Tuesday, July 29, 2008

Market Climbs A Wall Of Worry

Seems like the more negative the news on any given day, the higher the market wants to go.

(click on charts for larger image)

S&P 500 Index chart July 29, 2008
  • After the close yesterday, Merrill Lynch (MER) announced it would sell most of its collateral debt obligations ($30 billion) for 22 cents on the dollar. Merrill's stock prices rises nearly 8% today to $26.35.
  • Standard & Poor's reported today that the Case-Shiller Home Price Index fell over 15% in May.
Case-Shiller Home Price Index Chart for May 2008
  • The Wall Street Journal carries another editorial on Barack Obama's tax plan. Barack Obama's plan could be enough to send the economy into a deep recession by raising the highest marginal tax rate to 62.8% versus the current 44.6%.
  • On July 31st, The Wall Street Journal had an editorial on the percentage of taxes paid by taxpayers based on income levels. Historically, raising taxes on the top 50% of taxpayers has been detrimental to the economy and stock market.
Could last week have signaled the beginning of a market uptrend?

Source:

Record Low Annual Declines Recorded in May 2008 for
the S&P/Case-Shiller Composite Home Price Indices (PDF)

Standard & Poor's
By: David Blitzer and David Guarino
July 29, 2008
http://www2.standardandpoors.com/portal/site/sp/en/us/page.article/0,0,0,0,1204838123979.html

Obamanomics Is a Recipe for Recession
The Wall Street Journal
By: Michael J. Boskin
July 29, 2009
http://online.wsj.com/article/SB121728762442091427.html?mod=opinion_main_commentaries

Their Fair Share
The Wall Street Journal
July 21, 2008
http://online.wsj.com/article/SB121659695380368965.html?mod=opinion_main_review_and_outlooks


1 comment :

Dividend Growth Investor said...

David,

Maybe that means that the market has already bottomed. We'd have another thrust of the rally to send S&P 500 5-10% higher, before we decline halfway between the july lows and the higher highs..
After that we'd be trading sideways for several weeks before the market recovers and reaches a new all-time high in 2009 :-)