Saturday, February 27, 2010

Stock Market -- Position Overview

Our recent newsletter, dated January 22nd, stated that we remain bearish, as Main Street readjusts it consumption/saving patterns to the new normal. The stock market sugar high remains in place for the time being, but several technical indicators suggest prices are within the throes of a topping process. We anticipated that the DOW could continue within this "elevated topping process period of consolidation" during the course of the month, with a projected trading range between 10,150 and 10,950. The actual result saw the DOW trade within a narrower range than projected, between 10,043 and 10,729.

The US dollar was anticipated to remain within a broad trading range, between euro fx equivalent of $1.40 and $1.46, during the course of the month, as investors continue to decide if this the their global currency-of-choice for the short and long-term future. The actual result produced a slightly larger trading range than projected, between euro fx equivalent $1.3865 and $1.4561.

The US treasuries, at least for the near-term, was forecasted to remain within a supported price trading range, during the course of the month, with a peak-yield for the US 10-year Note of 3.85% or lower. We further stated that China and Japan will continue to feed the US debt addiction, eventually equaling the US Gross Domestic Product, and producing undesirable long-term consequences. The actual result saw the US treasuries remain within a supported price trading range, with the US 10-year Note having a yield-range for the month between 3.58% and 3.86%.