Daily Investment Interpretations

Tuesday, March 17, 2009

2009-3-17:  The markets climbed smartly today. The NASDAQ added 58.09 (4.14%) to 1,462. The Dow swelled 178.73 points (2.48%) to 7,396, and the S&P 500 increased 24.73 (3.21%) to end the day at 778. Oil closed at $48,78, while Gold subtracted $5.20 to reach $916.80. The VIX fell 2.94 to 40.80.   
    Perhaps the biggest single piece of news tonight is in an article that appeared yesterday, Foreign debt purchases fall sharply in January. What this article explains is that foreign purchases of U. S. debt fell from +$35 billion in net purchases in December, 2008, to -$43 billion in net sales in January, 2009. Coupled with last week's warning by the Premier of China, this suggests that foreign interests may not be willing to buy our $2 trillion in debt issuance that's shaping up for 2009. Of course, other factors might also enter in. Last October saw a panicky flight to U. S. Treasuries. This tide might now be going out again. In the meantime, the government is talking about buying Treasury bonds to keep their prices high.
    Today's other news item was an unexpected rise in new housing starts, fueled by new apartment buildings.
    Todd Harrison is suggesting that 800 might be a turnaround level for the S&P 500. However, the indices should retest their March 9th lows even if this were the start of cyclical bull market. (As I mentioned last week, investors are sufficiently convinced that this is just a bear market rally that the market will have to rise, with performance anxiety triggering a buying stampede, until the bears capitulate.) If the retest of the March lows is successful, there should be time and opportunity to buy into the market.
    Michael Ashbaugh: Rally effort on firm footing.
    The IMF cut the forecast for 2009 Chinese growth to 6.5% today. That's a lot better than what the rest of the world is anticipating. China may be the next stop for investors.