U.S. Stock market traders voiced their opinion on the stimulus package signed by President Obama today, and that answer was a resounding NO! The major averages dropped about 4% today, and it was notable that the Dow Jones Transports broke through their November lows. The Dow Industrials barely closed above its November closing low, and it hovers just over 1% above its intraday lows. The other major averages, due to the outperformance of tech and biotech stocks in the last couple months, remain a bit above their November lows, but have broken through support levels that should at least carry them down to the November lows.
As stocks continued to trend lower, their was a flight to quality into Gold, Treasuries and the Dollar. 10 Year Treasury yields were down to 2.65%, down about 30 basis points from their recent highs. I have also noted that the spread between the 10 Year Note and 30 Year Mortgage rates has narrowed to about 200 basis points. This may help to put a floor under real estate prices. However, we still need to end the job losses if we want to see a recovery in real estate.
Aside from Gold and Silver, commodities were sharply lower today, as economic weakness becomes the focus of trading again. Energy prices lead the way lower, and Copper and agricultural commodities were also quite weak.
Tomorrow, Obama is set to unveil is plan to deal with the mortgage issue, and Thursday, Tim Geithner will apparently provide more details regarding the TARP and the banks.
Stay Tuned!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
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