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Daily State of the Markets Good morning. I’ve been writing a fair amount lately on the subject of how difficult this market has become to try and work with, and I believe that Monday’s action was a perfect example of why. In short, if you are one of those folks who likes to ease into the week come Monday morning with some water cooler conversation and/or a leisurely cup of coffee with colleagues, you missed the day’s entire move. Here’s what I mean. It took exactly 2 minutes for the Dow Jones Industrials to move up 188 points at the open on Monday morning. The venerable index then worked its way back and forth in a very tight range for the vast majority of the day. I believe the appropriate adjective here would be “directionless.” Then, with the market looking rather weak with 9 minutes left in the trading day, the programs took over again. Boom! Nine minutes later, the Dow has tacked on another 80 points. Looking at it another way, let’s say that you had come into Monday’s session looking to add some long exposure to a portfolio based on the strong seasonality and the improved sentiment in Europe. But since you were likely busy talking about the latest Teebow miracle, you wound up missing the opening minutes. Thus it made sense to wait a little longer, you know, to see if the market’s big opening move was going to hold before you added any long positions. So, had you waited 30 minutes (which, I believe is the definition of a long-term in the fast-money world), you would have been able to buy the Dow at 11,532 – up 300 points on the day. While buying after a move of that magnitude may have been tough to swallow yesterday morning, it didn’t appear to be a bad spot to add if you were looking at a daily chart of the last 6 months or so. Thirty minutes after your cautious buy, you would have been feeling pretty good as the Dow had moved up to a gain of 330 points. Nice. And with everybody talking about the stellar retail sales numbers seen over the weekend as well as the hope (key word) that Team Merkozy might actually do something in Europe, well, you might have been proud of that little purchase. But then the stall started. And for the next 4 hours, the market just laid there. By the time 3:30 pm eastern rolled around, you might have been kicking yourself for not exhibiting some patience on your buy. I’m guessing that you might have started to second-guess the idea that anything had really changed in Europe. And as for those strong weekend shopping numbers, you might have started to hearken back to the past couple of shopping seasons, which, if memory serves, also started out strong but then finished with a bit of a whimper. But, just about the time you may have been thinking that last week’s trend was going to return, the boyz got busy with their computer toys again. And as I pointed out earlier, in the time it took to look up when the next EU Summit is scheduled for (which is December 9th, btw), the market roared back to life and you were almost back to even on your decision to do a little seasonal buying in the stock market. The moral to this morning’s meandering missive is simple. With the entirety of a market move occurring within a matter of two or three of minutes, it is important to recognize that this remains a difficult environment. I should also add that if you are planning on doing any work in the stock market these days, don’t be late! Because missing the opening bell by even a minute or two may cost you a bundle. Turning to this morning… European markets continue to fret about rising rates in Italy and the potential for new downgrades in places like France. However, traders in the U.S. remain encouraged about the prospects for the shopping season and its impact on Q4 GDP. On the Economic Front… We’ll get a report on Consumer Confidence at 10:00 am eastern. Thought for the day… Awareness and choice are yours to exercise… Pre-Game Indicators Here are the Pre-Market indicators we review each morning before the opening bell…
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Long positions in stocks mentioned: None For more of Mr. Moenning’s thoughts and research, visit StateoftheMarkets.com The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of StateoftheMarkets.com and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment. Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided. The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed. The information contained in this report is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer. Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice. Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results. |
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