Monday, December 08, 2008

Dow Trades Just Over 9000

Top Line: As expected, the Asian rally continued around the globe pushing stocks up in its path. After jumping 300 points on Monday, the market kind of hit a wall called Dow 9000 and couldn't manage to stay above it. After a brief rest period, the Dow should make another run over 9000 and it will stick.

We're kind of relaxing with our positions at the moment. The market has been so violent for the past several months and now a day like today with only a 200 point range in the Dow is sort of boring. Ok, not so boring due to the nice gains we enjoyed. The market is on the way to a nice gain going into January.

The news over the weekend is that the President elect is wanting to spend some serious money on infrastructure to provide jobs. The liquidity being poured into the system is just incredible and we think that the market will be a primary recipient of those funds. With the extreme depths of the fear in the last couple of months, we expect that people will continue to feel that we are in a bear market. This means that they will be selling rallies until they decide that the market truly is moving up.

One of the items we have heard in the past month or so is that the market will experience some tax loss selling about now. We're really not sure what that means this year because there have been few gains that need to be offset by selling losses. Since the bears are roaming around, they are looking for any reason to tout their position and tax loss selling is as good a reason as any.

The stock market is in an up trend. We think volatility has decreased over the past two weeks and people are not talking about the market nearly as much as they were just two weeks ago. Complacency will return next year as the market moves up. These are our clues as to when the market will be ready to roll over. We will have a couple of opportunities next year as the market floats up. We think the first will be right around the inauguration on January 20th. There will be others, one will be a good one which we will talk about when the time arrives.

For now, we are looking for a small pullback based on the way the overnight US futures are trading. The news from Fed Ex (FDX) was that they would miss their numbers and got hit about 10% after that. Texas Instruments also made negative comments so the futures are under pressure this evening.

Once this current adjustment is over, there should be another push over 9000 sometime in the next week or so. We think that the Dow will be near 10,500 when we get to January 20th.

What's your thought?

Maybe Jackson has an idea, well, a smile for you anyway.



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