TASE drops below 1,000: Merrill Lynch analyst Haim Israel: The TASE is correcting, and it will last a few weeks.

Posted on: Tue, 03 Nov 2009 16:32:00 EST

Symbols: TEVA

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Nov 03, 2009 (Globes - McClatchy-Tribune Information Services via COMTEX) --
TEVA | Quote | Chart | News | PowerRating -- The Tel Aviv Stock Exchange (TASE) fell below 1,000-point psychological level in early trading today. The Tel Aviv 25 Index is down 1.3 percent to 992 points, and is down 6 percent over the past week, and the Tel Aviv 100 index is down 1.3 percent to 928 points.

Only four Tel Aviv 25 are up, and only slightly: Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA), which published its third quarter financial report today, and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) are both up 0.3 percent, while Paz Oil Company Ltd. (TASE:PZOL) is up 0.2 percent and Osem Investments Ltd.) (TASE: OSEM) is up 0.1 percent.

Merrill Lynch analyst Haim Israel told "Globes", "A lot of money that made high returns in the past few months is now leaving risky investment instruments. There are also expectations of a U-turn in the dollar, which should depress the TASE for a while."

Haim Israel attributes the dollar's current weakness to higher prices for commodities and the rise in yields on US government bonds, which also charged the stock market rally. "The trend has now reversed. A lot of money is going back to US government bonds because their yields have risen, making them more attractive. This in turn strengthens the dollar. I believe that this correction will continue for a few weeks, and I still believe that there will be an end-of-year rally. There's a lot of liquidity outside the market."

Two weeks ago, a TASE trader told "Globes" that the piggishness is back in the market, and he predicted a correction. Following the 6 percent drop in the Tel Aviv 25 Index over the past week, voices are now openly talking about a correction.

One traded told "Globes" today that everything depended on the public and the US. "If the public panics and runs away after a few days of declines, it won't be good. Like always, we depend on the US as well. I don't recommend taking on more risk right now."

Merrill Lynch was bought by Bank of America in 2008 and is now a wholly-owned subsidiary of the bank.

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