Daily Investment Interpretations

October 29, 2009


2009-10-29 (Early Afternoon):  The S&P has climbed as much as 20 points. Looking at the patterns of previous dips since last March, generally, when the markets rise as strongly as this after a dip, they continue to rise for the next week or so. Among those cases where they haven't (in May and in June-July), there have been a few days at the top followed by a retesting of the lows. But more often than not, strong rises out of dips have been followed by a few more "up" days before a "down" day occurs. And the "end of the year" performance anxieties must still be there. It's time for dip buyers to do their thing.
    With stock futures up and the GDP coming in stronger than expected, I bought back into QLD before the close this morning. It was (and still is) a major gamble. It remains to be seen whether my move will pay off. But I don't have very much money invested in QLD, so I shouldn't lose too much money if QLD sinks again.

2009-10-29 (Noon):
  The markets are having their "dead cat bounce" this morning. The growth in GDP was greater than expected. (The next argument will be that this increase in GDP is the result of the replenishing of inventories, and that the economy is dependent upon government subsidies and can't sustain this recovery.  However, Businessweek and other sources are arguing that the swift adjustments made when the economy was sinking will support a durable recovery. But stock market mavens can make their fortunes only if the markets are manic-depressive.) The only question is whether this bounce is only a bounce, to be followed by further deterioration, or whether it represents a market turning point. Right now, with the S&P up 17 points and the Dow up 135 points, the chart pattern is hinting a turnaround to me.