May 15, 2009
Stocks slid this day, with a selling surge at the end. The NASDAQ
8,268.84, and the S&P 500 relinquished 10.19
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
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
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
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.