The market traded in a somewhat tight range on Thursday with the bulls winning the battle for the majority of the day. However, the bears stormed back late in the session and took advantage of the uncertainty over the debt-ceiling to push the market lower by the end of the trading session.
The Dow dropped 62 points and finished at 12,240 while the S&P slipped 4 points and settled right at 1,300. The Nasdaq kissed the 2,800 level and managed to finish higher, but only by a point, and closed at 2,766.
Going into the closing bell, traders started dumping stocks in anticipation of a vote to get legislation passed to reduce the debt-limit. The vote was taking place after the market closed but as usual, the Keystone Kops on Capitol Hill “delayed” the delayed vote well into the evening…before calling it a night.
We would much rather spend our time talking about the market because we hate politics but the current situation in the White House reminds us of a company who is currently being run by a two-headed monster.
As we have seen with Research In Motion (RIMM, $25.46, down $0.29), two CEO’s don’t work and can ruin a company. The company once ruled the smart-phone world. They had the best technology, their books were in great shape, and they seemed invincible.
RIMM got comfortable and rested on its laurels. The company saw the competition coming, tried to play catch-up, tried to pull some rabbits-out-of-their hats, and now? The stock hit a 52-week low of $25.39 yesterday.
Does this sound like a familiar story?
Right now it feels like Obama AND Boehner are running America’s show. How this debt debate has dragged on until the last minute is beyond us. Boehner started off his address to the public yesterday by saying his budget “plan isn’t perfect” and obviously it wasn’t/ isn’t. He couldn’t even get enough support from his own party to get it to the Senate last night.
Meanwhile, Obama wasted Wednesday and Thursday, and well, the entire week and said he would veto anything the Republicans put on his desk. Nice.
As we start the last day of trading for the month, we said July would be an incredibly volatile time period and we were right. The market was in danger of breaking below its 50-day moving averages 2 weeks ago and rallied last week on a jailbreak by the bulls and was looking at new highs.
This week, the major indexes have fallen below their 50-day moving averages (MA) and will be trying to hold the 200-day MA’s today. Futures are pointing towards a nasty open this morning and we went over lower levels of support yesterday so they will likely get tested.
Dow futures are down 125 points while the S&P 500 futures are down 12 points. Nasdaq futures are off 18 points. Subscribers, check the Members Area for the updates.