Market is Still Confused

The market decided not to extend Wednesday’s rally.  There wasn’t much action in stocks on Thursday.  The action was happening outside the stock market as is sometimes the case.  The dollar was down about a percent while silver was up over 4% to close above $10.  That move was enough to push PAAS up about 10%.  The bond market was down a little, about a half of a percent.  Oil was up about 2% to over $63 a barrel and if anyone was interested gas prices here in Minneapolis are near $2.50 today after we saw them touch just under $2.00 about a month ago.

Some of the news that may have had a bearing on trading today includes some retailers reporting soft February sales (due to bad weather).  ANF (Abercromie and Fitch) got smacked for almost 10%.  The ECB (European Central Bank) raised its key interest rate 25 bps to 2.5% while forecasting more growth in Europe.  Meanwhile, Congress approved an extra 13 weeks of disaster unemployment benefits for people out of work due to Katrina and Rita.  

Friday we hear about the University of Michigan Consumer Sentiment Index which is estimated to drop from 91.2 to 88.  The other data point for Friday is the February ISM Non-Manufacturing Index estimated to increase a bit to 58 (numbers about 50 indicate expansion).  Normally we would be talking about the jobs report coming out on the first Friday of the month but not this month.  The jobs report is coming out next Friday so not to worry.

As far as we can see the market is now poised for a drop.  The market has struggled to get up to these lofty levels and is having trouble maintaining these high prices.  The momentum of this rally is now behind us with an eerie sense of a drop coming.  For those of you who feel safer than you did a few weeks ago, you should make sure that your stocks have been able to outperform the momentum highs set earlier in the year.  If not, I would say that the rally for those stocks is over too.  Take care and…

Be careful out there, be extremely careful…

Dow Industrials:  11,025.51  -28.02
RYVNX:   18.37
RYAIX:  21.82
TLT:  89.85  (ouch)
BEGBX:  13.13