June 18, 2009
Cabot's China and Emerging Markets Report urges buying on this dip, as does my
market technical analysis service. Cabot's position is that this dip is long
bull bellows bravely. Furthermore, there seems to be a lot more skepticism
and pessimism than was present a few days ago, which seems to me to be a bullish
8,555.60, and the S&P 500 inched up 7.66
to end the day at 918.37.
a barrel, while gold
VIX fell 0.33
I highly respect the opinions of Prieur du Plessis and Todd
Harrison, who certainly knows inordinately more about the stock market than I
do. At the same time, I have to choose among advisors with differing advice. My
choice at the moment is slightly in favor of this pullback being a temporary
correction, but the ultimate arbiter will be the actions of the market indices.
The S&P 500 has closed for three days now below its 25-day moving average,
but is still above its 50-day moving average, and is about 5 points above its
200-day moving average. The Chinese index FXI is right at its 25-day moving
average, but it's about 6% above its 50-day moving average.
The crucial point is that stock prices are still relatively
cheap, with the S&P off 40% from its 2007 high, and we're no as longer
worried about the world's economy collapsing.
The markets have risen modestly this morning. The cited reason is that
continuing jobless claims have begun to decline (slightly) and the Philadelphia
Industrial survey has shown the best levels since last September. At the same
time, this good news hasn't caused the markets to go into orbit. Prieur du
Plessis thinks the markets are topping, and will retreat 10% or more from here.
(They might retest their March 9 lows.) My market timing advisory is calling for
caution, but for buying on the dips.
I'll hear from the Cabot China and Emerging Markets Report
later today. (The Chinese index, FXI, is off about twice as much as the S&P
500, as is the emerging markets index, EEM. So much for the decoupling of