Friday, September 11, 2009

Remembering 9/11; No Break for Bears; Gold Tops $1000

The trading day began with moments of silence... remembering the victims of the awful attacks on the World Trade Center 8 years earlier. At the close, strangely enough, the Dow Jones Industrials stood 0.10 lower than the close on September 10, 2001. It was a sombre session, within a tight trading range, the mood almost preoccupied with previous events.

While many market participants recalled 9/11, others were focused on more current disasters, namely the fall of Lehman Brothers, which occurred just one year prior. The US economy and the markets have been through a metaphorical wringer since last September, witnessing the near-collapse of the entire financial system, followed, thankfully, by a subsequent recovery.

Though all of the major indices closed lower on the day, ending a five-day winning streak for the bulls, the losses were barely noticeable. For the week, the Dow finished ahead by 164 points, the NASDAQ improved by 62, and the S&P added 26 points, all reinforcing the recovery wind that has swept over the financial landscape.

Dow 9,605.41. -22.07 (0.23%)
NASDAQ 2,080.90, -3.12 (0.15%)
S&P 500 1,042.73, -1.41 (0.14%)
NYSE Composite 6,843.82, -6.99 (0.10%)

Market internals ended on a mixed note, with decliners gaining a small, late advantage over advancing issues, 3223-3205. New highs continued to dominate new lows, however, 349-88, giving every indication that the rally will not wilt soon. Volume returned to its sluggish ways, with trading activity close to the lowest level of the week, though the NASDAQ still seems to be the place to which money is flowing.

NYSE Volume 1,388,797,000
NASDAQ Volume 2,347,513,000

Economic reports offered some vague insights. Consumer sentiment shot up to 70.2 for September, after a showing of 65.7 in August. Wholesale inventories dropped 1.4%, the 11th consecutive monthly decline. This shows that goods are still moving at a very sluggish pace and wholesalers are playing close to the vest, though eventually manufacturers will be called upon to replenish inventories. When that begins to happen, a strong reaction by the markets is almost assured.

Another positive sign came at 2:00, when the US Treasury announced a budget deficit for August of $111.4B, when analysts were expecting much worse, though the markets barely noticed.

Commodities finished in very mixed fashion. Oil was hammered down $2.65, to $69.29, on oversupply concerns, but gold finally topped the $1000 mark, ending with a gain of $9.60, at $1,006.40. Silver lagged, up only 3 cents, to $16.70.

From a chartist's perspective, the trading day was positive for bulls, as stocks advanced in the early going, fell to the lows of the day shortly after noon and then recovered into the close. With the slightly lower finish, it has set the classic bear trap for the opening session next week.

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