Stock Market update -Jun 29th

Fasten your seat belts! We will close out June and the 2nd quarter with another big slide in prices. The Dow has lost 1600 points since the turn in mid-May at the 13000 level; the S&P 500 lost 160 points from the 1440 level, while the Nasdaq lost 550 points -the Dow has been the worst performer of the three.


Here is a longer term look at the three major indexes. This clearly shows the importance of using simple charts to track performance -the Nasdaq has been a clear loser here if you held it for the 'long term'.

After the Fed meeting on Wednesday, the market sold off hard on Thursday, with some more selling on Friday; the US Dollar also sold off. I would be very cautious going forward as the economy continues to be dragged down by a number of factors (Oil continues to move higher, touching $142 this week). The market has already given back around 20% since last October. Cash is a great position in these uncertain times -why risk losing an additional 10% plus, when you can get around a 2-4% return in cash. Not to sound like a broken record, but the credit crisis is still looming large out there, with the potential for possible bank failures as things continue to get worse (bank index).

Next week we have a short week because of the 4th of July holiday on Friday. We could expect some action in the US Dollar based on the ECB actions next week. Also, the market is very oversold, and with the S&P 500 approaching the March and January lows, we could get a small bounce at that level (note that the DOW has already broken down 'past' those levels). On a side note, Gold and gold equities saw a nice jump this week.

News stories:
Oil hits $140 for the first time
U.S. Stocks Tumble, Sending Dow to Worst June Since Depression
Dow in 350-point tumble
Gloom Descends Over Wall Street Again
Barclays warns of a financial storm as Federal Reserve's credibility crumbles
This Recession, It's Just Beginning
Gold surges into $900 territory

BofA to cut 7,500 jobs after Countrywide deal
Banks' pipelines to fresh capital are narrowing
Citigroup sinks to 10-year low, Goldman urges short sale
GM drops to 53-year low, Goldman urges "sell"
GM's Market Value Is Only $7 Billion—Half That of Avon
Ford (F) Says It Will Never Make Money Again
New home sales and prices both drop in May
The Housing Abyss

Intel to skip Vista upgrade
Eleven Billion Videos Viewed In April, And No One Made A Dime
World now has 10 million millionaires