Daily Investment Interpretations

July 5, 2011

2011-7-5: (Tuesday Night): The market closed basically flat today, with the NASDAQ up a small fraction of a percent and the Dow and S&P down a small fraction of a percent: U.S. stocks retreat after best week in two years when Moody's cuts Portugal debt rating to junk grade, and S&P Warns That Greece Plan May Still Trigger Default. The NASDAQ Composite closed up 9.74 points (0.35%) at day's end to 2,825.77. The Dow fell 12.9 points (0.9%) to close at 12,569; the S&P 500 lost 1.79 points (-0.13%) to end at 1,337.88. Oil advanced to $96.96 Gold jumps more than $30, Gold is best debt-crisis defense — just not yet; Gold leaped to $1,416: Gold jumps more than $30. The VIX rose 0.19 to 16.06.
    How to use paired trades to profit in July. I didn't really follow this author's stategy. It's wonderful that his strategy returned 24% during the month of June, but what kind of return will it yield in the future? I've decided to stick with TopStock ortfolios' timing system.
    Michael Ashbaugh's weekly column notes that U.S. markets sustain the third-quarter breakout.
    Vast rare-earths discovery in the news  Troves of rare-earth ores lie on the ocean floor, and are in the spotlight.
    In this excellent explanatory article, Dr. Irwin Kellner illucidates that For the economy, it’s a tug of war. I've excerpted the following passages from his article: 
    "Because the economy has been growing at only a glacial pace, more stimulus would seem to be called for. However, since the political situation in Washington is so contentious, fiscal policy as a means of stimulating consumer spending has been rendered virtually useless. 
    "Enter the Federal Reserve. Fed chair Ben Bernanke recognized early on that monetary policy was the only game in town when it came to boosting aggregate economic activity. The Fed flooded the financial system with money, pushing interest rates down to near zero. This sent money into stocks, bonds and commodities, boosting the wealth of people who owned them, who tend to be affluent. 
    "On the other hand, this increase in liquidity has led to a sharp run-up in prices of two key staples in the average American’s market basket: food and energy. And while the Fed and many others like to look at prices excluding these items (so-called “core” prices), the fact remains that for people in the middle- and lower-income classes, higher food and energy prices have hurt their buying power immensely. 
   " So while the wealth effect has risen, the income effect has fallen. And because the affluent are relatively few in number and do not spend all they earn, the rise in their well-being is more than offset by the decline in the income effect felt by the vast majority of Americans on whom the economy relies. 
    "Thus, unless policy makers stop bickering and enact some fiscal stimulus soon, you may expect that economic growth will be weak and that unemployment will remain high well into 2012.
    TopStock Portfolios' David Moenning writes: The Next Question.  
    Market futures are neutral again tonight.