Waning Confidence

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Not surprising, although unexpected to many, the consumer confidence reading fell to a 10-months low yesterday taking the starch out of the market with all major indexes giving back some of last week’s gains.

This brings the validity of the current recovery back on the front burner. With unemployment and underemployment at records levels with no end in sight, real estate prices still mired in a downward trend and debt levels at unsustainable levels wherever you look, how is the consumer supposed to feel?

At the same time, we continue to battle some of the technical resistance points that have put up a formidable fight. Namely the 1,100 level on the S&P; has proved to be a barrier for several months now that can’t be cracked for any length of time.

A new driver is indeed needed to push the markets out of their sideways pattern. I just happen to look at some positions we established the middle of last September, from which point the S&P; 500 has gained less than 2.5%.

Despite this lack of upward momentum, the major trend has not been interrupted, and yesterday’s drop merely pushed the TTIs (Trend Tracking Indexes) a little closer to their trend lines. The TTIs are positioned +3.42% (domestic) and +2.67% (international) above their long term trend lines.

We continue to hold on to those positions that were not affected by the recent decline.

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