2010

January 24, 2010 · Posted in Weekly Posts · Comment

The sell-off we have been analyzing the last week or so is well under way but is not yet complete. If you are long, well bad for you. If you are short, take some profits along the way. If you are in cash stay that way, we do not see any compelling buys yet.

The market may pause tomorrow but do not be fooled, it is unlikely that we are complete. If we do pause for a day, or two, or three we would use the opportunity to add to our short positions rather than to get long. We need to see where this market gets to and how it bounces. The bounce will be key. Do we rocket up or simply rise lethargically. The answer will tell us if the market has changed significantly.

This week we have many, many earnings reports, the Fed meets, the possibility of China beginning fiscal tightening, Bernanke’s confirmation by the senate (though even if approved he is now damaged goods to the point that he will be seen by the world as being a risk), multiple economic reports and the State of the Union. Do not underestimate the impact this speech could have on the negative side. This past week was a disaster for the Administration. If the President comes across or appears to be received as a lame duck then markets could dive. Conversely, there is really nothing the President can do or say in that speech that will give them a real reason to rally.

Annotated charts below for: US Dollar, Crude Oil, Gold, Shanghai Composite, NYSE Composite, S&P, and S&P Energy Sector.