Tuesday, September 22, 2009

Up and Down

Over the past two days, the markets have been practically at a standstill, with trading ensconced in a fairly tight range. After closing down 41 points on Monday, the Dow rose 51 on Tuesday, for a net gain of 10 points. This kind of range-bound gyration is probably due to a number of factors, one being that the market has been on somewhat of a tear and has cooled off for some profit taking, and also the usual waiting game prior to the Fed rate announcement (due Wednesday at 2:15 pm).

While the Fed is poised to do nothing once again, it's probable that they'll spice up the language somewhat, the accompanying press release stating that there are incipient signs of recovery in various parts of the country, though jobs and real estate prices are still acting as a drag on the economy.

Since none of that is anything new, traders will be - more and more every day - looking at stocks from a valuation standpoint, seeking companies that are well-managed, stable, and with solid cash-debt positions. There's also something of a speculative movement ongoing as well in this trader's market. With so many small firms trading at very low prices, investors have been nibbling and gnawing at stocks mostly priced under $20 per share. There are loads of them, some good, others not, but that's a matter for which markets are built.

The orderliness of the current rally has been something marvelous. Creeping upwards little by little nearly every day, this 6 1/2-month-old boom has not gotten overextended, and still appears reasonably priced considering current conditions. Any good news from the real estate world or job creation front should send it soaring off like a Roman candle.

Dow 9,829.87, +51.01 (0.52%)
NASDAQ 2,146.30, +8.26 (0.39%)
S&P 500 1,071.66, +7.00 (0.66%)
NYSE Composite 7,047.13, +78.54 (1.13%)

Advancing issues finished smartly ahead of decliners on Tuesday, 4259-2214. New highs outpaced new lows, 458-60, continuing a nearly 3-month-old trend that now appears unbreakable. Volume was moderate, tending toward high.

NYSE Volume 5,923,928,000
NASDAQ Volume 2,504,479,500

Commodities were mostly higher on a weaker US dollar. Oil rose $1.84, to $71.55, though it remains stuck in a price range between $65 and $75. Gold bounded higher by $10.60, to $1,015.50. Silver bounced back 24 cents, to $17.12.

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