Thursday, July 21 4:03 – Weekly Highlights

It looks like the U.S. stock market will finish the week flat. It is about where the last three peaks in the market this year have topped out – about 0% – 2% below the year’s high of 12,807. The ceiling is more noticeable on the S&P 500 which is a much broader and better index than the Dow Jones Industrial Average. Europe was up this week, Asia flat.

U.S. stocks should push through the old highs when the budget deal gets done, which it almost certainly will. Then the economy and corporate earnings can re-take center stage. The economy is not in the shape to push the market higher so a rally may be short-lived. Analysts are reluctantly starting to bring down overly optimistic estimates of economic growth for the balance of the year. I’ll be happy if the second half of 2011 shows 2% growth. Most current estimates are 3% – 4%.

Bonds had a mixed week, with most prices finishing just a little higher, even junk bonds which have had a rough month.

The US Dollar was lower; gold was flat; oil and food commodities were up 1% – 1.7% for the week.

With some notable exceptions, summer is on average a pretty flat time in the market, hence the old saw, “Sell in May and go away.” Volume is light while the upper crust visit the Hamptons, Europe, etc. Don’t let them kid you though, some of those Hampton “cottages” have unbelievable offices with big banks of monitors to track what’s going on back in the real world.

Enjoy the weekend. Get the yard work done early. Its pretty bad when you have to wear a hydration pack just to mow your burned-up lawn. I used to have a helmet with a place on either side for soda cans and tubes down to the mouth but I am much more sophisticated now.

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