6.19.09

6.19.09

          The stock market had better than expected economic reports this week, but decided to ignore them.  The Dow declined 3% while the DJ Transportation average declined 4.2% for the week. It is not a good sign when the market is unable to rally on good news. A rally that makes new highs while volume is making new lows is usually suspect.

          A rally in which insiders, who were buying heavily prior to the rally, begin selling, while public investors, who were scared to death and not interested prior to the rally, have become enthusiastic about buying, particularly the speculative issues of the Nasdaq. This is usually a strong warning sign to step aside. We are probably seeing the start of the “summer doldrums” where vacations are causing a somewhat lackadaisical interest, and reflected in the ‘low volume’. The volume in the first hour Friday was 800 million shares, and finished the day with 2.12 billion shares traded. This was a quad expiration day which should have had 4 billion shares traded.

          Next week has a heavy schedule of potential market-moving economic reports coming out, including Existing Home Sales, New Home Sales, Durable Goods Orders, and Consumer Sentiment. And the Fed begins its next FOMC meeting on Tuesday.

          We will be watching the Dollar and Commodities this coming week and keeping a good eye on the transports, oil, and gasoline.

          For now we are still 100% in cash and looking for an entry point.

Till next time

The MTA Staff