Tuesday, June 10, 2008

Stock Market -- Position Overview

Our recent newsletter, dated May 9th, stated that the sentiment for the stock market may have shifted, but skepticism, let alone profound bearishness, has not taken root. We further stated that some investors may be bullish because of the tax rebates or the delusion that the credit crunch is history, but that makes us all the more certain that we have not seen the last nor the worst of this bear market.

We forecasted that the DOW would decline during the course of the month, and projected a trading range between 11,950 and 13,150. The actual result saw the DOW decline as forecasted, but with a narrower trading range for the month, between 12,442 and 13,136.

The US treasuries were anticipated to be price-supported during the month, at least for the near-term, with a projected peak-yield for the 10-year Note of 3.90%. The actual result saw the US 10-year Note first being supported, but then begun to decline in price, as inflation pressures grew during the course of the month. The 10-year Note yield range for the month was actually between 3.74% and 4.09%.

We further projected that the US dollar would likely experience renewed pressure during the course of the month, with a euro fx equivalent trading range between $1.53 and $1.59. This proved to be a very accurate forecast, as further uncertainties pressured the US dollar, resulting in an actual euro fx equivalent trading range for the month between $1.5294 and $1.5773.