01.02.09
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01.02.09 Investors said goodbye to 2008 this week. The S&P 500 lost 38.5% making it the worst year for that Indice since 1937. That’s right, you have to go back 71 years to find a worse year. And that is after posting an 8% gain since Christmas. We did get the Santa Claus rally,that began on Christmas Eve and will officially end at the close Mondays close. Volume during the rally has been noticeably light. The old adage is that volume equals conviction. This will put the market to the test in the coming week when a full compliment of Traders return to their posts. Once again, we saw the market virtually ignore bad economic news, of which there was plenty in this shortened week. The fact that the market has been ignoring bad news is good news. It is indicating that most of the weak money is gone from the market. The ISM Index, which is computed from a survey of national manufacturing conditions, hit its weakest point since June 1980. The ISM added that new orders were at their lowest level since January 1948. Weekly initial claims surprised in a good way, as they fell by 94,000 positions to 492,000. The improvement seemed dubious, however, given the continued job cut announcements and the understanding that claims for continuing benefits jumped to 4.506 million from 4.336 million.The labor market is weak and we will soon get another reminder of that reality when the December employment report is released next Friday. The bullish bias of this week's participants shined through Friday when the market jumped 3.2% after the weak ISM number. That was the best first trading day of the year since 2003, yet it had the one drawback of occurring on volume of just 1.05 billion shares. For some perspective, consider that volume at the NYSE has averaged 1.43 billion shares over the last 50 days. The Market is showing signs that we may have seen the bottom. If we get confirmation of this, we could soon be making a call to go long. For now however, we will still remain 100% in CASH Till next time The MTA Staff |
