Hey, an uptrending week. We finally had one. With the magic decline of the price of crude oil, the Market reacted very positively. The question is…can this keep going or was it just a shot in the dark?

Here’s the problem…the Market is now completely driven by crude oil. When the price of crude oil goes down, the stock market goes up. When crude oil goes up, the stock market goes down. To make an entire stock market dependent upon oil, in fact the entire economy dependent on oil, puts the country in a vulnerable position.

While the stock market went up this week, financial stocks faced more huge problems. This week Fannie Mae unveiled a $2.3 billion dollar loss. Freddie Mac’s loss was a cool $800+ million. Just a couple of weeks ago Treasury Secretary Paulson was telling Congress that these two firms were ok, well capitalized, and he needed new legislation on the outside chance they have a problem. Now they have a problem.

Three brokerages, UBS, Merrill Lynch, and Citicorp, revealed this week that they were going to pay nearly a collective $60 billion, as they bought back auction rate securities from their investors. Citi was also paying a hefty fine of $100 million for its involvement. The other banks, Wachovia, Bank of America, etc. are not far behind. This is a $330 billion debacle that needs to be fixed now.

Next week we will have a number of opportunities to trade. We’ll see the CPI numbers, retail sales, and Michigan sentiment. Based upon the same store sales data that was released last Thursday, probably the retail sales data will not be great.

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