3.21.08

3.21.08

       It was a very interesting week indeed. Gold bullion was down 9.1% and Gold stocks were down 16.7%. Oil dropped 4.1% and the Dollar got stronger. It has been a long time since we have seen that kind of a move in the market. A weak dollar has been the main problem and we need to see it moving up, up, and up some more.  At the same time we need to be cautious and not get to optimistic to soon. It could turn out to be a sucker’s rally. 

 The Dow had a nice move +3.4%, the SP500 +3.2% the Comp +2.1%, the NDX +2.3% and the R2K +2.9%.  Investors with losing trades in credit markets -- mortgage bonds or collateralized debt obligations, for example -- are being required by banks and others to set aside more cash to cover the money they borrowed to make trades, a process called "deleveraging." To raise the cash, some investors and hedge funds are selling some of their commodity winners." This could be a part of the “squeeze” that caused Gold and Oil to drop.

 The Fed gave away Bear Stearns for $2.00 a share. Their Headquarters building alone is worth $8.00 a share. To that, add the fact that the Fed also is allowing J.P. Morgan to exchange $30 billion in sub-prime paper for $30 billion in AAA government paper. A sweet deal for JPM, and a sour deal for taxpayers.

        We like the way the market is starting to shape up. If the Dollar can continue to get stronger, oil will drop, and that will go a long way to help the economy.

        For right now we are going to be staying 100% in cash, and try to get some kind of conformation.

 Till next time

 The MTA Staff