Sunday, March 22, 2009

Market Thoughts (While Watching Syracuse)

  • With options expiration behind us, what will the market do now? After the IBD follow through day the previous week, we had two distribution days last week.  Not a great sign, but it doesn't mean it's all over.  The market hasn't had much leadership and there has been some speculation in the financial "penny stocks."
  • Again, there are major headwinds in the news.  The technical analysis folks are warning of the bear market rally being over and that we're heading back down.  Of course, just a reminder, but these folks tend to get the trend right but miss the inflection points (turning points) from bull to bear and from bear to bull.  I think missing the ends as it were, causes them to underperform buy-and-hold over longer stretches of time.
  • But the front page headlines are often times a contrarian indicator of where we are.  By the time the average journalist is writing about it, the economy has moved on and is looking towards the future.
  • There are rumors of Treasury Secretary Tim Geithner resigning.  President Obama says he wouldn't accept a resignation.  Uh, what if Tim quits?  "Take this job and your March Madness brackets, and shove it, Mr. President."
  • We have projected additions to the national debt of $10 trillion over the next 10 years.  Borrowing money at 4% would add an additional $400 billion in interest payments to the annual budget.  That money is gone, too.
  • Oil prices are beginning to firm up.  This story wants to know why prices are up.  Weak dollar or economic rebound?  How about production cuts from OPEC?  Oh, and how about falling non-OPEC oil production?
  • As the latter link says about declining supply (and increasing prices), That basically amounts to a booby trap waiting in the path of the expected economic recovery.