What caused the sudden and precipitous drop? The economic data, once again, was horrendous: the unexpected drop in last Tuesday’s Conference Board Consumer Confidence report provided the preamble; Thursday’s non-farm payroll number showing the US economy lost some 130,000 more jobs than expected proved to be more than any green-shoot theorist bulls (or more importantly for purposes of the ensuing discussion, supplemental liquidity-providing proprietary program traders) could handle.
Don’t laugh. While we become ever-more convinced with each passing day that we are currently experiencing a deflationary depression that will take global equity indexes to levels way below their March lows before the end of 2009, we think the stock market can rise. You read it correctly. I am very excited and indeed, quite optimistic about the equity markets. For this week, at least.
In rather peculiar trading, which saw relatively wide intra-day ranges and yet relatively tight closing prices, the S&P 500 broad market index closed the week of June 8-12 a whopping 8 points, or 0.85% higher.
The biggest story from last week, and one which I am monitoring very closely, is the rise of interest rates in the US. The Ten year treasury bond yield which stood at 3.16% a month ago has moved to 3.83% on Friday. The 30 year Treasury bond has moved from 4.06% a month ago to 4.6% on Friday The increase in rates is a major factor for US mortgage rates and for the hopeful turnaround in housing values and sales. US mortgage rates have jumped almost 28% during the past few weeks and this continues be a major factor for new homeowners who will need the incentive of low rates to be able to feel confident in buying a home.
As I write this early Monday morning, GM, the seventy-seven year old blue-chip company – a symbol of great American innovation and industry of the roaring 20s – is in bankruptcy court filing chapter 11. Its shareholders and bondholders are being wiped out. Yet the market is ripping higher. Rather, to understand the recent rally one has to look no further than the US dollar [...]
As we expected would be the case, the tension between bulls and bears reached exhaustive levels during the week of May 18-22 after the broad markets closed a volatile week virtually unchanged. Indexes erupted on Monday after a private survey of homebuilders’ sentiment showed its most positive reading in eight months and [...]
The fundamental reality helped paint an altogether different technical picture from what we had last week, as stock prices (which just two weeks ago broke out of its bearish wedge formation on the upside) have now broken below the lower trendline of the bearish wedge, making the early-May move to 929 on the S&P 500 look like a classic head-fake. The heaviest volume occurred on Wednesday,[...]
Equity markets rose sharply for the week of May 4th, with the S&P 500 and TSX closing up 6.5% and 5.5% respectively on the heels of “reassuring” banking stress-test results and a better-than-expected loss in the number of non-farm payrolls. The headlines seduced once-wary investors to throw caution to the wind, but a closer examination beneath the surface of the stress-test results and the job numbers suggest that those reaching down for green shoots may in reality only be pulling up weeds.
Today’s Market Commentary Thursday March 26, 2009
Well we were on the money again yesterday. We took out Monday’s highs in the first 30 minutes but we did not do it with conviction. It is now important for the markets to continue this rally to hold their respective daily 50sma’s. As you can see from the [...]
