S&P 500 1,128.55 +.41%
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Bottom Line: Last week's modest rise was a nice win for the Bulls considering recent gains, violence in Iraq, rising energy prices and hurricane fears. Energy-related stocks and homebuilders were leaders. Most sectors and stocks rose again, while volume and measures of investor complacency remain a concern. I continue to expect oil prices to decline to around $35/bbl. during the fourth quarter, however profitability at energy-related companies will remain high. I expect the Amex Energy Index(IXE) to break to all-time highs during the final quarter of the year. As well, diminishing inflation fears are leading to falling interest rates. The average 30-yr. mortgage rate has now fallen 59 basis points from its May highs. Lower rates, better job prospects and an increasing stock market should help spur home sales and thus homebuilding stocks to all-time highs during the fourth quarter. Finally, Chinese ADRs broke from the trading range they had been trapped in since April. Investors are anticipating a stabilization or acceleration in Chinese economic growth. This should also boost world growth as China had been a recent drag.
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