Wednesday, June 10, 2009
Stock markets remain strong this morning, bolstered by a weakened dollar, higher commodity prices, higher interest rates and newly-found confidence in the banking system. I have to chuckle a little as I list all of the "positives" that might be pushing the market higher. Seems like many of these items are economy-busters and soon, the market again might find itself in a free-fall.
Being a strong respector of trend lines, I expect that the S&P index will likely find its way to the 900 level by the end of the month. Currently in electronic trading, the SP future trades above 951, more than 5% above this moving average. To me, this is almost "free money." Yet, the market continues to run without end.
My industry analysis shows that some 153 stocks are positive on the year compared with 97 that are negative. In aggregate, the composite index of the stocks I follow is up over 10% this year already. Surprisingly, both oil and gold are only up 8.4% while the S&P is up 4%.
Nothing goes up forever though. I still haven't bought into the idea that the economy is improving. No one I have talked to in various industries tells me that there is any uptick. If stabilization at reduced levels is to be considered a success, then perhaps we have achieved it. I continue to believe that there is now more profit potential on the downside than the upside.