Daily Investment Interpretations

July 2, 2009

2009-7-2:  The markets fell 2% to 3% today. The NASDAQ Composite fell 49.2 points (-2.67%) to 1,796.52, the Dow lost 223.32 points (-2.33%) to close at 8,280.74, and the S&P 500 surrendered 26.91 points (-2.91%) to end the day at 896.42  Oil fell  to $66.37 a barrel, while gold dropped $10 to 931. The VIX added 1.73 to 27.95.
    Both my technical advisory services and Cabot's China and Emerging Markets Report are taking today's job news in stride, and consider this a good time to buy stocks at reduced prices.

2009-7-2 (Early Afternoon)
Today's jobs reports have spooked the markets. Initial unemployment claims came in at 614.000 for the week ending June 27th, with the four-week average running 615,250.
On the other hand, the moving average of continuing claims dropped a pittance to 6.75 million. The non-farm payroll data is showing a drop in non-farm payroll losses,

although today's numbers represented a significant jump in the unemployment numbers for the first time this year. The concern here is that continuing escalations in unemployment could derail or at least vitiate the recovery.
    My technical advisory service warns that a head-and-shoulders pattern could be setting up in the major market indices. (At the moment, the S&P 500 index has dropped below its 50-day moving average.) On the other hand, the threat of economic Armageddon seems to have passed, and a recovery seems to be in the cards. And as I've mentioned below, the economy isn't going to contract by 40%, which is what the stock market is currently discounting.
    My advisory service took special note of the little-heralded good news that was announced yesterday, and concludes that
a recovery is still on track, in spite of all the sturm und drang in the news and the daily turbulence. It still recommends buying on dips.
    This week's Cabot China and Emerging Markets Report should arrive in my in-box this afternoon. However, the Halter China Index, at 4,641, is currently above both its 50-day (at 4,500) and its 200-day (at 3,650) moving averages, and the 200-day moving average has flattened out, prefatory to moving up, so I would imagine that their recommendation will be to

take advantage of this pullback to buy more of their recommended stocks.