Weekly Risk Report 11/24/2008
The theme song for last week’s market was, “Momma told me there’d be days like this……” Searching hard for a silver lining I find that all four of our i-Wave’s components dropped in their own risk assessment as a result of a very rough week. All week the volume built as the markets were tossed around. By week’s close we saw only about 650 stocks that advanced while 4700 stocks declined. Not bad out of a total of 6459 issues traded! There were only 10 new 52 Week Highs on all of the Nasdaq and NYSE while around 3500 issues hit new lows. This shows a condition never shown before in our database. It says there’s complete agreement that the market has only one direction to go. Everyone has succumbed to the panic. Historically this is a bullish signal and indicates severe over-selling in the market place.
So, is it true that this is, “….the worst economy since the great depression…..” as the politicians preached recently? Well, it’s one of the worst stock markets we’ve had in a long time but the economy hasn’t yet ground to a halt. With all four of our IW components dropping in risk this week and 3 of 4 at or near the lowest levels seen since 1982 it would appear the markets are pretty well washed out. Trade volume increased as the week progressed with about 15 billion shares trading hands on Friday. It was Friday that also saw a late day reversal and a substantial closing rally.
We were able to add to our Global Signal portfolios mid week and made some minor purchases in our Balanced Income portfolios as well. Balanced Income components hold a lot of preferred shares in many different industries. These help to keep the overall yield up in these funds. Recently there’s some talk in the press and on business stations that possibly these preferred shares now offer a very handsome total return as the yields are good and the prices are depressed. These are the very reasons we are adding to our positions.
