Stock indexes fell sharply again today. One can’t really blame Obama for this. The results of the election were no surprise. There was euphoria on election day with a nice rally, but post-election economic reality has set in. We now can look forward to European style socialism, or worse. Who knows how the stock market will react as policies get implemented. It is hard to imagine anything positive with higher taxes, restrictive environmental controls, larger and more aggressive unions, more power grabs into now private areas of the economy, and on and on and on. I’m sure the first couple of years of the new administration, when economic conditions fail to improve, Obama and the media will continue to blame Bush for eight years of failed policies, with no mention of many years of failed policies by congress and freddie and fannie, etc. And I’m also certain in the years ahead if the economy worsens, and when it is no longer is effective to blame Bush, the media that helped elect Obama will be more kind to him than to any republican. That’s to be expected. I suppose it doesn’t matter. Maybe I’m being too pessimistic. Maybe all will be well with the world. He says he wants to unite. But where has there ever been evidence of that in the past? So far it is all talk and promises. His actions have been quite the opposite. He has never reached across the aisle. He has the most left leaning voting record, that is when he did actually vote. We’ll see. I hope I’m wrong. Maybe now in the highest office he’ll move to the center.
Regarding the market, before I get off on a tangent about politics and alienate half the readers, the markets across the board were down hard for a second day. I have included the Dow Industrial chart with two 50% retracement levels drawn. The red lines are the 50% level of the September highs to October lows. You can see how price came right up to the 50% level on the election day rally, nearly to the tick on the Dow. The faint, dashed green line is the 50% level of the same October low up to the election day high. You can see how price came right back down to that level, and in the case of the Dow actually closed a bit below it. The trend indicator has pinched together, and on the Dow actually crossed up by a hair. But I’d still call the trend down. It is common for this indicator to pinch together and then widen out as the main trend resumes. Momentum is clearly down. But I still think overall downside momentum is slowing down a bit, and if the stock indexes can somehow manage to hold and create a trading range in this lower zone, it might still indicate a low formation is being created. The indexes have come down a long ways, and even with all the economic problems, an upside can’t be ruled out. Market often turn long before the news. Of course Obama will be given credit for any upside. That’s fine. As long as I can catch the trend when it reverses.
I have a new advertiser on the left sidebar. A couple of years ago I subscribed to a service called InvestorFlix. It was much like NetFlix, except the videos were from trading seminars. I thought many of the presentations were excellent. Most were from expensive trading conferences around the country such as TAG. Now the service is completely online, and it is called INO TV. No more having to order, wait for the mail, and having to return them. I think the price has also dropped since there are no more mailing costs. There are offering a sample of a few free videos just for clicking the link on the left and filling in a few lines of information. Check it out. There is no cost or obligation.