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Goldata Financial
Dedicated to above average returns in the stock market.
STOCK MARKET COMMENTARY
June 29, 2009
From Elliot
Goldberg, Registered Investment Advisor, Goldata
Financial
Last week, the tug of war between the bulls
and bears resulted in a stalemate. Monday brought news from the World Bank
that global growth would shrink more than thought driving down economically
sensitive issues and market averages. Wednesday’s 1.8% increase in
durable goods orders and a good 7-year Treasury auction Thursday reversed
that thought and the market averages finished basically flat for the week,
leaving only us traders as beneficiaries of the zigging
and zagging.
Mr. Market continued to be pulled by the bulls looking for pre-2008
growth and the bears, who point to a 10% unemployment rate coming shortly on
top of a personal savings rate that is growing and will tend to stall
consumption. The technical chart is just as complicit as we remain
range-bound between SPY89 and SPY95. Congress was up to its old tricks
– stop me if you’ve heard this one --- Barney Frank putting
pressure on Fannie Mae and Freddie Mac to reduce lending standards for condo purchases,
as they are suffering (especially in his district). You see, we make more
money available for loans for condos and don’t really care if the
borrowers are worthy risks. Unbelievable! Have we learned nothing? Fed
Chairmen Bernanke’s appearance before Congress to explain his side of
the Bank of America/Merrill Lynch merger provided good theater, but little
additional information. Let’s face it --- the Feds wanted the deal done
and they gave Bank of America a $20 billion insurance policy in the form of
guarantees against Merrill losses to help consummate the deal. My favorite
punching bag lately, Senator Chris Dodd, opened his mouth again last week and
inserted his foot by saying that “Citigroup doesn’t get it”
when it came to raising base salaries and reducing bonuses for some of its
traders. Chris, we, the taxpayers, now own about 1/3 of this company and if
we don’t pay the people who produce the profits, they will go elsewhere
and take their business with them leaving us with a worthless asset. Since
you don’t want to pay them bonuses based on their personal production,
we’ve got to pay them higher salaries to try to keep them. It is you, sir, that do not get it. As the quarter winds down this holiday-shortened
week(markets closed Friday), we should see some
positive window dressing trades early on which will probably reverse shortly
thereafter. It looks from here that the grinding will continue
until quarterly earnings reports start to appear in a few weeks and provide
some additional clues as to the seriousness of the actual economic recovery.
Until then, we’ll stay pat with our current trading strategy of moving
stops up on days where averages spike one way of the other, availing us to
take advantage of the short-term moves anticipated, while protecting against potential
disaster on the downside.
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