Friday, May 15, 2009

Stock Market -- Position Overview

Our previous newsletter, dated April 13th, stated that too much damage from the massive stock market decline has been inflicted to consider an advance as anything but a bear-market rally. Bargain hunters should note that a bottom is not a place -- it is a process that can take years and requires an active money manager to generate profits in either a rising or declining stock, bond or real estate market, as offered below. We projected that the DOW would continue a period of consolidation during the month, and anticipated a trading range between 7,400 and 9,600. The actual result was a narrower than forecasted trading range, between 7,483 and 8,307.

We anticipated that the US dollar would decline in value, based on our technical prospective, at least for the near term, and projected a euro fx equivalent trading range for the month between $1.31 and $1.41. The actual result saw the US dollar both decline and rally in value, with a euro fx equivalent trading range for the month between $1.2917 and $1.3555.

The US treasuries were forecasted to remain under price-pressure during the course of the month, and we projected a base-yield for the US 10-year Note of 2.85%. The actual result did see the US treasuries decline in price during the the month, inversely causing yields to rise, producing a US 10-year Note yield range between 2.86% and 3.31%.