Stocks closed lower on Friday as traders were disappointed over the governments apparent confusion on how to deal with the ongoing banking crisis. The 4th quarter GDP figures came in slightly better than expected, but that was likely due to a build in inventories rather than consumption. Ultimately, the Dow Jones Industrial Average closed nearly 10% below its close at the end of December, making this one of the worst Januarys on record. A weak January tends to indicate that the remainder of the year will be weak, but of course that is not set in stone.
Bottom line is that until we see improvement in the jobs figures and real estate, the economy will be weak, and I can't see the stock market moving very high from here. At best, we are stuck in a between 7,500 and 9,100 on the Dow, and at worst, we begin a new, painful leg down.
One thing worth mentioning is that I am noting more commercial and investment real estate being assigned to the "special assets" division of some of the banks I deal with. This means that the banks are trying to figure out how to deal with an underperforming property, and typically, that means foreclosure. That is somewhat interesting since as of late, the REITs have been among the best performing industry groups when the market manages to move higher.
More to come on the weekend.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
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