Daily Investment Interpretations

July 16, 2009

2009-7-16:  The indices rose approximately 1% today, with part of the rise attributed to economist Nouriel Roubini ("Dr. Doom"). Dr. Roubini is calling for an end to the recession by year's end, as has been the case from the get-go. The NASDAQ Composite gained 22.13 points (1.19%) to 1,885.03, the Dow added  95.61 points (1.11%) to close at 8,711.82, and the S&P 500 advanced 8.06 points (0.86%) to end at 940.74  Oil ended the day up slightly at $62.15 a barrel, while gold lost $4 to $934. The VIX dropped 0.47 to 25.42.
    The Cabot China and Emerging Markets Report was tossing its horns tonight, and recommending two new stocks.
2009-7-16 (Early Afternoon):  My investment advisory service still cautions that stocks may be trading in a trading range, and that there is strong overhead resistance waiting at 950. In the meantime, I have just read an updated economic forecast from Zacks.com. The unemployment rate currently stands at 9.5%. Zacks is predicting that before this downturn ends, unemployment rates will peak at 9.6%, with the economy bottoming this quarter, and starting slowly back up next quarter. Their forecast of eventual 9.6% unemployment floors me. Do they think that the unemployment rate is going to drop to zero within the next week or so? Even at the present level of initial jobless claims, the unemployment rate should hit 9.6% within two weeks. Only a step-function fall to zero two weeks from now, followed by no additional layoffs for the rest of this year and 2010 and 2011, would hold the unemployment rate to 9.6%.
    It doesn't give you a whole lot of confidence in their other prognostications.
    With the markets digesting yesterday's gains, it's not hard to sit on the sidelines today and wait to see what's going to happen next.