- January, which is supposed to be a harbinger of the year to come, experienced a drop in the S&P of 8.6%. That is on top of the 38% lost last year.
- The bulls could not hold ’em. In the last half hour the averages gave up enough to call into question the rally that we had experienced earlier this week. The S&P fell below the precious 830 level, closing at 826, down 2.2%,
- Importantly, the market declined on higher volume, indicating an unwillingness of traders to take positions home over the weekend. Advancing issues swamped declining issues.
- The Commerce report showed consumer spending — which accounts for a whopping two-thirds of U.S. economic activity — fell another 3.5 percent in the fourth quarter after declining 3.8 percent in the third quarter. Spending on durable goods such as cars and furniture plunged 22.4 percent, the steepest decline since the first quarter of 1987.
- Proctor & Gamble tanked, as did Alcoa and Caterpillar had yet another bad day as it announced even more layoffs.
- Gold shot up $19 to $927.
- Bonds rallied mid-day as investors reacted to the poor GDP news but in the end could not hold.
- Perhaps if we get better news on the Bad Bank idea we could resume the rally.
- Next milestone is S&P 820.
- Meanwhile, I didn’t sell anything as my hedges worked. As suggested this morning I will keep my hedges on for the foreseeable future. Gold (GLD), inverse bond fund (TBT) and double-inverse S&P (SDS). These mitigated losses on long equity positions.
Hope you have a terrific weekend. We are travelling next week so posts will be intermittant.
