March Newsletter

A follow-through was signaled on March 1^st , carrying the markets into positive territory for the year. But the rally may be fizzling. Default risks increased for Greece and Portugal. QQQQ, SPY, and UUP are being watched as potential buys

The NASDAQ staged a "cautious" follow-through on March 1st. The signal was questionable with only the NASDAQ meeting the absolute minimum 1.6% gain on higher volume. Nevertheless, the rally pushed the indices into positive territory for the year; in a cautious and tender way. To everyone’s surprise, the market held up the day after the healthcare bill passed. This would have been a good sign, but back to back distribution, or high sell off days weakened this rally. Semiconductor and Chinese internet stocks have led the way, but have also experienced recent selling pressure. Investing in this market remains difficult. Money managers are being pressured keep their portfolios on par with market performance, but their lack of volume equates to their lack of conviction.
In financial news, 2010 will mark the change of social security outflows exceeding tax inflows, six years earlier than government forecasted. The Congressional Budget Office estimates present value of unfunded social insurance expenditures at $46 trillion. The healthcare bill may add another $562 billion to this over the next decade, according to an ex-CBO director in the The New York Times. In the article "Fantasy In, fantasy out", the bill's claim of reducing the deficit by $138 billion is nothing but a"slight of hand", applying front-end loaded revenues and back-end loaded expenses. Abroad, the PIGS continue to make a lot a noise. Portugal was Fitch downgraded from AA to AA on increased default risk, and Greece’s auction of 5.9% bonds showed lackluster support with investors.  Interestingly, this boosted US dollar; which is the "taller midget" among financially troubled countries.
With 4 recent distribution days, the rally may be fizzling out, or taking a rest before moving higher. Many of the market leaders have been under selling pressure, another negative for rallies. Buy opportunities may come from 20-day moving average pullbacks on the indices; 115.71 for the SPY (SPDR S&P 500 ETF) and 47.48 for the QQQQ (Powershares QQQ Trust). Another from the US dollar, which staged an impressive breakout on 3/27 but retraced back down.  UUP (PowerShares DB US Dollar Bullish Fund ETF) looks buyable on a move above its previous high at 24.14. Just be careful as the dollar sometimes trades with wide intraday swings.

March Newsletter

A follow-through was signaled on March 1^st , carrying the markets into positive territory for the year. But the rally may be fizzling. Default risks increased for Greece and Portugal. QQQQ, SPY, and UUP are being watched as potential buys

The NASDAQ staged a "cautious" follow-through on March 1st. The signal was questionable with only the NASDAQ meeting the absolute minimum 1.6% gain on higher volume. Nevertheless, the rally pushed the indices into positive territory for the year; in a cautious and tender way. To everyone’s surprise, the market held up the day after the healthcare bill passed. This would have been a good sign, but back to back distribution, or high sell off days weakened this rally. Semiconductor and Chinese internet stocks have led the way, but have also experienced recent selling pressure. Investing in this market remains difficult. Money managers are being pressured keep their portfolios on par with market performance, but their lack of volume equates to their lack of conviction.
In financial news, 2010 will mark the change of social security outflows exceeding tax inflows, six years earlier than government forecasted. The Congressional Budget Office estimates present value of unfunded social insurance expenditures at $46 trillion. The healthcare bill may add another $562 billion to this over the next decade, according to an ex-CBO director in the The New York Times. In the article "Fantasy In, fantasy out", the bill's claim of reducing the deficit by $138 billion is nothing but a"slight of hand", applying front-end loaded revenues and back-end loaded expenses. Abroad, the PIGS continue to make a lot a noise. Portugal was Fitch downgraded from AA to AA on increased default risk, and Greece’s auction of 5.9% bonds showed lackluster support with investors.  Interestingly, this boosted US dollar; which is the "taller midget" among financially troubled countries.
With 4 recent distribution days, the rally may be fizzling out, or taking a rest before moving higher. Many of the market leaders have been under selling pressure, another negative for rallies. Buy opportunities may come from 20-day moving average pullbacks on the indices; 115.71 for the SPY (SPDR S&P 500 ETF) and 47.48 for the QQQQ (Powershares QQQ Trust). Another from the US dollar, which staged an impressive breakout on 3/27 but retraced back down.  UUP (PowerShares DB US Dollar Bullish Fund ETF) looks buyable on a move above its previous high at 24.14. Just be careful as the dollar sometimes trades with wide intraday swings.