5/27/08

Economics

While I was gone, my tax dollars were working hard:

http://article.nationalreview.com/?q=MTdjMjk0OTZmMjU1M2M5ZThlZWFlMzE0MjExYmY0NzQ=

In the capitalist system, one of the ways the free market deals with the increasing price of a product, is to use less of it:

http://mjperry.blogspot.com/2008/05/largest-monthly-decline-in-history-for.html

The free trade paradox:

http://mjperry.blogspot.com/2008/05/free-trade-paradox-poor-benefit-more.html

Politics

Domestic

Obama on marriage:

http://article.nationalreview.com/?q=YjE1Yzc4MTYwMWJjZWExZDI0YWYxYTA0MDY1YjNjNzQ=

Obama on the role of the judiciary:

http://pajamasmedia.com/blog/what-kind-of-justice-would-president-obama-mete-out/

International War Against Radical Islam

The Market

The bad news is that not only did I have computer battery problems but the resort at which we were staying had wi fi problems. The good news is that by the time it all got worked out, it didn’t make any difference. In fact, there was a minor positive to it: following last Tuesday’s Market decline, I added to positions in VF Corp (Dividend Growth Portfolio), Bank of Nova Scotia (High Yield Portfolio)--I just couldn’t get that information to you. Which was as just as well, because as you know, stocks got whacked really good on Wednesday. Both the DJIA and the S&P were pushed through the lower boundary of their respective March 2008 to present up trends. At that point, I suspended any purchases until either stocks recovered above that March 2008 to present up trend or it was clear that they wouldn’t. Friday’s Market action sort of took care of that issue.

The issue now, from a technical standpoint (even though I talked briefly with a couple of buddies on what was happening to the Market fundamentally, I am not sure that I am up to speed and will spend today trying to regain a feel.) In any case it looks to me like that from a strictly technical point of view: (1) the DJIA (12479) traded up to circa 13133 [a prior high] before rolling over and plunging through the March to present up trend line. On its way down, it traded slightly below the August 2007 low, circa 12500. The next visible support is the April 2008 low at 12263; and after that the January 2008 low, circa 11634, (2) the S&P (1375) did not have a similar double top but reached the 1440 level before dropping through its March to present up trend. The most visible support level is the August 2007 low of 1370.

The point of all of this is to say that (1) I am behind on the fundamentals and need to catch up this week, and (2) it seems clear that the March 2008 to present short term up trend has been violated and we now need to look for the parameters of the next trend. A cursory glance says that we are in a trading range, we know the top (DJIA 13133; S&P 1440) but have no clue about the bottom end of the range. Hopefully, that will become apparent this week.

Technical

Trading volume during last week’s decline:

http://bespokeinvest.typepad.com/bespoke/2008/05/volume-during-l.html

Fundamental

News on Stocks in Our Portfolios

A positive write up on Praxair (Dividend Growth Portfolio):

http://www.zacks.com/newsroom/commentary/?id=6891

More Cash in Investors’ Hands