Following is a small sampling of current thoughts about the stock market.
* I suspect the "Bush bounce" in recent polling data has had something to do with continued firmness in stock prices. Here's a rundown of my seven-measure tracking group. I've used Tuesday's close (9/7) as a cutoff, since it represented recent highs. Note how Tuesday itself represented much of the year-to-date gains for those components that had them.
2004 to Date
9/7 Through 9/7
Measure Only (Excl. Divs.)
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NYSE Comp. 0.7% 1.8%
Russell 2000 1.2% 1.1%
Wilshire 5000 0.7% 0.9%
S&P 500 0.7% 0.8%
DJIA 0.8% -0.1%
Value Line (G) 0.9% -1.9%
NASDAQ 100 0.7% -3.9%
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Average 0.8% -0.2%
Median 0.7% 0.8%
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* You can continue to make a strong case that the above results represent a very disappointing 2004 outcome so far. Bear in mind the lofty expectations as the year was commencing. Moreover, as of 1/26/04, the date my technical work shows as the last major momentum peak, the tracking group was already up a hefty 5.3%, on average, for 2004 (median gain of 4.5%). The NASDAQ 100 led the pack, up 8.1%, versus Tuesday's return of minus 3.9%.
* Recent gains have pushed two of the three proxies I use for moving-average surveillance purposes marginally above their 200-day MAs (DJIA and S&P 500). This now sets up an important situation, since it is the first attempt since the 200-day MA was breached on the downside to get back above -- more importantly, stay above -- this key, closely watched measure.
Versus 200-Day
Measure 9/8 Close Moving Average
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DJIA 10,313 +0.4%
S&P 500 1,116 +0.3%
NAZ. Composite 1,851 -5.9%
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* If stock prices are reflecting the better Bush polling numbers, it is a bit amusing for this reason.
It has been my observation that other than paying them lip service, stock bulls more or less ignore negative political and geopolitical developments when they are in progress. However, if conditions change for the better, the bulls are quick to make a major cause celebre out of it, in an effort to have the market reflect the good news that never genuinely was reflected in prices when it was bad news.
Although the President has had a nice polling run after a very solid Republican convention, it is exactly what, based on historical standards, would be expected. I suspect the polls will begin to tighten again soon. If so, let's see how CNBC treats the phenomenon.
Conclusion
A secular bear I remain! As matters currently stand, I continue to see years of lousy equity-market performance, measured against the market's peak values of early 2000. And measured on a price-only basis against those values through yesterday's close, the DJIA, S&P 500 and NASDAQ 100 were down 12.0%, 26.9% and 70.7%, respectively.
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