8.07.09
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8.07.09 We are in a very unusual market environment. Because the news is not as bad as it had been a few months ago, it is being taken as good news. An example is the unemployment figures. Because “only” 247,000 jobs were lost in July, the market took off to the upside. On Friday it gained 114 points on that news. However, it was a day of strength in the morning, and weakness in the afternoon, not a good sign. The Dow was up 180 by 2 pm. Then, it was selling that came in later in the day again, and took away 1/3 of the gains. It is not only happening in the U.S. but in other markets as well. Take China for example. Credit Suisse analysts released a research report Friday saying that a bubble is forming in the Chinese stock market. Former Morgan Stanley Asian economist Andy Xie says people are now piling into China’s bull market on no other basis than seeing that it has already soared dramatically. He says, “This kind of bubble ends when there isn’t enough liquidity to keep feeding the beast.” The Shanghai Composite is up almost 100% just since November. On some days trading volume in the Chinese stock market is now exceeding the volume in New York, London and Tokyo combined. Speaking of Volume, it is the most important thing that is missing in our markets. We would have had a Buy Signal on 3/25/09 if we had had more volume. Low volume means the market is being controlled by ‘Traders’ not by ‘Investors”. Traders have a totally different agenda than Investors do. We are still 100% in CASH and holding. Till next time The MTA Staff |
