Tuesday, June 29, 2010

That was the recovery?

There seems to be a growing body of evidence that the second quarter may mark the peak of the stimulus driven "recovery". The combination of stimulus funds running out, tax credits expiring, no more extensions of unemployment benefits, state financial troubles, plunging consumer confidence, Krugman throwing in the towel, endless wars (the military build up off the coast of Iran should have us all filling our extra gas cans), etc, etc, gives me pause when looking at our economic situation.

The trading in the market remains the exclusive domain of the technicians. Four weeks ago, those in the know said this market is simple - buy the S&P500 at 1040 and sell it at 1120. On June 8th the market flirted with 1040 before running straight to 1130 over the next two weeks. A week later the market closed at 1041 (many thanks to the silicon based traders that goosed the market in the last 10 minutes to prevent a close below 1040 which would have made the computers go haywire in the AM). So while you were bombarded by Drudge's flashing red screens about the plunging market, keep in mind that while the its down 11% this quarter the active trader could be up 15% or more without using any leverage. That's good for Ferrari dealers in Greenwich and Realtors selling large islands on the St. Lawrence River but not so much for the buy and hold crowd.

Many of the better technicians seem to be jumping off this 1040-1120 train because the moving averages have been crossed. It's silly tea leaf reading in my opinion but this is what is impacting your retirement funds so it's best to be aware of what's coming.

ABC's "This Week" runs a week 30 second blurb highlighting the ultimate sacrifice made by our servicemen and women overseas in the past week. This week's numbers really jumped off the screen when I saw them - 16 soldiers lost in the past week. Consider that 17 sailors were lost in the bombing of the USS Cole. According to the Washington Post, total fatalities now stand at 5,521 for the 2 wars.

Piggybacking on an idea I saw on another website today - What's the best book you've read this year? Offer up your nominee in the comments.

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