The Dow Jones Industrial Average closed Thursday at 13,485.97 I continue to see upside resistance at 13,558.92 and downside support at approximately 13,345. Volume on the Dow Jones Industrial Average continues to be light. I generally consider this to be a negative sign when the Dow Jones is trading at multi-year highs.
A Few Thoughts on Tuesday’s Market: I continue to look at the market with a nervous eye. I do not believe that the strength of the overall economy is nearly as strong as the major market indices would have us believe. This causes me to be concerned that we could see a severe and lasting downturn when the music stops. I think that the Fed has grown increasingly desperate, and it is running out of arrows in its quiver.
A Few Thoughts on Monday’s Market: The major market indices and a large number of the various sector indices that I track are obviously benefiting from the Fed’s 3rd round of quantitative easing, otherwise known as QE3. However to be very clear, I consider QE3, and the previously quantitative easings’, QE1 and QE2, to be an unprecedented form of market manipulation that is not only ineffective, but one that has very serious, negative unintended consequences that are detrimental to the US Economy. Manipulating interest rates to artificially low levels will not make up for bad fiscal policy out of our elected officials in Washington, DC. Worse yet, these artificially low interest rates are creating a bubble in all bond classes as savers either search for higher yields or safety; these artificially low interest rates punish savers with reduced interest income, and create a sense of uncertainty that is holding back business development. It seams that the only group benefiting from these artificially low interest rates is the largest companies in the US and global economy. These are the companies that dominate the major market indices; and that is why these indices are doing so well, while the rest of the economy is seems to be disconnected from the stock market.
In looking at the charts of Friday’s trading activity, very few of the charts I looked at appeared to be demonstrating any sort of a break from their recent trading ranges. The one exception to this is the gold and silver stocks. They all had breaks above recent trading ranges; and appear to be headed at least to new short term highs. Of course it is always wise to remember that gold and silver stocks have a tendency to be very volatile and can reverse course suddenly and without warning. With that being said, I found Newmo
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