Thursday, April 7th, 2016

Economy falters and stocks dive

The Economy is faltering as you have seen on TV and news media.There is a lack of creation of jobs and high gas prices and real estate prices going in for a double dip recession. This does NOT sits well with the stock market. The market is in a  gradual sell off. Nothing violent or brisk but a sustained downward motion in the last 6 weeks. The Washington leadership has been clueless as what to do with the current economic conditions. The President is out of options it seems, and after taking office 30 months ago things seem not to improve for most Americans. The “economic malaise “continues with burst of euphoria here and there.

There is a saying in the market ” Dont catch a falling knife”. It couldn’t be more true. The market is on the move to its 200 day moving average which is not very far at all. The SPX should hit 1250 pretty soon and DJI 11700. Take a look at the chart below.

That should give some pause to the selling. The selling has not stopped yet. This is a professional grade selling where tons of stocks are unloaded and if you stay in the middle of it you will be crushed.

So we are mostly in cash and staying on the sidelines. There are weeks like these where things don’t stop going down. The overall Economy and the lack of job creation has finally frustrated the Wall Street. This poor performance on the jobs front, real estate markets and debt is enough to depress any bullish sentiment out there.

We are in a bear territory under the 50 day moving average. Most stocks are hitting their 200 day moving averages now and specially the leaders. There are  always sharp rallies in bear markets only to be met by fresh round of selling. Bear need food to live on. They need the markets to bounce and than they sell it off. Once a bottom is placed than it becomes much safer to trade and we at not there yet.

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