Improvement

I’ve been mentioning that we’ve had major improvement in the credit markets over the past week or so.  Spreads are loosening up and LIBOR continues to come down.  All of the intervention worldwide is helping the credit markets.  I believe the panic is behind us.  There is still some fear but the panic is gone.  As far as the equity markets, the panic also seems to be subsiding.  There is still plenty of fear but not as much.

The pattern the last three days has been very constructive.  Up 900 points, down 70, then up 200.  We basically had a pretty strong day Tuesday, a mild profit taking pullback yesterday, and a pretty strong day today.  I nibbled today and made a couple of purchases.  The first purchases I’ve made in a very long time.  I have stops on major holdings that are general to the market not wanting to give up gains made in the past few days.  But, certain stocks and sectors are looking good for the first time in a while.

We can’t dive in but we can buy on the way up.  I have not yet bought extremely high beta ETFs just yet, but I am nibbling here and there.  The market is in the process of improving but it’s not THERE yet.  I think the selling pressure is easing up but the demand for stocks isn’t there just yet.  It’s like holding something under water in a pool.  If you let it go, it bounces to the surface.  That’s where we are right now.  The pressure has been released for the short-term which is giving equity prices a boost but the really strong demand isn’t there yet.  But, every up day causes those with 100% cash to question their sales they made and jump on board at some point.

Today was a big improvement and the fact that we’re building on the 900 point up day from two days ago is very constructive.  In addition, the market tried to sell off in the last hour but when we were only up 50 or so, the buyers stepped back in pushing the Dow up 189.  That’s another positive sign.

One main concern I have and it may benefit us in the short run is we are getting better than expected economic reports.  This is fooling everyone into thinking things are improving.  They are not.  They will get worse and as the months go on, people that read these reports will have sticker shock when they see those bad numbers.  But, for now, let’s hope they are good in the short run and it causes equity prices to rise.

So far so good.

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