Stock Market Commentary for 8/22/08

Thursday saw a mixed performance by US equities, with the DJIA closing 12 points higher, while the Nasdaq Composite was down 8 points. One of the most stunning developments was the rise of oil futures back up to 121 dollars a barrel from as low as 111 dollars a week ago. This price surge was attributed largely to the Russian invasion of Georgia over the past week.

These have been challenging times for investors. I see that the CGM Focus Fund, one of the best performing US mutual funds, has given up nearly 20% of its value since early July. Fannie Mae and Freddie Mac, the two largest US mortgage loan holders, have given up nearly 75% of their value during the same period. The ultra-short exchange-traded fund SKF also gained another 2.5% today, reflecting continuing negative sentiment towards the financial sector. Our own Viable Acquisition Index is now back down into the red danger zone with a reading of only 47 for Friday's open, and equity futures are also negative at this time for tomorrow. Seeing markets drift lower reminds one of the proverbial frogs cooking in a pot, not realizing that things are getting warmer until it is too late.

As always, there are bright spots as well. Bulletin Board stocks EMDH.OB and LBAS.OB gained 11% and 14% respectively on Thursday. Also, all of the stocks in our computer-generated HHI Index have at least doubled over the past year in spite of the overall market challenges. To revise an old proverb, everything that goes down must eventually come up. When markets finally do recover, there will be a lot of money piling in from the sidelines.

Best wishes, GH

The HHI Index for Friday, August 22, 2008 is as follows:

+7 (very strong buy) — ROCK, /

+6 (strong buy) — MED, /

+5 (buy) — LDG, FFKT, /

+4 (hold) — PARL, ENG, NWY, IKN, THMD, NTES, /

Daily Stock Market Commentary is accompanied by a daily Bible Reflection.

• Today's Bible Reflection: Reflections on Psalm 47
• Yesterday's Stock Market Commentary
• Yesterday's Bible Reflection: Reflections on Psalm 46
• What is the HHI Index?

_{The HHI Index is a list of stock ratings derived from a proprietary computer model and are being shared as a public service with no guarantee of or responsibility for trading success. Readers are strongly encouraged to do their own research and to exercise caution in all trading activity. Click here for an explanation of the HHI Index.}

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