Thursday, March 13, 2008

Stock Market -- Position Overview

Our previous newsletter, dated February 7th, stated that the stock market was anticipated to remain under pressure, as further evidence unfolds confirming the deteriorating US economy. We projected a DOW trading range for the month between 11,520 and 12,775, as the stock market is in a well -established downtrend, with several sectors declining more than 20% from their peak price levels. The actual result for the month was a narrower range, with the DOW trading between 12,069 and 12,767. The major stock indices were apparently working off the oversold condition produced by the strong decline in the month of January 2008, resulting in a narrower range than expected, but with an accurately forecasted upper level price point.

The US dollar was projected to have possibly found near-term support, due to elevated levels of inflation, with a anticipated euro fx equivalent trading range for the month between $1.43 and $1.49. We further stated that the US dollar may have discovered support at euro fx equivalent of $1.50, which has been tested and held on several occasions. The actual result saw the US dollar initially trade within our expected range, but when it fell through the stated key support level of euro fx equivalent of $1.50, causing the US dollar to accelerate its decline and resume the downtrend. The euro fx equivalent trading range for the month was between $1.4445 and $1.5218, as the US dollar traded within our projected range, then broke lower.

The US treasuries was expected to be price-supported, as they continue to anticipate further slowing of the US economy, with a projected peak-yield for the US 10-year Note during the course of the month of 3.90%. This proved to be very accurate, as additional economic data released during the month further confirmed our beliefs, with the US 10-year Note being price-supported and a yield range between 3.57% and 3.92%.