Market Out of Gas?
Research for Online Investors

by John Dalt

10/23/09

Is the market running out of gas.  Amazon beat earnings and Microsoft gave an encouraging forecast, but the market is down this morning.  Look at the accompanying chart.  Do you see a pattern?

Since the 50 day average crossed above the 200 day, the market has climbed, interrupted by three major pullbacks testing (but not penetrating) the 50 day average.  Eleven hundred has blocked us from going higher, 1047 looks like a magnet.  Optimism has ruled since Oct. 1 and like all things in life cannot go on forever.

For traders, look to sell into this market, either moving to the sidelines or taking small short positions in selected sectors.  I like real estate (SRS) and oil/gas (DUG).

Following up on our headline yesterday concerning Nokia (NOK) suing Apple (AAPL) for patent infringement, Financial Times has the story, “Nokia takes on iPhone in legal fight.”  Apple has used patent protection aggressively in the past, now it is their turn try on a pair of tight shoes.

The OH! Bama charm offensive seems to be wearing thin with others than just Israel, Russia, and China.  Nicolas Sarkozy, President of France was elected on a platform of reforming France, making it more like the United States (think capitalism).  Oh! Bama has snubbed him, refusing an invitation to dine with Sarkozy while in Paris this summer.  France is concerned with America’s new tolerance of Iran’s nuclear program, preferring a much harder stance.  “There is an annoyance about what the French see as naivety in the Obama administration,” said Bruno Tetrais of the Foundation for Strategic Research.  Reuters has the story, “Disappointed Sarkozy shifts gaze from Washington.”

“If something cannot go on forever, it will stop.” ---Stein’s Law

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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