There certainly is no shortage of opinion about whither the market! I have CNBC on all day in the background, which is mostly useless - it’s for news. I certainly wouldn’t make any judgment calls about the market from any of the commentary featured.

It is interesting how some of the biggest email-based promoters differ. For example, one commentator is breathless about China. Another also breathlessly extols China and points out how they are buying up raw materials, and then in the bottom part of the same email says China is an ecological nightmare (true) and has stopped buying raw materials. So which is it?

This last pundit, whose name rhymes with Dick Young, also says the dollar is a dead duck and warns of an impending crisis of such immense proportions we will be nostalgic for the Great Depression - but don’t worry, his time-tested stock picking strategies will save us. Well, the dollar is in deep doo for a number of reasons, probably unfixable. But it’s the only dollar we have. Who else’s currency would you rather have? Brazil’s? The Euro?

He makes the coming crisis sound like the Zombie apocalypse so beloved by Hollywood. But, if this crisis is imminently upon us, should we be buying stocks? Maybe items like guns, ammo, water, non-perishable food would be more practical. I don’t have anything against fear-based marketing, but come on. If American ever turns into the dog-eat-dog apocalypse world of the old movie Escape from New York, I’m guessing stocks will be the last thing on our mind. (Honey, there are armed and hungry men outside, I think they want our stocks…)

Jon Markman, on the other hand, points to some more upbeat facts. Domestically, housing sales are up 7.2% and new housing sales even higher, unemployment has peaked at 9.8% just missing the magic 10, corporate profits are up 24% in the first six months of this year and durable goods orders are up 4.9% month over month. Internationally, industrial production and manufacturing numbers are up in Singapore, the Philipines, Spain, Germany, Japan the UK and in many other countries.

But the trend does not care about pundit predictions. The thing we must remember is that trends remain intact until they end. And until it clearly ends, you play the trend.

The major indices recently rebounded beginning on October 5th. My philosophy is to write covered calls with the market. When the market is pulling back, I tend to close open positions - so I can repurchase the stock lower and ride the rip. I don’t usually write calls on market pullbacks.

However, the market has to reach higher highs to keep the trend intact. For example, the DOW recently hit an intraday high of 9,917.99. We have to move above this high to keep the uptrend intact. The DOW closed at 9,786 today. Breaking through this might not be pretty, but if it does, this trend may last a while.

This entry was posted on Thursday, October 8th, 2009 at 5:04 pm and is filed under Markets/Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.