Daily Investment Interpretations

January 20, 2009

2009-1-20:  The U. S stock markets shrank today (Inauguration Day). The  NASDAQ fell 88.47 points (-5.78%) ending at 1,441. The Dow lost 332.13 points (-4.01%) to close at 7,949. (The S&P 500 dropped 44.9 points (-5.28%) to 805. Oil rebounded to $38.74 a barrel, and gold added $15.30 to end at  $855.20 an ounce. The VIX vaulted 10.54 to 56.65. 
    I concluded on Friday that the rally wasn't dead yet. Now it is. Michael Ashbaugh's column today, Sentiment suggests further downside, says, "With last week's downturn, the bear market came back. That's partly because the S&P 500 violated the 850 level, confirming the primary downtrend. And against this backdrop, market sentiment remains complacent, suggesting further losses are likely. And perhaps most importantly, last week's break below the 850 mark was punctuated by 29-to-1 negative volume internals." He concludes that the S&P 500 50-day moving average holds at 875, and the Dow's at 8550. "On a break atop these areas, we can reconsider the bull case."
    The driver for today's plunge: Banks battered as sector matches worst day ever. 
    "Jamie Dimon, chief executive of JPMorgan Chase (JPM) predicted in an interview with the Financial Times that the US financial and economic crisis would worsen this year as hard-hit consumers default on credit cards and other loans. 'The worst of the economic situation is not yet behind us. It looks as if it will continue to deteriorate for most of 2009,' said Mr. Dimon. Elsewhere in the world, evidence mounted that the recession was widespread and deepening." This quotation comes from: Prieur Perspective: Risk Aversion Still Center Stage. Other informative articles are: Searching for Absolute Returns, Part I, and Searching for Absolute Returns, Part 2, and Op-Ed: Ghost Towns, Ghost Malls.