The stock market put on a brave face on Wednesday and managed to stay out of negative territory, barely positive in some cases but positive. And, while it was a dull trading day, there were some noteworthy items.
The first thing is the trade deficit which dropped about $3 billion in February, about 2.5%. We mention the 2.5% drop because one of our reads today was about the fact that February has 28 days in it versus January which has 31. We thought this was interesting just because that would be about a 10% reduction in time and what we saw was only a 2.5% reduction in the actual amount. Something to think about especially since February’s number is the third largest on record and a huge number in its own rite.
Then, there was the must read article in the Wall Street Journal from Wednesday, April 12th entitled “Hot Homes Get Cold” on page B1. I hope you have a chance to read it because it’s all about what we have been mentioning for a long time. The article considers the Florida housing market and what has happened to it over the last couple of months. The examples shown in the article represent a stark picture in the booming state of Florida. The last paragraph tells of a broker who has 35 listings and said that they had three days last week “with not a single showing…We usually get 2-6 showings a day.” The broker goes on to say that one of the home owners called him in tears saying that her husband had purchased two investment properties and they are now going to lose their “life savings” if they sell the homes in this market. Again, something to think about.
Then, after the bell, we started to see quarterly earnings reports starting with AMD (Advanced Micro Devices). This company is in direct competition with INTC and is starting to take some market share away from INTC. Their report was good but not good enough for the market. This earnings period has the potential to drive the market. We would think that the direction would be down.
In that regard, the market has been struggling over the past few weeks and we see that the momentum indicators are starting to turn down. The basic pattern would suggest that a bounce would be attempted and a subsequent sell off would occur. We see the start of this down turn being in the past, not the future. Yes, there is always a possibility that the market could go to make new relative highs but the technical nature just doesn’t suggest that in the least. If we do get any kind of rally at all it will most likely be a technically weak one and would be the last. There are all kinds of reasons to get out of this market and stay out.
Be careful out there…
[Programming note: the stock market is closed on Friday so there will be no post on Thursday evening.]
Dow Industrials: 11,129.97 +40.34
RYVNX: 18.29
RYAIX: 21.83
TLT: 85.04
BEGBX: 12.89
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