Daily Investment Interpretations

October 20, 2010


2010-10-20 (Wednesday Night):   The markets rose today about ⅔rds as much as they fell yesterday: U.S. stocks rally on earnings, bargain-buying, and Dow holds triple-digit gains. The NASDAQ Composite climbed 20.44 points (0.84%) to 2,457.39  The Dow regained 129.35 points (1.18%) to close at 11,107.97, and the S&P 500 rose 12.27 points (1.05%) to end at 1,178.17. Oil dipped to  $79.52 a barrel, while Gold shrank to $1,334. The VIX fell 0.84 to 19.79.
    The "Beige Book" minutes of the last Federal Reserve meeting were released today: Fed sees modest growth. Third-quarter earnings seem to be doing strikingly well.
    Fed's Lacker Isn't Convinced of Need for QEII
    My investment advisory service was impressed with the upward action this morning, but would like to see a close above 1,185 before jumping back into the marketplace. My advisory service says that yesterday's action suggested the beginning of a second wave of the credit crisis. But today, Bank of America CEO Brian Moynihan reassured shareholders that the Bank of America could and would ties up the New York Fed for years in court.
    Maybe the most important piece of news of all is that the economy is continuing to grow. This is probably happening because of overseas earnings by large American multinationals. Nothing positive is happening on the domestic unemployment scene.
    One of the takeaway messages I'm sending myself is that the emphasis in our financial media is entirely on what's happening within the U. S., and that's the wrong mouse hole to watch. We need to watch and invest in the global markets. 
    Mark Hulbert writes: The insiders have been big sellers recently. He ponders why this might be. "How, then, to translate the insiders’ recent behavior into a trading strategy? Moreland, for one, is choosing to remain bullish: 'As negative as insider buy/sell ratios have become, we ... fully expect them to get much more negative in the coming weeks — just as they did time and again during the bubble years when something about the seemingly robust U.S. economy spooked executives.'
     It's a zero-sum economy  This article concludes that with such a slow-growing U. S. economy, for every winner, there must be a corresponding loser.
     Treasurys rally, pushing 2-year yields to new low