Daily Investment Interpretations
May 12, 2010
The markets rose about 1½ % today: Stocks
clawing way back. The NASDAQ Composite was up 49.71
to 2,425.02, the Dow scampered up 148.65
and the S&P 500 added
to end at 1,171.67. Oil closed a little lower at $75.65 a barrel,
while Gold hit a new all-time high at $1,243: Gold
reaches for the stars. The VIX fell 2.8
The Dow and the NASDAQ Composite are just now penetrating their 50-day moving averages. The S&P 500 hasn't quite made the crossing just yet.
Mark Hulbert discusses the Debate about May 6 dive misses the point . He cites work that predicts 10% daily drops in the markets have occurred about once every 6¼ years. They happen when big institutional investors get spooked about the markets and stampede out of the marketplace.
It's curious that the dollar is rising, which should make the price of gold and oil fall, but the price of gold is rising faster than a rising dollar can cheapen it. A "flight to safety" is driving the dollar higher, and is also running up the price of gold: Why gold is breaking records.
This is the wall of worry that the stock market climbs. Things must be scary enough that institutional investors are frightened enough to sell stocks at a loss. (I have to admit, though, that when Paul Krugman didn't know whether or not European governments would be willing to take the bold, decisive steps necessary to keep the Eurozone from splintering, it was time for me to worry, too.)
Todd Harrison has written a "Minyan Market Musing": The war on capitalism.
Market Edge: Behind bear-market rallies (video)
Market futures are off a tad tonight.