Daily Investment Interpretations

January 29, 2010

2010-1-29:  Once again, the market indices fell steeply closing at another new low for this dip (correction?). This dip now enjoys the dubious distinction of being both the deepest in absolute numbers (76 points on the S&P 500... about 6%... though not the deepest dip percentage-wise) since the market bottomed last March.  The NASDAQ Composite relinquished 31.65 points, (-1.45%) to close at 2,147.35, the Dow dipped 53.13 points (-0.52%) to close at 10,067.33, and the S&P 500 subtracted 10.66 points (-0.98%) to 1,073.87. Oil closed at $72.89 a barrel. Gold ended at $1,083. The VIX rose 0.89 to 24.62.
Today's news was good: Fourth-quarter GDP was up 5.7% in the third quarter--1% more than expected, and consumer confidence showed a welcome gain. The consensus forecast for GDP growth going forward is about 3&. The 2009 GDP came in at $14.3 trillion, so a 3% gain would put it at $14.7 trillion by the end of 2010. So why didn't the markets rise? Could it have been because of a rising dollar, forcing further unwinding of the dollar trade, and selling of assets to cover hedge fund bets against the dollar? There's no discussion in the news tonight explaining what's going on. 
    The Cabot's China and Emerging Markets Report is still 50% in Chinese stocks and recommending the purchase of two Chinese stocks... this, after the Halter index has broken far below not only its 50-day moving average but also its 200-day moving average. I sold the remainder of my Chinese stocks today--about 15% of my portfolio. I'm now about 72% in cash.
    Mark Hulbert has written January by the numbers, showing that the track record of the January barometer isn't all that good.