Daily Investment Interpretations

June 10, 2011

2011-6-10 (Friday Night): The markets crumpled again today: Dow sinks below 12,000, Goldman served first again: Maybe not. The NASDAQ Composite tumbled 41.14 points (-1.53%) to 2,643.73. The Dow sank 143.45 points (-1.42%) to close at 11,951.91, while the S&P 500 sagged 18.02 points (-1.4%) to end at 1,270.98. Oil fell to $98.92; Gold slipped to $1,533. The VIX rose 1.09 to 18.86.
    Yesterday, I wrote,
Today's action probably reduced the rebound pressure on the markets, although I would expect them to continue to rise to their resistance levels (1300 and 1320 on the S&P 500), and to make their bounces sufficiently compelling that many professional investors buy back in. Then the markets can suddenly reverse, and take away their money."
    Instead, the markets plunged.
    So much for my future as a stock market psychic.
    Here's what TopStock Portfolios featured today: Buzzkill - Part III (Tepper's View), Did Anything Change?, and The Way I See It (A Look At the Big Picture).     
    The first of these articles interviews David Tepper, who, when QE2 was first approved, announced that it was "game on" in the stock markets. Mr. Tepper is now predicting that there wont be a QE3... i. e., it's "game off" time now.
    The second article, written by David Moenning, asks whether Thursday's rise was just a technical bounce, based upon no meaningful changes in the economic outlook, or whether it had further to run. He concluded... correctly we know now... that it probably was just a "dead-cat bounce".
    The third article, by "Curt B.", concludes, "To sum up - My intuitive sense is uncomfortable but I also recognize that there is not yet objective market based evidence indicating that the bull market cannot continue. So I circle back to what I have stated before. I will keep positions small, attempt to quickly cut losses, look to take profits without quickly (and avoid getting greedy), and stay flexible."
    Mark Hulbert on Are stocks sending a sell signal?. He explains that he tried a market timing system in which he sold whenever one of the market indices (the S&P 500?) fell below its 200-day moving average and bought whenever it rose above its 200-day average. The system worked well in the 80's, and broke down in the 90's and the 00's.