Dear Clients,
Well so much for the stock market making its turn in the midst of all this bad news. Last week completely erased the previous week’s gains while the market found its way closer to the bottom set last November. To market technicians this comes as no surprise, as many have suggested that stocks need to test those November lows at least one more time before they can move higher in any sustainable fashion. Since I’m not a technician I can’t say whether or not last week’s 5% drop in stocks indeed follows some predictable pattern.
I will say this however; if it’s not due to some fifty-two week mountainesque pattern in the charts, or a double top with an inverted head and shoulders breaking through the resistance line (technical jargon), I’m betting last week’s drop was simply the market thumbing its nose at Washington for a week of horrendously bad politicking.
Of course I could be missing something, but it’s my observation that the market is signaling (with sirens and flashing red lights no less) precisely what it wants to see come out of Washington. Forget the stimulus package