5.01.09

5.1.09

Where did it come from?   Where is it going?

      This rally started in early March, and the impetus was the reports that showed that in January and February a better than expected group of economic indicators looked like an upside reversal was in the offering. But in April, these same reports showed that there was no follow thru and the market has moved sideways for the last two weeks. True, the S&P 500 gained 9.4% in April, but that all came in the first half.

        The S&P 500 was at 869 on April 17 and ended the month 872. For the most part that lack of positive follow-through has continued over the last two weeks, with reports showing that retail sales, durable goods orders, existing home sales, new home sales, new home starts, permits for future starts, all reversed back to the downside in March.

The most laughable report of all was the Jobs Report which showed that “only” 630,000 jobs were lost since last month’s report. Some of the TV Gurus tried to say that it was “good news” because it wasn’t as bad as the last time.

      There is no ‘official report’ issued, showing the numbers of ‘under-employed’ workers. Those folks are now working 3 or 4 days a week instead of the normal  5 days.

       Chrysler has announced it will shut down all of plants for the duration of the bankruptcy and will be closing over 100 dealerships.  GM is also  closing all of its plants for a few months in order to work off excess inventory. It too is expected to close over 150 dealerships.

      Add to that, the fact that Citi and Bank America are both under-funded and need to raise additional capital. We haven’t even talked about the Swine Flu, and the effects that may have on the economy.

Right now it is difficult to make a case for a continuation of the rally and we believe it will serve us well to stay 100% in CASH. The fundamentals just don’t allow us to be bullish. 

Till next time

The MTA Staff