Free Newsletter: Stalking Stocks with the Shark Stocks Limp Into End of Quarter - 6/30/08

Free Newsletter: Stalking Stocks with the Shark Stocks Limp Into End of Quarter - 6/30/08

Greetings Shark Investors:

Although stocks were able to recover from a shaky start, the major indices closed out Monday’s trading session in a lackluster fashion as high oil prices and poor action in the financials once again conspired to keep pressure on the broader market. The news wires were especially quiet in the morning as we kicked off the new week and the last day of the second quarter, but with oil once again spiking more than $2 to over $142 a barrel, it wasn’t too surprising to see the index futures pointing lower early in the morning.

The futures were able to improve a bit as the opening bell approached, but even though the market did start the day with modest gains, any initial buying was to be short-lived. However, we moved to what would turn out to be the lows of the morning shortly after the Chicago Purchasing Manager’s Index – which is a measure of manufacturing activity in the Chicago Fed District – came in. While it did continue to indicate a contraction, the headline and well as the prices paid ad employment components all exceeded expectations.

Despite that disappointing reaction, stocks turned higher mid-morning, mostly on sharp turn-arounds in consumer discretionary, tech and industrials. However, even though the market was sporting modest gains as we worked our way through the New York lunch hour, any progress to the upside failed to gain much traction. As we entered the afternoon, a sudden wave of selling – which coincided with reports that rumors of a possible “take under” of LEH had been swirling – pushed the averages well of the highs of the session. Finally, even though the market was able to improve slightly as we headed towards the end of the day, a last push downward ensured a very disappointing and weak close to a rather lackluster trading session.

All in all, it was probably better that we didn’t see more of a bounce on Monday as the action did little to relieve the oversold market conditions, leaving us with the possibility that some sort of bounce will give this market some relief as the second half of the year gets under way, However, as we’ve been pointing out, the drops over the past six trading sessions may have been precipitous, but at no point did the selling reach panicked levels, which suggests that downward pressures have yet to be exhausted. The implication is that there are plenty of folks who haven’t been selling into this, and will likely take the opportunity to sell into strength when the relief rally that just about everybody and their brother is anticipating actually occurs.

Certainly, that bounce is all but inevitable, but the current level of doom and gloom will make it all the more difficult to deal with. For those who attempt to play it, the trick will be to make sure they don’t give in to the hope that suddenly we have clear skies ahead. However, for most individual investors, the best thing to do right now is sit tight in cash and ignore all those market pundits who would tell us that we need to be buying stocks that are losing money in a market that is trending lower.