Monday, October 19, 2009

Stock Market -- Position Overview

Our recent newsletter, dated September 18th, stated that we would expect lower stock prices once the sugar high, provided through the various stimulus programs, has run its course. We further stated that the sugar high is still persisting, allowing for the stock market to remain within an elevated period of consolidation, and anticipated a DOW trading range for the month between 9,200 and 10,300. The actual result saw the DOW trade within a narrower range than projected, between 9,252 and 9,917.

The US dollar was anticipated to decline in value even further during the course of the month, with a projected euro fx equivalent trading range between $1.42 and $1.50. This forecast proved to be fairly accurate, with the actual euro fx equivalent trading range for the month between $1.4194 and $1.4840.

The US treasuries were projected to have low yields for many years to come, but in the near-term, could remain under price pressure. This price pressure was anticipated to occur during the course of the month, inversely producing higher yields, with the US 10-year Note having a base-yield of 3.30% or higher. The actual result did see US treasuries decline in price, inversely causing yields to rise, with the US 10-year Note having a yield range for the month between 3.27% and 3.53%.