Daily Investment Interpretations

July 7, 2009

2009-7-7:  It looks to me as though it's time to sell. The Dow and the Nasdaq Composite closed below their sell thresholds of 8200 on the Dow and 1750 on the Nasdaq. The S&P 500 hit its breakdown level of 880,before closing up one point at 881.
    The NASDAQ Composite fell
41.23 points (-2.31%) to 1,746.17, the Dow jettisoned 161.27 points -1.41%) to close at 8,163.60, and the S&P 500 dropped 17.69 points (-1.97%) to end at 881.03  Oil fell  to $62.12 a barrel, while gold dropped $5 to 929. The VIX added 1.85 to 30.85. I'll get a reading on today's action before tomorrow's opening, but as of tonight, it looks to me as though any technical bounce should be taken as an opportunity to go to cash.
    Michael Ashbaugh concluded this morning that the bull trend was still intact because the
S&P 500 was still above its 200-day moving average: Trendless market fuels debate, but that was before this afternoon. 

2009-7-7 (Morning):
  Today's market action doesn't look good. The flash point for selling is a close below S&P = 880 and 8,200 on the Dow, and 1,750 on the Nasdaq Composite... a fraction of a percent below where the indices now stand. I have just sold (at a $12 loss) the 400 shares of the Wilderhill Green Energy ETF that I bought yesterday. Today will be an interesting day in the marketplace. My investment advisory service is watching the head-and-shoulders pattern that seems to be developing. This article, Where'd the stock rally go?, helps to allay panic, and put what's happening in perspective. It argues that the free-fall is over, and that things are gradually improving. (The worse things become in the present, the easier it will be for year-over-year comparisons to eventually begin to improve.)
    From an economic standpoint, the continuing layoffs are generating increasing concern. And the first round of the Obama Administration's fiscal stimulus program won't begin to take hold until September:
And more on Bernstein-Romer. And by now, it appears that a second stimulus package is going to be necessary: U.S. must be open to second economic stimulus: Hoyer.
Paul Krugman points out today that the “paradox of thrift”... the idea that in the long run when everyone tries to save more, they end up saving less because of increased deterioration in Gross Domestic Product... really is happening as he forecast on February 2
nd: http://krugman.blogs.nytimes.com/2009/02/03/paradox-of-thrift/.
    The Halter China index, HXC, has fallen farther today than it rose yesterday, and is kissing its 50-day moving average (which is still moving up)