Daily Investment Interpretations

June 22, 2009

2009-6-22:  The markets melted down today. The NASDAQ Composite backed up 61.38 points (-3.35%) to 1,766.19, the Dow lost 200.72 points (-2.35%) to close at 8,339.01, and the S&P 500 parted with 29.19 points (-3.06%) to end the day at 893.04 Oil fell $2.62 to  $67.06 a barrel, while gold dropped $15 to 921. The VIX climbed 3.18 to  31.17.
    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.

6-22 (Noon):  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.)

6-22:  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 opportunity. 
    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.