Market outlook going forward? Down in advance of the 3 day weekend.
Back on April 25th I said the following: "Gold closed yesterday at $914/ounce and 2 weeks ago it closed at $890/ounce. This is a 2.7% gain. The Dow didn't gain anything, the S&P500 gained only 1.2% and the Nasdaq gained 2.5%. Technology did the best in the markets, but not as good as did Gold. I have said to watch Gold prices to get a best sense of direction of the market. If Gold goes up, the markets will drop and if Gold drops the market should go up. I think there is a trend building for Gold's continued rise, going forward."
Gold closed today at $953/ounce, up $15/ounce in trading. I think we are still going higher!
On May 16th I said to watch the Tech sector. I said specifically the following: "Here, Jim Cramer of CNBC's Mad Money and I part ways, as he sees Tech stocks taking us higher. I see Tech stocks now leading us down as many take their profits from the lows. Besides, it is the closest Index to the 200 day Moving Average and is being pressed to go lower. Let's see if I'm correct. Stay tuned.
On May 9th, in my post on the "Put to Call ratio as an Indicator" I said the following:
The 200-day moving average is still trending downward. This tells me to hold off. It’s not yet time to jump back into the markets. This is not the time to buy & hold… not yet. Believe me, I’m watching this indicator closely.
Well on Friday May 8th the Dow closed at 8,574. Many analysts and investors then, including Jim Cramer, were telling people to jump into the market before the train leaves the station. Yesterday it closed at 8,292 and because we have a 3 day weekend because of Memorial Day, the Banks and the Stock market will be closed on Monday. Therefore many may not want to hold stock going into the long weekend and therefore it should be a down day today. Volume both on Wednesday and Thursday was higher than on Monday and Tuesday. So we have had dropping prices on higher Volume, a Bearish indicator.
I know it is easy to get caught up in the excitement when the market is rising and you're not in and invested. It has a way of enticing us in because we are afraid we might lose out on the gains. How do I know this? Because I have experienced the same thing in times past. But I realize that there must be logic and rationality and an over arching belief about current conditions in the world and the U.S to give validity to such hope and promise. That time will come. But it is not now. As long as you continue to see or hear about more layoffs and foreclosures at the clip we have seen recently, it can't be getting better any time soon. It may not get worse, but it is pretty bad now if you haven't noticed. We all have friends or family or neighbors who are unemployed and scared about finding a job, any job. And when the FED says things are going to be bad going forward, when they change their projections on unemployment and GDP, pay attention.
Futures point to a higher open today. But beware, it makes sense to me that the markets should close down for the 3 day weekend. The last hour will be what to watch. Oh and one last thing, the 3 Month LIBOR rate has dropped to 0.66%, which is unbelievably low. And speaking of banks, BankUnited FSB has been shut down by regulators. It is the largest bank to be closed down this year. It is located in Florida.
UPDATE 6:00am PST.
Art Cashin was just on CNBC and believes the market will close up today because he believes the Shorts will be nervous going into a long weekend. So there you have it. We are on opposite sides on this one. He is usually more correct in his market calls than I am. But one ting he did say was that yesterday there was markets were scared yesterday on the question of US AAA Rating by S&P could be downgraded. Later in the day the Ratings agency came out and said there was no merit to the rumors. However, Pimco's Mohammed El Erian, also on CNBC this morning, was concerned of the unintended consequences of government policies and the implications to the markets. So there seems enough concerns going forward to stay cautious and not just jump in and blow all your cash in the market.
Gold closed today at $953/ounce, up $15/ounce in trading. I think we are still going higher!
On May 16th I said to watch the Tech sector. I said specifically the following: "Here, Jim Cramer of CNBC's Mad Money and I part ways, as he sees Tech stocks taking us higher. I see Tech stocks now leading us down as many take their profits from the lows. Besides, it is the closest Index to the 200 day Moving Average and is being pressed to go lower. Let's see if I'm correct. Stay tuned.
On May 9th, in my post on the "Put to Call ratio as an Indicator" I said the following:
The 200-day moving average is still trending downward. This tells me to hold off. It’s not yet time to jump back into the markets. This is not the time to buy & hold… not yet. Believe me, I’m watching this indicator closely.
Well on Friday May 8th the Dow closed at 8,574. Many analysts and investors then, including Jim Cramer, were telling people to jump into the market before the train leaves the station. Yesterday it closed at 8,292 and because we have a 3 day weekend because of Memorial Day, the Banks and the Stock market will be closed on Monday. Therefore many may not want to hold stock going into the long weekend and therefore it should be a down day today. Volume both on Wednesday and Thursday was higher than on Monday and Tuesday. So we have had dropping prices on higher Volume, a Bearish indicator.
I know it is easy to get caught up in the excitement when the market is rising and you're not in and invested. It has a way of enticing us in because we are afraid we might lose out on the gains. How do I know this? Because I have experienced the same thing in times past. But I realize that there must be logic and rationality and an over arching belief about current conditions in the world and the U.S to give validity to such hope and promise. That time will come. But it is not now. As long as you continue to see or hear about more layoffs and foreclosures at the clip we have seen recently, it can't be getting better any time soon. It may not get worse, but it is pretty bad now if you haven't noticed. We all have friends or family or neighbors who are unemployed and scared about finding a job, any job. And when the FED says things are going to be bad going forward, when they change their projections on unemployment and GDP, pay attention.
Futures point to a higher open today. But beware, it makes sense to me that the markets should close down for the 3 day weekend. The last hour will be what to watch. Oh and one last thing, the 3 Month LIBOR rate has dropped to 0.66%, which is unbelievably low. And speaking of banks, BankUnited FSB has been shut down by regulators. It is the largest bank to be closed down this year. It is located in Florida.
UPDATE 6:00am PST.
Art Cashin was just on CNBC and believes the market will close up today because he believes the Shorts will be nervous going into a long weekend. So there you have it. We are on opposite sides on this one. He is usually more correct in his market calls than I am. But one ting he did say was that yesterday there was markets were scared yesterday on the question of US AAA Rating by S&P could be downgraded. Later in the day the Ratings agency came out and said there was no merit to the rumors. However, Pimco's Mohammed El Erian, also on CNBC this morning, was concerned of the unintended consequences of government policies and the implications to the markets. So there seems enough concerns going forward to stay cautious and not just jump in and blow all your cash in the market.
Labels: Fed, Gold, Jim Cramer, stock market, unemployment
posted by Charles Amico at 7:10 PM
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