Daily Investment Interpretations

May 15, 2009

2009-5-15:  Stocks slid this day, with a selling surge at the end. The NASDAQ Composite lost 9.07 points (-0.54%) to 1,680.14, the Dow skidded 62.88 points (-0.75%) to 8,268.84, and the S&P 500 relinquished 10.19 points (-1.14%) to close at 882.88. Oil dropped $0.60 to $56.34. Gold added $3 to close at $931, while the VIX increased 1.75 to 33.12.
    The crucial story in these numbers is that the Dow and the S&P 500 have continued to slowly retreat toward their support levels (875 for the S&P 500), so for them, the pullback is still in play. The NASDAQ Composite bottomed on Wednesday at 1,664.19. and closed today about 16 points or (1%) above Wednesday's low.
    What should we do? My opinion is that it makes sense to wait and see how much farther this pullback will go.
    Mark Hulbert has published, An encouraging straw in the wind, in which he observes that greed has finally lost out to fear, at least as evidenced by a majority of "investment gurus" who "devoted their talks and workshops to managing risk and avoiding further losses rather than how to make a killing." He notes that newsletter publishers "are incredibly sensitive to which way the wind is blowing among individual investors". From a contrarian viewpoint, this is bullish.
    My excellent investment advisory newsletter ponders the fact that most professional investors are expecting a shallow pullback. From a contrarian standpoint, could that mean that this dip will go deeper than the bulk of the "smart money" expects?
    As of Thursday, the Cabot China and Emerging Markets Report was still  recommending increased exposure to Chinese stocks.