August 2009

State of Consternation

The markets continued their ascent from the March lows, with the S&P 500 rising 3.61% for the month and a respectable 16.10% for the year. As you know, our results have been posted on our performance page. In what has been a truly remarkable run, this market has surpassed even what many bulls consider fair value let alone the bears who have been left in a state of utter consternation. Here are some thoughts of what may lie ahead:

• With the Fed on hold (probably through next year) and an economy that is on the mend (albeit sluggish) the odds seem fairly good that the market will bump its way up over the next year.
• From a technical standpoint (Lowry), the market is showing some selectivity in its advancing issues, and this could be a sign that we are close to a decent correction; however, given that selling pressure remains rather dormant, any downdraft at this stage should remain well contained.

-Joe