Today saw a very poor start to the final week of September in the stock market. After the initial fireworks that pushed the Dow up about 80 points we saw a bunch of back and forth action for the next several hours. Around mid-day the market headed south such that the Dow was actually negative briefly but managed to rally to close up about 24 points. I don’t think that was what the bulls had expected going into the day. There were a few bears who didn’t think so either.
Oil, which had dropped so much on Friday, about $2.50 a barrel, decided to rally today and pretty much retraced the full decline. It had been down in Sunday’s special trading session and then on Monday it traded down under $63 but from there it moved up about three dollars to close near $66. The damage was limited but petroleum supplies got tighter. That didn’t sit too well with the market.
It did sit well with precious metals as they opened down fairly hard but rallied massively over the course of the day. Good thing we’re out, still with the sarcasm. The HUI did roll over with the market into the last half of the day and, I might add, didn’t close higher than when we sold our BGEIX position and didn’t trade as high as last Monday. The resistance around 240 in the index seems fairly strong. We are hoping to see it drop a little before we think about getting back in.
The bond market made it two down days in a row and look to have failed in an attempt to rally higher. We still contend that the high in the bond market happened in early June with a failed test in early July and another failed test in early September. The question now is can it break support near the 4.5% level. (Bonds trade lower to cause rates to rise.) One thing that bothered the bond market (and us stock market bears) was the news on existing home sales which increased by 2% last month. I guess we’ll have to wait to see what the hurricanes did to these sales next month.
The stock market traded very poorly today and the bears won the day. As we mentioned last night, the market is oversold and is still trading poorly. We are at the end of the month so it should be trading fairly strong but it’s not. We are near the end of the quarter and basically the end of the mutual funds year, and it is still trading poorly. The market seems to want to go down. We are bearish.
Dow Industrials: 10,443.63 +24.04 (failed to hold the 10,500 hit this morning)
BGEIX: 13.27 (still below our exit point of 13.34)
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