhibiting marked weakness as of the end of June. This is typical seasonality but also is being aggravated by rising interest rates and oil at near record levels. The market is locked in a narrow range and all indications are that it will retest its 3 month lows in the weeks ahead.

For June, the S@P was down 1.78% but came in with a 5.8% gain for the Second Quarter. Year to date, the S@P is up 6%, the Dow up 7.6%, and the NASDAQ 7.8%. Since the markets historically average 7-8% per year, it might be fair to say that the best days of 2007 in the general markets all already behind us.

Looking ahead, Benjamin Reitzes, BMO Nesbitt Burns economist said, “Consumers seems to be buckling under the pressure of higher energy prices, the housing headwind and higher interest rates as real consumer spending increased a mediocre 1% in May and less than 2% for the second quarter.

After tax real incomes continue to fall while spending continued to rise and the personal savings rate dropped to -1.4% in April compared to 1.2% in May, the 26th straight month in which households spent more than their take home pay.

And, to further squeeze the consumer, the Fed Open Market Committee reported on Thursday that it “wasn’t convinced” that moderate core inflation would be sustained. Therefore, they kept interest rates steady and warned that higher inflation, not recession was the greatest threat to the economy.

All in all, not a pleasant recipe for the 40th Anniversary of the “Summer of Love.”


Sector Savvy

International sectors, particularly the Pacific Rim, continue showing dramatic strength, along with Emerging Economies and Energy. Profound weakness continues in Real Estate, Home Builders and Utilities as that sector responds to the threat of higher interest rates.

Greed and Fear Index

In the general markets, fear has taken control in the last few weeks, particularly since the big hit on June 7th in response to rising interest rates.

Our radar looks out 6-8 weeks, and the weather is decidedly stormy ahead.

This weekend we will rebalance the portfolio for July so watch for the Position Update to show up in your mailbox. As usual, we will be closing a couple of positions and letting a couple run.

Have a good weekend.

Your partner in prosperity,

John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wallstreetsectorselector.com

Fascinations:
Historical best sectors in July—biotech, gold, utilities
July starts Nasdaq worst 4 months of year
Expect extreme volatility around July4th