More Volatility

Thursday brought more of the same type of volatility we have seen over the past few days.  From the looks of it, the market is struggling with its identity, bull or bear.  Stepping back a bit from this week’s trading and looking over the past ten years we note that the NASDAQ markets are far from their 2000 highs while the Dow Industrials is a mere 7% or so away.  This is the tale of two markets, the high one that is in front of the people everyday, that being the Dow, and the rest of the market which has been struggling for the better part of six years, our apologies to the Russell 2000 which has been strong for the last several years.

The biggest event of the past few weeks is the Dow moving ahead without the troops and that is not a good sign for the market in general.  Next to that is the overbought position the market finds itself in after this latest move.  Thursday’s drop did alleviate some of the over bought condition but the market is set up for a fall.

In the news today, the Fed released a report showing the nation’s net worth, saying that the median family’s net worth increased by 1.5% (to $93,100) after inflation during the period of 2001 to 2004.  That is after a 10.3% move from 1998 to 2001 and a 17.4% rise in the 1995 to 1998 period.  To us it looks like the consumer has been spending a lot of their net worth, you know, taking advantage of the big ATM they live in.  (We know we promised to send out our net worth spreadsheet and we still intend to do that in the near future.)

There are no good words to describe the near term trend of the market so we aren’t even going to try this evening.  Have a good weekend and maybe we can be a better idea next week about what is going on.  Remember that next week is the first of the Month and a normally strong period but in light of the over bought nature of the market, we don’t see much upside from these levels.  There does seem to be a lid on the market at the moment.

In the news for Friday will be the durable goods orders.  Expectations are for a drop of about 2.0% after a 1.8% rise in December.  Again, we don’t expect this number to affect the markets much but want to keep an eye on it for developments.

Be careful out there…

Dow Industrials:  11,069.22  -67.95
RYVNX:  18.84
RYAIX:  22.09
TLT:  91.19
BEGBX:  13.08