Thursday, June 18, 2009

Market outlook for June 18, 2009

Here are some headlines setting the stage for the market today. This from Bloomberg news and it gives good reason for another down market today. European and emerging-market stocks fell for the fifth day, the longest losing streak since January, as an unexpected drop in U.K. retail sales and downgrades of U.S. banks by Standard & Poor’s fanned concern the global economic recovery will falter. “We could see a pullback in risk appetite in the near term and a more material correction lower in stocks,” said Adam Cole, head of global currency strategy at Royal Bank of Canada Europe Ltd. in London. To me this says that our exports to Europe will continue to slow

John Bogle of Vanguard said this morning on CNBC that considerable unwinding leveraged positions is going to continue over a number of years. He also said we are in for an "L" shaped recovery and we are going to stay where we are for quite a while. I have stated clearly here that I thought we were headed for an "L" shaped recovery and this is why I have continued to be bearish.

Jobless Claims came in up 3,000 to 608,000, while Continuing Claims came in down 148,000 to 6.69 Million jobs lost.

As we approach the quarter end, I believe we are going to continue to retreat in the market. So we have about 2 weeks more of declines, in my view. Quarter endings are inflection points as the chart of the Dow shows. Look at the arrows as they represent 3 weeks before each quarter's ending. Not in all cases but many they were trend reversals.

I continue to like Bear ETF's and will continue to hold my TZA. Those still owning Apple stock, I would sell the shares now as I see it has topped out and is most likely headed lower. I also believe anyone holding E-Bay should also sell right now, as looking at the 2 year chart, I think we are headed lower in that stock as well. Apple closed yesterday at $135.58 and E-Bay closed at $17.09/share.

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