Meant to post this yesterday….
Doom and gloom as grabbed the stock market by the throat this morning, sending stocks reeling for nearly 300 points on the big board. Pick your poison, whether it be:
- The Stimulus (Spending) Plan,
- The market’s lack of confidence in Treasury Secretary Geithner,
- Global economies and equities slumping,
- State and Local municipalities with their backs against the door (some near broke),
- Or the sobering reality that this recession is going to be much deeper than any we’ve been through.
The reality is it’s all of the above and then some. February’s Empire State (NY) Manufacturing Index didn’t help matters either as the print came in at a record low, minus 34.65. No need to give you the details, they all stunk.
The plus side of Wall Street’s G and D is the flight to quality that has happened in gold, treasuries, and mortgage backs. Gold in closing in on $1,000.00 an oz, the 10 year note is up 1 and 24/32’s, trading at 2.67%, and mortgage backs in the lower rates are up 11/32’s and 6/32’s on the higher rates. Keep in mind that the market sold off hard on Friday and many did not reprice due to the short trading day. That has been adjusted in today’s pricing.
One piece of encouraging news came via the TIC report, a measure of net purchases/sales of treasuries by foreign entities. The net effect was a positive 18.5 billion buys verses sells, telling us that those across the pond and worlds beyond still like our paper. Maybe they think if we default they’ll have a shot at owning Disney Land or Beverly Hills.
The week ahead will feature New Residential Construction, PPI, and CPI as the headline economic releases. Take advantage of the market where appropriate as today’s strength has willing sellers (hedge funds). It also should be evident to you that a “trend’ may last 2 days or 2 hours so don’t miss the bus. Technically, the charts are more positive than negative with a 5th wave high forming on the Elliot Wave studies.
Looks good but as many trader has said in the past, “don’t get married to it.”