Daily Investment Interpretations

August 11, 2009

2009-8-11:  The indices declined again today. The NASDAQ Composite fell 22.51 points (-1.13%) to close at 1,969.73, the Dow shrank 96.5 points (-1.03%) to close at 9,241.45 and the S&P 500 dropped 12.75 points (-1.27%) to end at 994.35. Oil fell to $69.36 a barrel, while gold doffed $13 was unchanged at $948. The VIX ended the day up at 25.99. 
    The news is quite negative, in keeping with a falling market... which brings us to the question: which comes first: the bad news or the falling markets? Given the obscure gurus whom the media quote to get a foreboding forecast, I'm inclined toward the idea that the bad news is what comes first. Be that as it may, the markets are overextended after their rapid recent run-up, and a retrenchment is in order.
    My investment advisory service is warning of a technical breakdown in the NASDAQ Composite index, which failed to confirm the recent highs in the Dow ad the S&P 500. It called for a wait-and-see stance regarding whether investors bought on the dip today. (My guess is that they didn't, but I should hear more about that in the morning.)
    Michael Ashbaugh's Tuesday technical analysis, S&P 500 hesitates at major resistance, opines that this rally still has legs. (He treats the technical breakdown in the NASDAQ Composite as simply a range-bound correction after a momentous run-up.) Another analyst argues that the Rally has 'just begun' (video). (One of his encouraging indications is the fear and pessimism that's allowing these markets to "climb a wall of worry".) The Forecaster of the Month: Slow, steady recovery. And finally, Paul Farrell, in Forecasting next meltdown, predicts a stock market rise during 2010 and 2011, followed by an even greater meltdown in 2012 than the current 2008-2009 debacle.
    On the commodities front, China's material imports at record.