Up trend or Trading Range--Still Waiting for Direction
Steve Cook on Disciplined Investing

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Economics

   This Week’s Data

    The International Council of Shopping Centers reported monthly sales of major retailers declined 0.6% versus the prior week but rose 0.6% on a year over year basis; Redbook Research reported month to date retail chain store sales fell 0.3% versus the similar period in April and decreased slightly versus the comparable timeframe in 2008.

    May vehicle sales reported unchanged from April versus expectations of a slight increase; still the year over year numbers remain ugly:
    http://www.calculatedriskblog.com/2009/06/graphs-auto-sales-in-may.html
    http://www.ritholtz.com/blog/2009/06/auto-sales-worse-and-worser/

    Weekly mortgage applications rose 4.3%--a welcome change.

   Other

    More thoughts on GM (this from the NY Times no less):
    http://www.nytimes.com/2009/06/02/opinion/02brooks.html?_r=2&ref=opinion

    And:
    http://www.clubforgrowth.org/2009/06/how_washington_blew_gms_bankru.php

    Update on the Baltic Dry Index:
    http://mjperry.blogspot.com/2009/06/baltic-dry-index-advances-24-straight.html

    Some ‘green shoots’ in housing:
    http://mjperry.blogspot.com/2009/06/blog-post.html

    Another opinion view of those ‘green shoots’:
    http://www.ritholtz.com/blog/2009/06/pending-home-sales-index-rises/

    The latest from Bill Gross:
    http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2009/IO+June+2009+Staying+Rich+in+the+New+Normal+Gross.htm

Politics

  Domestic

  International War Against Radical Islam

The Market
    
    Technical

    Chart on oil:
    http://bespokeinvest.typepad.com/bespoke/2009/06/oil-up-99-in-75-trading-days.html

*******************************************

    The indices (DJIA 8740, S&P 944) piddled yesterday which is not bad given the strength of the prior two trading days. The S&P remains right on the January high resistance level (947) while the DJIA is well below its comparable level (9078).  Both are selling above the lower boundary of the re-set uptrend off the March lows (DJIA 8335, S&P 900). 

As I said in yesterday’s Morning Call, the issues right now are (1) whether stocks are in a trading range or an uptrend--I am inclined toward the former (2) and if the former, is the lower boundary of the trading range S&P 666 [March low] or S&P 876 [the February high-turned-support level].   

   Fundamental
 
      Headlines:

    It was relatively quiet yesterday.  Two items worth mentioning:

(1)    the financials (AXP, JPM, MS) continue to raise more equity.  The headlines read that this is all in order to repay TARP funds.  Whether or not this is the case, I think that the important takeaway is that the banks continue to repair their devastated balance sheets thereby lessening the probability that the financial system implodes and the economy goes off the cliff.
http://www.nakedcapitalism.com/2009/06/fed-setting-higher-than-stress-test-bar.html

(2)    As I am sure you know, our Treasury Secretary is in China.  It is worth noting what he didn’t say, which is, that China is manipulating its currency [a campaign theme of Obama] which hopefully means we will get less of the anti-China protectionist rhetoric out of Congress.  Of course, just maybe the reason for making nice is related to something he did say:

please don’t stop buying US Treasury bonds and we promise to get our deficit spending under control.  Two words: yeah, right.





Posted 06-03-2009 8:28 AM by Steve Cook
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