Dave Fry at ETF Digest, March 24, 2009
And, it can change around the other way by the time you read this.
Yesterday we noted the market was short-term overbought at least measured by the McClellan Oscillator. We’ve also been noting how trusty this indicator has been at least in timing short-term moves. Additionally, the indicator with a reading over 100 in the most recent instances has led to very sharp declines in January and last fall.
Have things changed? Only the latest plans.
I’ve been reading Walter McDougall’s “In the Throes of Democracy” (a sequel to his Freedom Just Around the Corner, a New American History 1585-1828). I like to read these types of books and I must say McDougall is the best I’ve ever read. (There are characters I’ve never heard of and a potential movie script in every chapter.)
The point is during financial panics that occurred prior to the New Deal, none were resolved by government intervention especially using bailouts. During the Panic of 1837 most banks and businesses collapsed. So too did employment and the then burgeoning stock market. Folks were wiped-out but President Andrew Jackson did absolutely nothing. In fact, Jackson abhorred the US Bank. It took some time but enterprising investors reemerged and prosperity returned.
You might argue conditions are different in modern times and that’s true. But people are the same.
Volume was on the light side and breadth was negative on a profit-taking day.
So there was some profit-taking today on lighter volume which is about the only conclusion you can reach. Not one unconflicted economist (those without any stocks to sell you) likes the Geithner plan. I don’t like anything the Fed or Treasury have done in this administration or the last. Particularly galling is the former Chairman of GS operating as Treasury Secretary bailing out his old firm with taxpayer funds. Not to be left out is the congress which……well, nevermind.
But bulls see all this as a great buying opportunity and as someone just watching the tape you have to hand it to them. The end of the month approaches and no doubt bulls will want to paint the tape to prop things.
Tomorrow is Durable Goods and more Home Sales data sure to provide the media an opportunity to spin things in the manner they wish. Also on tap the Fed rolls out two governors to provide more encouraging happy talk.
Let’s see what happens.
Disclaimer: Among other issues the ETF Digest maintains positions in: GLD, DGP, DBP, DBB, DBC and USL.
The charts and comments are only the author’s view of market activity and aren’t recommendations to buy or sell any security. Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotations aren’t predictive of any future market action rather they only demonstrate the author’s opinion as to a range of possibilities going forward.
