Daily Investment Interpretations

March 9, 2011

2011-3-9 (Wednesday Night): Stock markets ended the day flat: Dow struggling for gains. The NASDAQ Composite lost 14.05 points (-0.51%) to 2,751.72. The Dow inched down 1.29 points (-0.01%) to 12,213.09, while the S&P 500 slipped 1.8 points (-0.14%) to close at: 1,320.02. Oil ended the day a little lower, at $104.05 a barrel, while Gold ended at $1,430. The VIX rose 0.38 points to close at 20.19.
    It's an interesting fact that the S&P 500 and many lesser stocks have set up wedge or pennant formations that have reached the points at which they break out either above or below their trading ranges: Foreshadowing?, Technical Talk: Important Juncture On The Charts. Tomorrow or Friday could see breakouts of the major trading indices. Market futures are seriously down ( % or more) tonight, so that breakout may be on the downside. There's probably some piece of big news, but so far, I haven't found it. Perhaps in the morning...
    Market pundits are banging the gloom-and-doom drum on this second anniversary of the current bull market: Investor lessons as bull market turns two, Bull markets and the judgment of history, and Dailey: Bull market ready to retire (video). "The S&P 500 has doubled since it hit its bear-market bottom on March 9, 2009." What they don't bother to mention is that the bear-market bottom in 2009 was the deepest since The Depression... down more 57% from its October, 2007, high, It would have to rise 15% to get back where it was 3 years ago. Furthermore, the recovery from this Great Recession has required a huge Keynesian stimulus program, and is occurring very slowly. When we start comparing this bull market with other bul markets, we're comparing apples with an orange. But, of course, the markets could see a long, deep correction. And I could be wrong about what's coming next. The QE II program is currently scheduled to phase out in June. But the arguments I'm reading aren't about a double-dip recession, but about the idea that the markets have come so far so fast that they must be running out of steam.
    The stock market will do what it wants to do, and I'll try to respond to it as best I can. But I don't buy the (in my view fallacious) argument that the market should run out of steam because it's come so far so fast.