Friday, January 29, 2010

Market Mirrors Frigid Weather

The stock market was as icy this week as the weather on the east coast and elsewhere.The S&P closed down 3.7% for the month,making it the worst month since last February.If the "January barometer" theory holds true this year,we're in trouble.It was the third straight down January.Tech and commodity stocks led the weakness,being sold into strength.Big cap tech rolled over as the dollar index rose 0.63%-the highest reading since last July.The inverse relationship between the dollar and stocks was in full force this week.It has characterized so much of recent months' market activity.The dollar is being seen as a haven in the face of global uncertainty regarding everything from the economies of southern Europe,to China's clampdown on lending,to anti-Wall Street rhetoric in Washington.Conversely,traders are booking profits from the stocks that have recovered so well to this point.They want to lock in their success while they can.The week froze out retail investors yet again.The S&P futures gave little comfort about next week,being down more than eight points tonight.

Friday, January 22, 2010

An Echo of March

The market gave an echo of the bad times of last March this week,the worst weekly decline since that bottom.It had been foreseen for months.No market can keep ascending without pause or correction.Yet that is just what people have been expecting of earnings.When their hyper-expectations weren't met this week,they sold off.Other problems were the fear of Paul Volcker-inspired regulatory reform,which is odd,since the former chairman of the Federal Reserve is widely admired on Wall Street.It must be admiration from a distance.China contributed to the decline as well,ordering banks to stop lending so much,which threatens to create bubbles.Corrections occur when a tipping point is reached.All the worries that had been hidden reach a critical mass and come tumbling out together.In the end,it's a helpful development.Only when reality is admitted to can a market resume its upward trajectory.There are things out there that can hurt us,and now we are conscious of them,we can resume our financial journey through earnings season.

Friday, January 15, 2010

Profit-Taking Today

Friday was a day for booking profits as investors expressed doubts about the economic situation.Reports suggesting consumer weakness raised the level of uncertainty about the course of 2010-enough to make taking profits a prudent measure at this time.Even Intel,with its sterling achievements in Q4,was skimmed for cream.JP Morgan Chase reported loan losses,and CEO Jamie Dimon expressed uncertainty about the economy in the conference call following its quarterly report.A disappointing reading by the University of Michigan on consumer sentiment further agitated the markets,raising the volatility level,although stocks did close off their lows for the session.The prospect of a three day weekend in the U.S. left traders eager to safeguard their portfolios with a buffer of cash in the face of a questionable opening on Tuesday morning and a cascade of further earnings reports next week,icluding one from Citigroup.

Friday, January 8, 2010

Market On Right Foot

The S&P futures were trading up this evening,putting an optimistic sheen on the outlook for Monday morning.It was a mildly positive move for the stock market in the first trading week of the new year.Historically,that has been a good sign for the whole year.Although the employment report for December was a minor setback,the three-month performance is encouraging,showing an upward trend line.No one expected the recovery to be anything but bumpy.That is why the stock market wasn't crestfallen today.Alcoa begins earnings season on Monday in the traditional way,by being the first of the big companies to report on its Q4 results.Given the brisk economic activity in the emerging markets,it may well be a good mark for the materials giant.Market participants can enter their weekend with some degree of confidence in the early part of next week.Many of them will watch the NFL playoffs with a bit less worry than they experienced last year at this time.

Friday, January 1, 2010

Red Eye Reflections

This is the red eye flight.You've been watching bowl games all day.Now you're watching the PC screen before you turn in.You may also be watching the markets,looking into the future as best you can.One certainty is that earnings season is just around the bend.Q4 will be revealed for what it really was.Until this important reading on the economy comes in,it might be best to pause before your next trade.There could be disappointments,as Thursday's poor close to 2009 may have been hinting.Another certainty is that there is always a new opportunity in investing.If you miss one,don't get agitated.The next one is already on the horizon-and there's one after that as well.There's always cause for hope in the financial markets.No wonder so many have found a lifetime of fascination in them.