Added: Sep 7, 2010
Author: noramassetmanagement
Duration: 4:6
The markets were down across the planet today with the exception of a few Asian countries that were up marginally. The Dow was down triple digit or 1%, and the NASDAQ and the S&P were both down more percentage wise at -1 1/4% each. Volume, however, was light with preliminary numbers coming in at 3 billion on the NYSE and 1.6 billion on the NASDAQ. Their 30 Day Moving Averages are 4.7 billion and 2 billion respectively. We are still in the lower 1/2 of the trading ranges but close to the midpoint for all 3 major indices. It was a very light news day today with the only economic data coming out today is the ABC Consumer Confidence at 5:00 EST. The survey or estimates are for -44 with the prior number being -45. We need to continue to get some good economic data for this "rally" to continue. Tomorrow, we get mortgage applications, The Fed's Beige Book, and Consumer Credit. Even though it was a very light news day, it was still all about the Fundamentals -- but over in Europe. Investors all over the world are again worried about the sovereign debt crisis in Europe. I thought that was behind us? Who knew? Wait a minute, we did, we told you it would come back and was briefly pushed back on the back pages of the papers because of the BP Oil Spill in the Gulf. Now it is back. Today, the European markets sold off today across the board, especially the banks. And it seems the banks didn't disclose all the sovereign debt they had on their books like they were supposed to in this stress test. In fact, the Wall Street Journal had a front page article today exposing the European Banks for not providing full disclosure. In fact, it was lack of disclosure that got everyone's attention. And remember, that stress test was no stress test a all. The variables they used were a mild slow down in economy and a slowdown in EU GDP. It did not have any "black swan" events like a large bank failure or a country failure, which is highly probable over the next few years. We need to watch and see if Europe becomes more important and the center of attention over the next few days. This is why I think it is prudent to be somewhat conservative for the moment. The risk/return is just not there and you are not being overcompensated for the risk you take. Therefore, have some selective stocks and sectors, some gold and silver, and be looking to pruning your bond portfolio. For the Full Story click the link below: http://noramassetmanagement.com/europe-sparks-a-sell-off/ Keep studying, Dan Stewart CFA® NorAm Asset Management E-mail: dstewart@noramassetmanagement.com
Channel: News
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