Capitalogix Commentary 05/31/09

A Different Form of Rescue for G.M., Through Bankruptcy.Auto Industry Natural Selection

President Obama will push General Motors into bankruptcy protection on Monday, making a risky economic and political bet that by nationalizing the onetime icon of American capitalism, he can save the company as a much smaller automaker that is competitive.

Still, The Market's Rally Persists.

The Markets continue to hold-up well three months into the rally.  From my standpoint, I'd like to see a pull-back.  However, the action has seemed relatively healthy considering the circumstances. 

The chart below shows a daily view of the S&P 500 since its March lows.  I marked the obvious Bull and Bear cases for your review.  A sustained break-out to the upside would be significant here.

090531 SP500 Consolidation

I don't normally post intra-day charts; however, Friday was interesting.  We spent the day bouncing within a tight range … then somebody started buying.  I hear people reference the "Boys" or the "Plunge Protection Team", or explain the push as "End-of-Month Window Dressing" or "Short-Covering."  Here is an hourly chart showing Wednesday, Thursday, and Friday.

090531 SP500 Consolidation Spike

From my perspective, all it means was there was a lack of sellers.  Let's see if they come back in June.

What Goes Up, Must Come Down:  Or Does It?

The rally did not just happen here in America.  This chart, from Bespoke, shows how far the fast growing developing countries have come this year. 

BRIC Country Equity Index Performance YTD 2009

When I see charts like this, one part of me thinks, "look how far they've come"; and another part of me thinks, "look how far they are likely to fall."

Business Posts Moving the Markets that I Found Interesting This Week:

  • Sell In May? Not This Time … as the Rally Continued. (Seeking Alpha)
  • Many Hedge Funds Caught Short by the Rally, Still Have Not Fully Bought-In. (WSJ)
  • Will Money Flow Back Into The Markets, Or Will The Sidelines Stay Crowded? (WSJ)
  • Economists Disagree Whether A Sustainable Recovery Has Begun. (Market Oracle)
  • Hulbert's Contrarian Take On Consumer Confidence. (MarketWatch)
  • Tivo Posts Loss As Its Growth Slows. (NYTimes)
  • Dell Warns PC Market Hasn't Hit Bottom; Suffers 63% Drop In Quarterly Profit. (WSJ)
  • More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

  • Susan Boyle's Final Performance on the "Britain's Got Talent" Final. (YouTube)
  • The Science of Voodoo – How Mind Attacks Body. (New

  • Shark Tank: New Reality Show Where Entrepreneurs Pitch To VCs. (WSJ Blogs)
  • Is Cloud-Computing a Myth or a Worthy Goal? (Forbes)
  • New Form of Warfare? Mysterious Computer Virus Strikes FBI. (ZDNet)
  • Thought Provoking Article about Author-Strategist, Jim Collins. (NYTimes)
  • How IBM Plans To Win Jeopardy! With
    Natural-Language Processing. (Tech Review)
  • More Posts with Lighter Ideas and Fun Links.
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