The stock market was down in the early going on Tuesday, some say due to the India bombings. During the afternoon one of the tech companies, KLAC, KLA Tencor, had a conference call with some analysts and said some warm and fuzzy things about Orders (bookings). Apparently this ignited a fire under the stock market and we saw some violent up moves during the early afternoon. From the early afternoon lows, the Dow rallied for about 100 points during the afternoon while the NDX, NASDAQ 100, rallied for about 25 points or about 1.5%.
The stock market is trying very hard not to let go and drop a Lot. It didn’t go down on Tuesday but over the next few months we still expect a very harsh and unexpected drop. We said to sell in May and go away and we are sticking to that until we see a good sized drop. Since May the NDX has dropped about 200 points so far for more than 10% and we expect another 10% or more before it’s over.
The Dow has been the laggard to the downside but that is the way it usually is. The Dow is made up of big cap companies and seems more stable to the unsuspecting public. Most people look at the Dow and judge the direction of the market or their portfolios by how it is doing—without actually looking to see what those two things are actually doing.
Speaking of actually looking at what is really going on, we urge you to read the “True Contrarian” on the link at the left. He has posted a nice update on the markets from here to the early autumn period and we are in lock step with his thinking. Go down a few pages to the bold print dated July 11th. The primary use for his postings is the gold calls but he does mention other markets too. He is looking for a good opportunity to buy gold mining stocks in the late summer to early fall. We will watch for good entry points.
The stock market seems to have dodged a bullet on Tuesday but we don’t think there will be much on the way of upside with this move. The market is still basically overbought and complacent. If a rally continues, sell it. We will get much better prices to buy back into stocks come fall. Until tomorrow’s post…
Be careful out there.
Dow Industrials: 11,134.77 +31.22