The stock market finished lower on Friday as the Dow put in two days of triple digit losses. The last time the Dow had two triple digit down days in row was back in June of last year when it fell six days in a row. The volume on the downside the last two days has been pretty chunky, something else to watch.
We have mentioned over the past several weeks that the Dow is showing a lot more strength in price than the broader market. Even in this decline out of the Fed raising rates on Wednesday, the Dow has outperformed the broader market. The NASDAQ Comp is down 4.3% in the past few days measuring from the close on Monday May 8th of 2344.99 to Friday’s close of 2243.78. Comparing that to the Dow, we see that the Dow closed at a relative high on Wednesday, after the Fed announcement, at 11,642 and closed Friday at 11,380 for a 2.2% decline. The media is now telling the people that the Dow is still within striking distance of its old high. There is No concern that the market has fallen at this point. That is the nature of the market.
The week was not very kind to the bulls; even the Dow was down on the week. Stocks took a beating and we see the calendar shows us it is May, a completely reasonable time for the market to start heading south. Even the great precious metals stocks got roughed up a bit late in the week with the HUI down 4.8% on Friday alone.
Whether the market moves back up to correct some of this recent drop or not, we think the top is probably now in and “All rallies should be Sold”. We have been talking about May being a great time to Sell and Go Away so we hope you took the opportunity of the highs in the last week or so to lighten up.
This upcoming week has a few pitfalls in it for the market starting with April housing figures on Tuesday along with April PPI. Wednesday brings the CPI and Thursday the LEI, leading economic indicators. There should be plenty to occupy the minds of traders as the week progresses. Monday is the 15th and we are clearly in a weaker period of the month for stocks so there won’t be much to hold up stocks, in our humble opinion.
The Chinese have decided to let their currency rise against the dollar in a surprise move over the weekend. The futures overnight have a little decline this evening due to the news. The market thinks, quite rightly, that this move may cause a little extra inflation in the US. The US is bound and determined to get the dollar lower and they are succeeding. This should be an interesting week.
Be careful out there…
Dow Industrials: 11,380.99 -119.74
RYVNX: 19.97
RYAIX: 22.86
TLT: 82.65
BEGBX: 13.61
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment