Economics
An interesting piece on global warming (or the lack thereof):
Check our your congressperson’s voting record on pork as compiled by the Club for Growth:
http://www.clubforgrowth.org/2007/08/the_2007_club_for_growth_repor.php
Some background on the causes of the sub prime problem:
http://www.baltimoresun.com/news/opinion/oped/bal-op.sowell08aug08,0,522262.story
Politics
Domestic
International War Against Radical Islam
The Market
Technical
As you know, whenever emotions skyrocket and prices are bouncing all over the lot, our tendency is to rely on technical analysis. At the moment, we think that the key levels to watch on the DJIA is 13200 and 13700. We have mentioned several times that 13200 has been developing into a support level. The Market is likely to test 13200 tomorrow. The question is whether it will hold. If not, the next stop appears to be 12855 (the boundaries of the ascending DJIA uptrend are now defined by approximately 12855 and 14293).
We mentioned the 13700 area because it looks like the DJIA may have formed a head and shoulders formation--not that it necessarily means anything. But take a look at the DJIA May 2007 to present; it would appear that the 13200 level is the developing neck line, the 13700 is the approximate top of both a left and right shoulders. If we are correct, technical analysts are likely viewing this as a negative.
The S&P 500 closed today near its 1449 support level. There is no head and shoulders formation here--just a steep plunge towards 1449. If this index can’t hold that level, it looks to us like the next area of support is 1364.
From a fundamental standpoint, our comments this morning remain valid: “second quarter corporate profits have been coming in at a rate of two times estimates, employment is strong and global economic growth is smoking, all of which should further serve to isolate credit problems largely to financial institutions.” The problem today was a French investment bank admitting it didn’t know the value of the investments in its portfolio and rumors that Goldman Sachs was shutting down one of its funds. Hence the real economic difficulties continue to reside with financial institutions and the high risk investors that they serve. We remain confident in the equity values produced by our Model and will continue to average into non financial stocks; but prudence necessitates that we at least wait for an orderly market.
Fundamental
Good advice on complex investments (eg. sub prime mortgages):
http://bigpicture.typepad.com/comments/2007/08/advice-for-rich.html
News on Stocks in Our Portfolios
More Cash in Investors’ Hands
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