02.06.09

       The market averages managed to post solid gains this week, with tech stocks leading the way. As the economy continued to deteriorate, it showed that almost 600,000 non-farm jobs were lost last month, sending the unemployment rate up to 7.6%. The dismal news could have triggered a stock sell-off, but investors instead decided to focus on the likely approval of the government's massive stimulus package and bank rescue plan.
For the week, the S&P 500 and the Russell 2000 respectively gained 5.01% and 5.58%. They were outperformed by the Nasdaq 100 which posted a 7.95% weekly gain as tech leaders were particularly strong. The NDX has now crossed back above its 50-day MA but remains located well below its 200-day MA.

          Banks had an exceptional day on Friday as some of them decided to forgo TARP money from the government because of the new rule that limits the top pay for executives to $500,000 dollars if they use TARP money. Some are saying that they want to pay back Uncle Sam as soon as possible to get out from under that restriction. That was a stroke of genius by Obama. Hit the big shots in their own pocketbook and watch them scramble to change for the better.

           The big question now is this. Is this a new Bull Market starting up or just a Bull rally in a Bear Market. We don’t have enough data yet to make this call. We are looking for improvement in the Housing Sector, and for Banks to start lending again as two indicators, among others, to give us a clue.

           Monday will be a day to watch closely to see what the new plan is going to be from the Secretary of the Treasury,and if the Senate can come up with 60 votes to pass the bill they are working on over the week-end.

           Though it is tempting to put some money to work in this market, it is just a little too early for the conservative investor. It may happen soon, but we need more confirmation.

           We are staying 100% in CASH as of now.

 Till next time

 The MTA Staff