Rollover

The stock market seems to be set on declining all of a sudden.  When the Dow had trouble last week near that 10,950 level and then fell away, it seemed like a good opportunity to get out.  Then this week, the Dow tried to rally back to that level but didn’t quite make it.  These don’t seem like mighty signals to most but we see them as powerful.  The trading day on Wednesday was much more negative than the numbers showed at the end of the day.  There was a bit of a rally going into the close to eliminate the worst numbers of the day.  

All in all, Wednesday was not a very good day.  There was a story during the day, confirmed by the news later on in the day that someone had been shot by an air marshal, a story which most of you have probably heard by now.  We only bring this up due to the market seeming to trade down on that news a little today.  You just don’t know what news the market will trade on until it comes.  

During the day the Dow dropped into the 10,700’s but managed to rally back over 10,800.  Remember that the Dow closed 2004 at 10,783 and today traded at that level.  Pretty strong year for the Dow, it may close breakeven.  Cash would have done a little better, without the headaches.  Yes, our other two indexes are up about 3% on the year but the year isn’t over.  There is plenty of time for a drop off in those.

After the close, Texas Instruments (TXN) announced good guidance for the fourth quarter and the after hours market was happy about it and drove the price of TXN up a couple percent.  Since then, there has been some deterioration in the futures as we are now seeing negatives replacing the happiness after the close.  We report this due to the nature of the trading.  Recently, it hasn’t mattered what happened during the day, the futures seem to have been up and above fair value every night for the past month.  So, tonight’s action after the TXN news is something to report.

Gold continues to outperform and we are not too pleased by being out of the sector.  We remind ourselves that we had a nice trade this summer with BGEIX but somehow this up move has gone further than we expected.  We remind you that we still think that it is a temporary situation but the world is definitely paying attention.  We do watch it every day and look for opportunities, so far, no safe plays seem available.

One last item:  We received an email from one of our readers that contained an article from yahoo finance that made some claims about the housing sector that of course align with our thinking process.  The title of the article said that the housing slowdown may claim 800,000 jobs, 500,000 in construction and 300,000 in finance.  The article sited several reasons like new home sales have declined, applications for home mortgages have trended down since September, homes are remaining unsold longer and home construction is outstripping population growth.  They must have been reading the blog for the last six months.  Thanks for the email.  

Be careful and be selling, “Cash is King”.

Dow Industrials:  10,810.91  -45.95
RYVNX:  18.50
TLT:  89.67
BGEIX:  14.50