Market Closed Monday; What Will Tuesday Bring?
Today the Dow Jones was closed for President’s Day, but tomorrow it will open with a flourish, and the questions are which direction will it head after losing ground on Friday, although rallying back above 10,000 before the end of the day. I don’t do this often, and I hesitate to do it now, but I’m going to make a prediction as to how the markets will fare this week.
First, to get this out of the way, I think the market is going down this week. I don’t think it will fall drastically, but it will be lower by Friday than it will open tomorrow. I wouldn’t be overly surprised if it falls to 9,500 by Friday, but that would really be pushing things.
Let’s look at why I believe this. Let’s start with Toyota, which is now in freefall. I think they need to be lucky there was a holiday, otherwise I think today would have been ugly after announcing that they’re now going to have a recall on trucks. All the pretty commercials aren’t going to overcome this mess, even if there are a few people saying they’re standing by their cars. It’s also going to be interesting to see how Honda stocks shore up after they announced some problems with some of their vehicles as well. Seems American cars weren’t so deficient after all.
Next, the price of oil went down to around $74. Oddly enough, this is related to debt worries in Europe, especially thoughts about how to bail out Greece, which most of us didn’t even know was in financial trouble. It really is a world economy these days.
Valentines Day sales were down this year because of the bad weather across the country. Actually, that sounds funny coming from me, because the weather here in the Syracuse area was pretty consistent with what we normally expect, though our snow totals are down so far this year. But the rest of the country isn’t used to this and doesn’t know how to clear it out, so it impacted holiday shopping, those folks who are late to buying for holidays such as this one, so that’s going to be a bad report.
Wall Street overall is also worried about potential Congressional bills that are being worked on to heavily tax those people who are scheduled to get big bonuses once again. Last March I wrote against Congress doing things like this, saying they were ready to cross a dangerous line and I still take that position. I never blame anyone for money they’ve been promised, though I blame the companies for doling these things out in a bad economy. Passing legislation against a small group of people is still bad policy.
And finally, traders are worried because China has decided to slow down its rate of loans and hold onto some of its own money. They’re worried that this might be indicative of a slowdown of the Chinese economy, and as one of the biggest trading partners in the world and a major consumer of goods, especially energy, that news has made them shaky.
Anyway, none of that adds up to good things for the Dow this week. Of course, who knows what other kind of news might be coming, but I’ll see how my prediction holds up.