What Happened to the NASDAQ Today?

The stock market seemed undecided today with the Dow up and the NASDAQ down.  The SP 500 managed a new high for the move which means the SP 500 is to another 4 year high.  We only bring this up because of Where the market Has been, not to provide insight into where it is going.  So many people think that the market Is going up when really it Has already gone up.  Now, it’s just a matter of picking an exit point.

Today’s trading leaves a question in our mind:  What happened an hour and a half into the session that caused the NASDAQ to drop so fast? Looking at some of the big names doesn’t reveal any big drops for them but still the index shows a rather large drop for about ten minutes before recovering nicely during the day only to fall into the close.  The Dow and the SP500 both dropped at the same time but didn’t fall nearly as hard and both were positive on the close.  There were a couple of downgrades on Apple Computer (AAPL) but that happened before the market opened.  Oh well.

I guess the big news for the past couple of days is in the currencies and the precious metals.  On Monday evening we mentioned that the dollar had dropped out of a trading range that it had been in for about a month.  The Fed raised short term rates on Tuesday partly to prop up the dollar and the dollar has now fallen a bit more, not really a lot but it dropped below 90.  (With this noticeable trend change in the dollar we have added to our watch list below the mutual fund BEGBX, a fund that hedges against the dollar.  It is at a nice price here after rising a bit from the lows set when the dollar was trading in its trading range.)

The Japanese yen on the other hand exploded yesterday.  The yen has been in a decline for a year starting back in December of last year when it traded near 101, closing this week under 83.  On Wednesday the yen closed about 85.25 for a significant jump of nearly 3% in one trading session.  

As for gold, it took another beating today dropping about $15 to close around $505, this after trading at $540 just a couple of days ago.  Silver has followed suit by trading down from 9.20 a couple of days ago to 8.35 today.  These are large moves for both metals and indicate that more is probably coming.  We will continue to stand aside waiting for a good opportunity.  

Important notes about today’s rally in the Dow:  The Dow was up with the NASDAQ down and the Dow stayed below its suggested ceiling of 10,950.  We continue to watch that level to balance our bearish stance.  Yes, the SP 500 made a new high but that doesn’t mean it’s a buy.  We still think that the market is desperately trying to hold on to its recent gains but it will Fail.

Probably the most interesting of all markets on Wednesday was the bond market which jumped a day after the Fed’s rate increase announcement.  I’m sure the Fed was hoping the bond market would follow along and push longer term rates up but that wasn’t the case today.  The bond market pushed rates down today trying to get the yield curve as flat as possible.  Right now, the fed funds rate is at 4.25% and the ten year bond is at 4.45%, meaning that ten year money is only worth 20bps more than overnight funds, amazing.  For comparison purposes the 30 year T-bond is yielding 4.66% for another 20bps for 20 years.  

Dow Industrials:  10,883.51  +59.79
RYVNX:  18.49
TLT:   90.62  (nice move up in bonds today)
BGEIX:  14.20  (going down)
BEGBX:  13.39  (New to our watch list tonight--dollar hedge mutual fund)