Daily Investment Interpretations

January 21, 2010

2010-1-21:  As of today's close, the "sell" decision is still looking timely. The NASDAQ Composite lost 25.55 points, (-1.12%) to close at 2,265.70, the Dow plunged 213.27 points (-2.01%) to close at 10,389.88, and the S&P 500 dove 21.56 points (-1.89%) to 1,116.48. Oil ended the day at $75.98 a barrel. Gold doffed another $10 to end at $1,103. The VIX shot up 3.58 to 22.27.
    The headlines read: Unpleasant surprise in first-time jobless claims, and Paul Krugman is saying, "No reason to panic", but that "Quite aside from everything else going on, the economic recovery isn’t looking very good."
    Right now, the S&P 500 has violated its 25-day moving average and is touching its 50-day moving average. The Dow has broken below both of those moving averages. The NASDAQ has closed below its 25-day average, but is still comfortably above its 50-day average. But my advisory service has issued a "sell" recommendation, and I'm now about 30% in cash.
    The Cabot China and Emerging Markets Report is recommending selling a couple of stocks but holding the rest and even buying two Chinese stocks.
    Weidner sees a return to sanity in banking     

2010-1-21 (Mid-Afternoon):  My investment advisory service has just flashed a "sell" signal. I'm going to be moving into cash.
2010-1-21 (Late Morning):  The stock market is being driven downward by programmed trading caused by the dollar breaching an important upside barrier against the Euro. Traders, especially at hedge funds, who have borrowed money that has taken advantage of the relatively low cost of the dollar and then reinvested that money in stocks and commodities are dumping their stocks and commodity contracts because their computers have issued warnings that they must cover their bets that the dollar wouldn't rise.
    What's at risk here is the possibility of the unwinding of the dollar carry trade.
    Stay tuned. If the markets continue to fall, it may be time for a "sell" signal later today. (Personally, I'm also waiting for today's Cabot China and Emerging Markets newsletter update. So far, there haven't been any emails advising its subscribers to sell.)