Down the Slippery Slope

Market Action:
Friday’s market showed little signs of trying to move higher.  The Dow closed down 120 points and very near the lows of the day.  Tuesday morning’s low is still intact but that may change in this fresh week of trading.  The NYSE volume came in under 2 billion shares after three days above it.  Let’s get to the analysis…

Opinion/Analysis:
The market failed to generate much buying on Friday, even though the Dow has been down everyday but one since the Last Record High on February 20th.  In seven days the Dow has dropped a total of 672.54 points closing price to closing price.  The last time the Dow was lower than Friday’s close was on November 10th.  The market has managed to wipe out nearly four months of upside in about a week.

As we write this evening, there is another Asian market problem tonight with Japan down over 2.5% and Hong Kong down almost 3%.  The US futures markets are down in sympathy but they are down less than 1%.  In any event, we expect at least the US market to start off on a negative path.  

We need to mention a couple of things this evening with regard to this market.  The first thing is that the world thinks this “dip” is just another buying opportunity.  In fact, on the cover of Barron’s this week is a Bull and a Bear and a title of “Stick With the Bull”.  We think the “Bull” is not an animal but more something to do with what a bull produces and they left off a part of the last word.  But, this is a family show we are running here so let’s not try to second guess Barron’s.

We don’t think this is a time to get too cute with our investments.  We talked about the end of the first wave on Thursday and that could be the case but there are no guarantees.  The complacency in the market had a rude awaking last week and the market hasn’t found a place to land for a brief respite.  The market topped less than two weeks ago and this is Not the end of the correction.  There is a long ways to go on the downside.  While the possibility exists for violent upside moves, these should be used to reduce your stock exposure.

For those of you who have been reading this blog for a while, there should be no surprise to the events of the last week.  Maybe the move did give you a wake up call, too, and we hope you answered that call if you haven’t been out already.  

We are recommending a zero exposure to stocks.  The safest asset is cash and we hope you have considered it.  For aggressive traders, this is the time to look at some of the opportunities in the RYDEX funds that we list every day in the table below.  Any of them that start with RY… are RYDEX funds and some of them are leveraged and others are not.  Please check the prospectus for further information.  Use caution when investing and feel free to ask questions in the comments.

Normally, we give you a list of the upcoming news items for the week:
February ISM non-manufacturing index—Monday
January pending home sales—Tuesday
Fed beige book—Wednesday
And, drum roll please…
The February job’s report—Friday

We hardly believe any of this matters this week due to the market’s new direction except that any news could help “grease the skids”.

We encourage any questions/comments in the comment section.  
  
Dow Industrials:  12,114.10  -120.24
VIX: 18.61
HUI:  323.29  
QQQQ:  42.48
RYVNX:   18.00 (we own)
RYAIX:  22.14
RYCWX:  37.82 (we own)
TLT:  90.20
BEGBX:  13.87