11.21.08

11/21/08

            Thanks to a late surge on Friday, the stock market closed at its session high with a gain of 6.3%. Though the rally was impressive, stocks still finished the week 8.4% lower due to heavy losses earlier in the week. Friday’s gains could have been due to a very oversold market, or it could have been short covering so as to be flat over the week-end. This is the kind of market where experienced traders don’t want to carry either long or short positions over a weekend.

             Some sectors are moving up or down by 5-10% in a single day. The weeks heavy losses were looked at by some as a time to start accumulating some shares at bargain basement prices. If this was a true turning point for the market, it will take time to prove it’s self. The move was supported by heavy volume which we always say is good. It shows conviction. Average volume on the NYSE this month has been 1.5 billion shares a day and Friday came in at almost 2.4 billion shares. Definitely some conviction there.

            The financial sector stood out as a notable laggard on Friday. At one point the financial sector was down 7.5%, which marked the sector's lowest level since 1995. However, it finished 3.4% higher. A range of 10.9%! Wow, that is inconceivable in normal markets, but these are not normal times. Citigroup was the most notable stock of the session closing at $3.75 a share. If you think about it, they charge a customer $3.00 to use an ATM machine. Ironic! This is the lowest it’s been since 1992. Citi is a giant in the Financial Sector. The FDIC is taking a close look at them to see what needs to be done to prop them up.

            We feel there is way to much risk in the market to be either long or short. If the market bounces off the bottom it could very well go up 1000 points in a single session. If some of you brave souls have a favorite stock that you would like to own, and want to buy some in here, don’t put more than 5% of your aggressive money into it. Also, be aware that you should be in a position to hold it for at least 5 years.

            You have probably guessed it by now, we are staying in CASH  100% for now.

Till next time

The MTA Staff