Wall Street Greek: Quadruple Witching & Korean and Iranian Scare

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Quadruple Witching

Markets overseas recovered some of the week's losses today, and the same has been seen to start the day in the US. However, Quadruple Witching, a Korean missile scare and Iranian unrest threaten to destabilize stocks' gain before the day is through. The fuel behind the rallies overseas and at home was piped in with positive economic data released yesterday. Also, the rising stock market trend of the past few months is seeking technical truth following the week's retracing on skepticism. We remind readers that we again correctly advised near-term sale of equities in a timely manner. We believe the market wants to rise before and with economic stabilization and recovery, and the long-term trend will reflect that. However, we will see periods of retracing and reevaluation. Look for the return of our "Week Ahead" copy to provide insight into the coming trading period.

Markets Overseas

Markets reevaluated things in Asia this week, just as they did in the US. Still, a portion of the week's losses were retaken on Friday, as the MSCI Asia APEX 50 rallied 0.53%. JP Morgan's (NYSE: JPM) upgrade of Japanese banks surely played a role, as the NIKKEI 225 gained 0.85% today. Yesterday's positive economic reports in the US also boosted the dollar, and further restored hope for global recovery. That said, the Wednesday departure from North Korean port of a suspect vessel looks to dampen enthusiasm beyond the day. North Korea attempted to test fire a long range missile on July 4th three years, and the US anticipates it will do so again this year. The volatile and unpredictable regime has US armed forces on alert, and prepared to intercept any missile launch in the direction of Hawaii.

Asia:

MSCI Asia APEX 50: +0.53%

Japan NIKKEI 225: +0.85%

Hong Kong Hang Seng: +0.81%

China CSI 300: +0.74%

India BSE SENSEX 30: +1.8%

European markets are gaining today as well, also recovering a portion of the week's losses. Global markets have reevaluated valuation and raised skepticism regarding the pace and sustainability of global economic recovery in a potentially inflationary environment in the years ahead. However, the UK's largest homebuilder, Taylor Wimpey Plc, today reported a gain in its order book, lifting the FTSE 100 a powerful 1.51%. Even so, we view today's recovery a temporary phenomenon, and something we see unlikely to follow through this coming week.

Europe:

DJ Euro STOXX 50: +0.53%

UK FTSE 100: +1.51%

France CAC 40: +0.58%

Germany DAX: +0.16%

(Prices as of hour of publishing, which may not be the close)

Supreme Leader of Iran's Address

In an unprecedented address, Iran's Supreme Leader, Ayatollah Khamenei, told the citizens of his country that the recent presidential election was not rigged and that protests should end. He said that protesters would be held responsible for their actions against the country's free election. Khamenei took a position your author did not expect. We thought he might sooth and refocus the populous on the common faith, and on the intended peaceful nature of God fearing peoples. We thought he would smooth over things more than he did, but he effectively showed the debate to be about the results and not the ruling system. However, he argued rather weakly that the election results could not have been rigged based on their sheer numbers and on the margin of victory. There remains strong possibility that the often reported moderate and modern people of Iran may finally rebel against their non-elected Theocracy. This is a critical moment for Iran, and may decide whether their nation is later entangled in messy war with the west or not.

Quadruple Witching

Markets are expected to be especially volatile today, as contracts for stock index futures, stock index options, stock options and single stock futures (SSF) all expire simultaneously. Quadruple Witching is a somewhat rare event, occurring only four times a year - on the third Friday of March, June, September and December.

Corporate Earnings Reports

The light EPS schedule includes CarMax (NYSE: KMX), Focus Media Holding (Nasdaq: FMCN), Nobility Homes (Nasdaq: NOBH) and a handful of foreign firms.