Dow Hitting Resistance

Over these past few months we have seen the Dow Jones Industrial Average approach the 9000 level since hitting its low of 6478 on March 6th. It set an intra-day high on June 11th just below 8900... pretty close to our target of 9000... and in stark contrast to those who were telling everyone to "wait for the bottom." By any standard this powerful 37% rally was impressive and offered tremendous trading opportunities. The average stock market return for an early economic recovery period like the present is about 36%. We are well within this range.

The past three weeks have shown the Dow trading sideways with some downward momentum. Where is it headed? Unless there is some catastrophic news out there, we should see this sideways pattern continue until the fall season to finish out our top. Markets seldom move straight up or down. Volume can be light during the summer months which can offer some interesting movement, in either direction. Overall the 50 day moving average is at 9045. I expect to see some good trading opportunities over the remainder of the summer as the market, and investors, sort things out with our economy, the bank crisis, world news, etc, etc.

Writer's note: I have been developing a concern that our way of thinking in this country is moving away from the free enterprise and more towards a socialism. We no longer live in an environment where we should 'ask not what our country can do for us' to paraphrase President Kennedy. Now it is more like 'what can my country do for me?' Free enterprise is what has made our country great. If we take away free market incentives, those of us left with jobs will be part of some nameless, faceless beaurocracy that offers no reward for outperformance. I will specifically be focusing on our quest for "National Healthcare Reform" and my concerns if we go to a socialized system. Make no mistake, an 8 hour wait in the Emergency Room will be the norm.. and forget about having that knee or hip replacement done anytime soon. I will write more about this in upcoming Marketdoc Reports. Stay Tuned.

Seems Like '79 All Over Again...

Most people under 40 cannot remember what it was like during 1979. As I read the headlines today, I see a striking similarity to events which took place thirty years ago. As the saying goes, "If history doesn't repeat itself, it sure rhymes." See if you agree:

1. The gold price was on its way to record highs.

2. Demonstrations were taking place in Iran which ended in the overthrow of the Shah.

3. Chrysler was on the verge of bankruptcy. Calls were being made for a government bailout.

4. Oil prices were escalating.

5. The dollar was under seige.

6. Major legislation had been passed which made the old "gas guzzlers" from Detroit out-of-favor and the focus was shifted toward improving fuel efficiency standards and overall vehicle quality.

7. There was an increasing call for development of alternative sources of energy.

8. The economy was in throes of a recession.

Of course, interest rates today are much lower than they were in '79-80. The stock market logged a 27% return from its recessionary low in January 1980 through June 1980. According to JennisonDryden, "the average post-recession return for the stock market S&P 500 is 36%... recession fears and market volatility make investors skittish..with many pulling money out of the market after having experienced much of the decline... Typically stock market declines begin prior to the arrival of a recession and a rebound begins while the recession is still underway."

Note: The above is for informational purposes only. Any decision to buy, sell, or hold a specific investment for a portfolio should be reviewed by your personal financial advisor.

Dow Keeps Gaining

Since hitting its low in March, the Dow Jones Industrial Average has continued to show quite a bit of staying power. We have seen the Dow gain over 35% in three months!! We are on track towards a 40% retracement which would place the Dow somewhere around 9000. The incredible fact remains that there are alot of money managers who still have not entered this market. They are beginning to panic as they sense having missed this record-breaking move upwards. These managers have been looking to get into the market on any sustained pullback but they have been unable. Now things are getting a bit uncomfortable for them!

The weekly Dow continues to climb toward its 50 day moving average at 9129. We hit an intra-day high at 8855 on Friday, June 5th. From here, 9000 seems within close reach. We might even see an advance ABOVE 9000 as these money managers enter the market. THEY WILL HAVE NO CHOICE BUT TO BUY!!! This type of activity could take us well into summer.

Pay no attention to the main stream financial media who are "waiting for the bottom." There are many crosscurrents of information floating around this market. Stay tuned to the Marketdoc Report and you too can learn to recognize these important market patterns.

Please take a moment to reflect on the lives our brave soldiers who fought and died on the Normandy beaches 65 years ago today, June 6, 1944. Remember D-Day. We owe them our freedom!

Note: The above is for informational purposes only. Any decision to buy, sell, or hold a specific investment for a specific portfilio should be reviewed by your financial advisor.