Monday, February 26, 2007

Trying to be Patient

Market Action:
Monday morning started with a bang as the market heard about some big takeover deal.  TXU, Texas Utility, agreed to be acquired by a group led by two private equity firms, KKR and Texas Pacific Group, the price tag, $32 billion.  While we’re not exactly sure why the entire market was celebrating this bit of news, we did notice that it was up.  The Dow jumped about 50 points at the bell and the other major indexes jumped as well.  This jump was then followed by a sell off that took the Dow down about 85 points from the early peak, before churning a little higher into the close, down 15.  We do know why the market jumps on this type of news; the possibility exists that another company may be taken out.  

This makes four trading days in a row the Dow has closed lower and these four days were preceded by four days of record highs in the Dow.  In our last post we mentioned that we expected a little rally and today’s early 50 point rally may have been it but we don’t think so.  We think another rally day is in order; maybe this will be the last.  

We must admit that watching this market, we think it is in slow motion with the eventual drop inevitable but elusive.  We are watching the pattern develop in slow motion but it is developing and we just watch the picture form.  A top has been forming over the past several months and with such a long top we should see a fierce decline.  

Be careful out there.

Dow Industrials:  12,632.26  -15.22
VIX: 11.15
VIXEC.X: 1.05 (down in spite of VIX being up)
HUI:  361.82
QQQQ:  45.04
RYVNX:   16.05
RYAIX:  20.88
RYCWX:  34.81
TLT:  89.43
BEGBX:  13.79

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