Wednesday, March 24, 2010

A Little Selling Today

It was an uneventful day for the major indices, but we did have some interesting action. The most important was a big spike down in bonds, which means that interest rates moved up. The move was prompted by a strong dollar, some hawkish comments from Kansas City Fed President Thomas M. Hoenig and a poor 5-year auction. Overall, the market took the move in bonds in stride, but it is something that we need to monitor very closely. Low interest rates have been the tailwind driving this market for the past year and if we start seeing them inch up, we are going to need some extremely good economic news to offset that impact. The market hasn't been concerned much at all about inflation or interest rates, but the action today in bonds was significant. The slightly negative price action today helps a little in dealing with our extended technical conditions.  There was some very weak action in gold on the dollar, and commodities in general were weak, but it was the pullback in semiconductors and retailers that we have to focus on. Retailers have been a leaders lately, and chips have shown signs of taking the lead, so weakness in those two groups would be a problem. Until this market is shaken up more severely, the supply of opportunities is going to be small. A minor correction like we had today helps a little, but it is just a small blip after the run we have had. The uptrend is still in place, but there are a few cracks developing......Maybe....

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