FEBRUARY 20, 2008: Inflation showed up again today in the ‘hot’ CPI number. In January, core inflation rose 0.4% vs the forecasted 0.3%. Minutes from the last Fed meeting however indicated that the they would do everything they could to keep the economy from going into a recession. The Nasdaq celebrated by rallying 0.9% on heavier but average volume.
Retailers, oil drillers, and steel producers were strong today. Medical related, solars, and automobile stocks sold off. Transocean was up 7%. Research in Motion advanced 5%, and fertilizer maker Mosaic moved up 4%. Suntech Power dropped 12% and Sunpower lost 4%.
The Nasdaq is now 19% off it’s October highs. Stimulus packages, multiple rate cuts, bail-outs, etc. may have brought us a ‘counter-trend’ rally but have failed to change the direction of the markets, which is decidedly down.
Counter-trend rallies during corrections are by no means a signal to jump back in the markets. Bear market rallies can be sharp to the upside and come back down even faster. It’s best to wait for a ‘follow-through’ day and see top-rated stocks breaking out of proper bases before committing money to the long side of stocks.
Don’t forget that the banking system is in serious trouble, the housing sector is in ‘melt-down’ mode and the consumer feeling the pinch of higher inflation and less access to credit. More info at www.goldenticker.com
“Real Homes of Genius” – What were we thinking!
Tags: bubble, collpase, consumer prices, cpi, housing, inflation, meltdown, real estate
