Friends
Well the best thing I can say about today’s market is that it was an orderly decline. Unfortunately we wiped away yesterday’s gains with the Dow Jones Industrial Average falling 20 points. We started the day falling more than 430 points, then recovered by midday to be down less than 200 points. But the last hour was not kind to the bulls as stocks fell pretty much in a straight line. The takeaway today is that there are still plenty of market participants who are not done selling and are taking advantage of any bounces to lighten up. It feels like there are a lot of traders who are still caught too long and are being force to liquidate.
Gold briefly crossed the $1800 level but settled back to close the day at $1792, still up $56 for the day. Oil rallied back to close over $81 per barrel, up more than $2 for the day. The five-year bond auction was a huge success as investors can’t get enough of the .90% (that’s right, less than 1% yield for 5 years).
The major cause of concern today was, you guessed it, Europe, and specifically French banks. Folks, as we have noted, Europe is just not going to go away any time soon. It continues to weigh on the minds of already weary traders. Confidence that European officials have the means to deal with the problems is waning. Domestically, our banks are just getting hammered as their business models are being questioned and traders wonder whether they will ever make money again in our lifetime. They are sound and well capitalized, but between the economy and new restrictions, the banks are just in a very difficult spot.
I sure wish I could deliver better news, but we are going to just have to wait as the market searches for a bottom. In the meantime, the machines are running amok, mainly because humans are choosing to sit it out on the sidelines. We are nibbling just a bit at high dividend payers and will continue to do so as prices get cheaper. We will take our time though, because forming a bottom usually is a process that needs to play out.
Try to have a nice evening everyone.
