Top Line: Thursday's market action has the characteristics of a very typical bear market. That is, there is strong buying early because the bulls Want to believe so bad. But what happens next is there is no place to go but down and the sellers come in. These days will become a part of the way trading will be done and as traders, you can capitalize on this pattern.
We're going to let CNN Money write our news items this evening but the highlights are that Oil was down about $5 a barrel early along with higher retail sales, brought on by both higher prices at the pump and several billion dollars in free money from the government. By the end of the day oil had rallied back and closed up on the day which seemed to cause the market to drop all day long. As a backdrop to all of this, the Dollar was rallying strongly and looks like it wants to continue its recent uptrend. The other news during the day was that MSFT(Microsoft) has dropped its bid for YHOO(Yahoo!)
Last, we want to remind you of the situation over at LEH (Lehman Brothers) where the news continues to be bad. LEH had been smacked pretty hard back in the dark days surrounding the Bear Stearns' debacle in mid-March but came out of that episode looking unscathed, sort of. Now, the company seems the next one that is need of being "bailed" out so we will keep our eyes on that situation.
Today's stock market action seems to be bearish on the surface because of the intraday reversal and near collapse at the end of the day. Out of the ashes came a rally in the final minutes of trading that eliminated all of the losses in the NDX (NASDAQ 100) and gave some life back to the Dow which had gone flat after a stunning burst of strength at the open.
The bear market has a long ways to go but we are going to get these types of rallies all the way down and they will hurt our day to day performance but there should be continual progress to the south. We do not recommend that you try to trade this treacherous market unless you are willing to be quick. As they used to say about Los Angeles, they have the Dodgers and the Angels and the way people drive you will be one or the other. Ok, the analogy doesn't really fit but in this market you need to be nimble and dodge as many bullets as you can, maybe we should have used the Matrix analogy instead. That would have been a little better.
In these times of financial uncertainty, you need to figure out the best way to Maintain your principal and gather cash for really good opportunities later, either in the market or in the highways and byways of life. We are here mostly to provide some entertainment for you along the way. Tonight's entertainment is over, oh stop clapping, but there will be more on Sunday evening. Have a happy Father's Day and, whether your father is here or not, think some good thoughts of him.
FSI: 90.50 (GOOG's advance couldn't hold up the Speculation index)