The markets opened up strong with all three indices up strongly on good volume. Then late morning, two economic reports came out to dampen the early rally. The Institute of Supply Management (ISM) reported the service sector growth was slowing and Citi's revised negative outlook on the retail sector sent stocks lower, especially retail stocks.
The markets sold off hovering around the breakeven and then remained negative for most the afternoon. A late day rally salvaged the day with the Dow ending up +57, the S&P up +5 1/2, and the NASDAQ up +2 on overall, decent daily volume.
With more economic data coming out, it looks more and more as if the double dip recession is coming. In the short term, we still have earnings season. And remember, with taxes going up next year, companies will accelerate earnings into this year. Therefore, we will probably have one more good Quarterly earnings season before the slowing economy will affect the bottom line of most companies.
Keep a close eye on your stocks over the next few days. Likewise, it is a good time to lighten up if you are overweighed in stocks.
Also, for those of you who missed out on gold earlier or are looking to increase you exposure, you may find another entry point very soon. I have attached a graph of spot gold so you can see how it is hitting a bottom trend line.
These are my thoughts for today. Keep studying,
Dan Stewart CFA®
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