Current Market

Posted by admin on April 3, 2009

Sorry I haven’t posted in a while, but I have been out of town on business for a week and thanks to the weather had an almost impossible time getting home.  Anyway in case you haven’t noticed the market has been on a nice run lately.  We are up 26% off of the bottom in 4 weeks.

As you can see from the chart below the price has move through the 50 day moving average come back down and bounced off of it.  This looks to give us clear upside to about 880-900 on the S&P 500.  That will put us up between 32-35% which is huge, but the market is still in a down trend with the price under the 200 day moving average.

The economy is in horrible shape.  The US has lost 5.1 million jobs since December 2007.  We may be past the worst of the down turn, but there is no foreseeable growth in the future.  With every country around the world racing to print more money we will see inflation soar within the next year.  China is using their maturing US treasury bonds to purchase raw materials instead of reinvesting in US treasuries at 0% interest.  I believe this will be a huge benefit to Chinese companies in the future.

I do not believe this is a new bull market, I believe this is a bear market rally and we will pause when inflation begins to kick in.  I am using this rally to sell some of my longs and build cash.

If you want to invest then I would focus on the natural resources such as energy, miners, and maybe some of the agricultural plays.  All the currency being  printed will result in higher prices later and the Chinese buying of these items will keep the prices up now.  I would also be a buyer of foreign natural resource stocks, because I believe that the dollar will go lower in the future.

I do not want to inject politics into this site, but if you do not agree with how the government is spending your money then I urge you to visit Campaign for Liberty and sign their petition to Audit the Federal Reserve.

Hopefully I can get back to making regular posts now.