Good News Spooks the Market
7th December 2009
The news on Friday was good. Unemployment had dropped from 10.2% to 10%. The market gapped open considerably higher. And then a funny thing happened on the way to the bank: the market sold off into the close on very strong volume.
What’s that all about you might ask? Once the euphoria died down, investors realized that a few more good reports and the FED might just begin increasing interest rates. The dollar jumped, while Gold and Oil tanked. That’s not good news for stocks or bonds.
It will be interesting to see if the 50 day MA supports the market this time, or if the prospects for an L-shaped recovery hold the market down. While active traders might want to put on a bearish trade or two, longer term traders and investors should consider taking some profits on current long positions. If this is another pull back, you can always get back in. If the market decides it is time to head south for the winter, there will be plenty of time to profit on the downside.
JD
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