Daily Investment Interpretations

September 28, 2010

2010-9-28 (Tuesday Night):  The markets rose about % today. The NASDAQ Composite added 9.82 points (0.41%) to 2,379.59 The Dow gained 46.1 points (0.43%) to close  at 10,858.14, and the S&P 500 rose 5.54 points (0.49%) to end at 1,147.70. Oil was unchanged at  $76.47 a barrel, while Gold closed at $1,310. The VIX rose 0.06 to 22.60 (on a day when the stock market also rose!)

    Today's news was more negative than positive. 
On the plus side: 
    Home prices rise (but Home price growth slows in July). 

On the minus side:
     Consumer confidence falls,
     CEO optimism fades
     Anti-outsourcing bill fails Senate test vote
     Sovereign-debt worries tethering Europe, and       
     S&P warning deepens Irish political and fiscal crisis  "Coming a day after credit agency peer Moody's slashed its ratings on Anglo Irish's lower-grade debt, S&P's fresh warning sent Irish credit spreads to new highs and the cost of insuring Irish debt from default hit a new peak. The news also drove other euro zone peripheral spreads higher."
     Irish default insurance costs rise. It's important to remember that Ireland's fiscal austerity program, designed to improve Ireland's debt ratings, has had the opposite effect as explained and predicted by Paul Krugman. (Apparently, the European austerity program has just been put on hold, pending improvements in the Eurozone economies.)

Interest rates on U. S. Treasuries, after rising for a couple of weeks, are plumbing new lows:
     Treasury sells 5-year notes at lowest yield ever
     Treasury sells $35 bln in 5-year debt at 1.260% 
     Treasurys stay up after 5-year note auction The yield on 10-year Treasury notes has fallen to 2.445%. Presumably, this is being driven by a "flight to safety" in the face of the recurring sovereign debt problems. 

Are we about to get a new "buy" signal?
    My investment advisory service is impressed by the "dip buyers'" resilience in the face of bad news. I'll wait until they issue a "buy" signal before I reverse direction, but it might be a good idea to decide on where to invest if a "buy" signal is forthcoming. (I'll use their recommendation for U. S. stocks, but a review of emerging markets is probably in order.)
     Hulbert: Contrarian analysis is bullish on stocks