June 22, 2009
The markets melted down today. The
Composite backed up
close at 8,339.01, and the S&P 500 parted with 29.19
to end the day at 893.04.
a barrel, while gold
Today's stock slide seems to have been driven by an
updated forecast by the World Bank that the world's economies will
contract 2.9% this year, up from a forecast three months of a world
economic contraction of 1.7%. Even so, today's fall was eclipsed by a
46-point fall on April 20th.
At 893, the S&P 500 is 7 points below its 50-day
and 200-day moving averages.
Now that the S&P has fallen below 900, the next "line in the
sand" is at 880.
Cabot's advisory service still sees this as a cyclical
bull market, destined to last some months.
I sold my riskier, 2X and 3X positions this morning,
because these are high-risk bets I made on the market. I'll buy them back,
hopefully at lower levels than where I sold them. But I don't think that
someone else who's holding unleveraged equities needs to sell at this
point, since the intermediate market trend is still up. If the S&P 500
falls below the 900 level and stays there long enough to tilt the 50-day
moving average downward, it may be time to sell, but that hasn't happened
yet. So far, this decline falls within the envelope of typical bull market
corrections. (The fluctuations are getting smaller, suggesting that this
market is scraping along a bottom.)
The S&P 500 is kissing its 50-day and its 200-day moving averages,
currently sitting at S&P = 900. I have trimmed my riskier, more
aggressive positions this morning. With the S&P 500 having touched 900
this morning, this pullback has reached significant proportions. My
wonderful market advisory service is watching and waiting for a buying
The market is meeting some resistance at the 900 level.
So far, this pullback is no deeper than the pullback in May, nor have the
25-day and 50-day moving averages tilted downward. So far, the
intermediate trend is still up.