A Rare Down Friday

Just a quick post this evening due to the 185 point loss the Dow suffered last Friday. Over the last 13 weeks, Fridays have seen up days so just a down day would have brought some questions with it; but, down 185 starts to give you a sense of unease. The market has enjoyed these up Fridays in the past because Mondays have generally brought some form of buyout news.

With this type of down move, it is the Update’s responsibility to let you know if there is anything more sinister going on. Well, we don’t think so at the present time. As we write this evening, the futures are making a powerful recovery and the Asian markets are not down much.
As we have been saying, we think the Dow will eventually break the June 4th high created right after the May jobs’ report was released. As we said then, there is a slight chance that the June 4th high is the top but we don’t think that is possible given the strength seen in the NASDAQ indexes after that date.

One thing about the stock market, the big Blackstone IPO generated much enthusiasm, at least for that company. We are no less than shocked that this IPO garnered such a huge amount of cash. These are the types of things that cause markets to end their up moves.

Our position continues to be that we are close to a top but not quite there. If we see the Dow make a new high above June 4th we will start to consider the possibility of a top. That event should be related to a weak move in the broader markets but it is not necessarily required. As always, if anything significant happens we will report on it here, otherwise we will be here every Wednesday evening until something the bear really comes back. That means Thursday mornings will bring you something to read other than your emails.

There are some big news events this week, not the least of which is the FOMC meeting taking place on Wednesday and Thursday. We do not expect any interest changes from them this week but we guarantee much hype over the possibilities. Yeah. The real news continues to be the mortgage market with more and more fear about the Bear Stearns funds that are trying to actually sell these illiquid assets.

Meanwhile, this week brings us the monthly home sales, existing home sales on Monday and new home sales on Tuesday. These are the items we will be paying close attention to.