The sky is not falling but after a dismal May (S&P down 6.27%), the markets fell another 2.5% today due in large part to the dismal jobs report released this morning. Not only were the recent jobs created much less than expected, but prior month's gains were revised downward. The jobs picture combined with yesterday's dismal economic data was too much for the bulls to contend with and many hit the exits. All of the major indices closed at their lows for the day which bodes ill for the beginning of next week. The brief reprieve the markets experienced the last couple of weeks has quickly evaporated and the S&P has now pierced the all important 200 day moving average. The market has become oversold again on a short-term basis so the bulls will be trying to rally above the 200 day moving average next week. Rallying to the average will be one thing - holding it will be another as US economic news continues to disappoint and the issues across the pond show no sense of abating. The Fed and ECB still stand in the wings and many are thinking we are close to another round of quantitative easing (QE3). Absent a stark reversal in Europe and in the US economy, QE3 may be closer than we think and the only thing standing between another 5% loss in the markets. The next level of significant support for the S&P is around 1220 (60 points below where we closed today).
As mentioned yesterday and in our recent communications, our portfolios have been in defensive mode for several weeks. For the month of May, our portfolios were down anywhere from .5% to 1%. Though not all prices have been posted yet today, it appears that our Fidelity and TD Ameritrade accounts were flat to up fractionally today. Better times will come but, for now, extreme caution is in order. As always, please call Sam or I if you have any questions or would like to speak to us about managing your current investments.
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