Halloween Explained

Part of the weakness in US stocks last Friday may be attributed to Citigroup's weakness. Citi's shares dipped 5% on rumours that it may still have a $10bn 4Q charge on its deferred assets. A market that has been robust will look for any excuse to correct. Bearing in mind that the markets there gained over 200 points on news that the US economy may have grown at 3.5% in the third quarter - surely things do not go from OK to so-so overnight. Btw, since when has Citi's problems been a focal point for the markets. Everyone knows that Citi has its own set of problems to deal with, plus why the worry, it has the government as a shareholder. We all also know that Citi has seen a lot of capital being decimated, written down and the need for them to raise an enormous amount of fresh capital - what's new, nobody expects Citi to be like Goldman or JP Morgan in present times, do they???

Another possible reason for the Friday sell down was probably the year end tax considerations by mutual funds whose fiscal year ended in October month end. Some fund managers may have been selling to lock tax losses. All in, people should look beyond just a dip and scare themselves silly ... look deeper to get a sense of the underlying sentiment and fundamentals.