The U.S. Stock Market shifted its focus to the actual economy today after the Senate passed its version of the financial bail-out plan Wednesday night. Weak employment and housing data over the last couple days has focused the market on actual economic data, which is likely to get worse before it gets better.
Surprisingly, the Dollar has been able to rally very strongly over the last couple of days, particularly against the Euro. Today, this strength spilled over into Gold weakness, as commodities continue to sink across the board. It was notable that many of the stocks that lead the market to its peak in 2007, the agricultural related stocks, coal stocks, and the dry bulk shipping stocks, continue to sink, and many actually made 52 week lows today.
Although the U.S. Government is ready to provide a huge bail-out plan that will include lots of new spending and the printing of more dollars, the markets are suggesting that inflation is not of concern in the foreseeable future. The air in the commodity balloon continues to be let out, and leading economic indicators such as the industrial metals, aluminum, platinum and copper, continue to drop. Oil is now ready to test its mid-September lows while gasoline and heating oil have already gone through those lows.
The bottom line is that these are positive developments, and once we get through this current credit crisis, and normalcy returns to the financial system, the stock market will begin to look forward. With commodity prices falling, the Dollar rising and interest rates remaining low, the platform will be in place for the market to begin a new bull market. UNLESS…the next administration decides to screw things up by raising any kind of taxes. If there are tax increases on business and the top income earners in the country, those that provide the jobs, the recovery will be slowed considerably. The financial bail-out will do nothing if jobs continue to be lost.
Stay tuned!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
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