Friends
Stocks were down from the start today with the Dow Jones Industrial Average down as much as 190 points early in the session, but as the day wore on, shares attempted to rebound and the DJIA finished the day down a quiet 77 points. Decent economic news including industrial production, housing starts and retail sales were trumped by continued worries about the problems in Europe. The meeting between Merkel and Sarkozy did little to alleviate the fears that the Eurozone is getting worse.
The macro environment is overshadowing any positives in corporate earnings, and even when we get decent domestic economic numbers, no one believes that we can avoid the continued contagion of Europe. Can we pull ourselves out of this malaise here in the U. S. and separate ourselves from the gravity pull of Europe? The markets are doubtful, but only time will tell.
Gold continued its advance closing the day up $30 to finish at $1785. Oil gave back $1 today to finish the day back under $87 per barrel. The 10-year Treasury note closed at a yield of 2.23% continuing to show strength long after the S&P downgrade (Fitch maintained a AAA for U.S. debt today).
The most likely scenario for the near term is a test of last week’s S&P 500 lows to see if we have put in a short-term bottom. This common pattern has not held true for the past year, but still seems the most likely outcome as we proceed through the summer. Typical technical confirmation would require successful tests of recent lows before a market can proceed on a new path (hopefully higher). We’ll continue to look for opportunities that down days provide.
Have a nice evening everyone.
