Technical Level Broken

A technical level on the S&P 500 Index was broken today,as the index closed below 1042.Apparently,there is now nothing to stop a free fall on Monday morning.Indeed,the S&P futures were down substantially earlier this evening,intimating just that.The VIX volatility index had spiked to an uncomfortable height today,and about 80% of stocks had crossed below their 40 day moving average.Frankly,it was a crummy end to the week.The consumer just is not there for the market,according to the economic data.It's the perfect excuse for a round of profit-taking after a 55% run-up.If it becomes a 10% correction,we could have three more days just like today.It's helpful to write and read about the situation as it actually is.Now we can put it aside and watch some football or whatever we like to do.

First Time Buyers Abundant

The figures for existing home sales came out today.Although they were strong,first time buyers accounted for 45% of the total,and about 70% of the homes sold were worth 250,000 dollars or less.Clearly the sales were driven by the first time home buyer's tax credit,which will soon expire.If the housing market is to ever recover,Congress needs to reauthorize the credit.The economy is still on unsteady footing.It is not yet time to withdraw the supports that prevented another Great Depression from materializing. Home prices declined 8.5%,another signal that the housing market has more miles to go before it can be considered restored to good health.New home sales figures come out next week,and will be closely scrutinized as well for clues to the economic condition.

Looking For Lili

"I'm Lili Taylor,"she says softly.Oh?I've never heard of you,but you must have done pretty well for yourself,if you're in a public television promo alongside filmmaker Ken Burns.You say you turn to public TV to help you decide who to vote for.I take it you're referring to News Hour with Jim Lehrer and perhaps convention coverage.Those are good places to learn,so you must have some sense in your head.Public TV isn't commercial-free anymore,but at least the ads are in good taste.My personal favorite is Chevron's " human energy" campaign.The music and faces are wistful-not what you'd expect from a big,bad oil major,but that's the whole point of this image-changing spot.I suspect that Lili never had such a problem.She's one of the world's gentle souls,it seems.If that isn't enough to get you next to Ken Burns,I don't know what is.

Xerox Punished For Breathing

Xerox got a haircut for its decision to buy Affiliated Computer Services.Fortunately,the stock was on the way back as the week ended.All the Dow component was trying to do was respond to customer requests for more services, the way IBM and others have.You would have thought they were trying something absurd.It must be the times in which we live.You would be better off sitting on the sidelines like so many investors have been doing,the reasoning may have been.Is that really the case?No.it is not.It's actually wise to reconfigure yourself now,so that you will be best positioned to take advantage of the global recovery as it progresses.It's something we all should consider,rather than moping around on our pile of cash.

Disappointing Economic News

This week was marked by disappointing news about the economy.Things don't seem to be going as well as had been thought.As well as had been thought was actually perfectly,but perfect is something that recoveries seldom are-especially recoveries from deep recessions.Everyone is so eager to get this behind us,they forgot just how steep the climb out was.Now we have been reminded,but there may be more to come.If we're in a proper correction,a 10% decline,we have several more red days ahead of us.That would be painful,but unless we get good earnings reports starting next week,it could well occur.We could backslide for a few weeks or so.It's better to admit it and plan what to do.What bargains would we like to buy;what bonds would we like to shelter in?That would ease the discomfort considerably.