Tag - Aeg

Stocks continued their slide today as traders are holding tight until they get the Fed's word on the economy. Bernanke & Co. are expected to wrap things up tomorrow, so we could see another round of lower closing prices. 

The Dow closed down 96.50 points at 9,241.45; the Nasdaq finished at 1,969.73, down 22.51; and the S&P 500 fell back below 1,000 to finish the day's session at 994.35, down 12.75 points. 

Stocks in the Russell 2000 were down 9.75 points to end at 562.12. 

Oil closed at $69.38, down $1.22 and gold was at $946.20, up $1.20.
Bucking the downward trend were small-caps like Avanir Pharmaceuticals (Nasdaq:AVNR) up 30%; EchoStar (Nasdaq:SATS) up 19%; and Ivanhoe Energy (Nasdaq:IVAN) up 15%.  

Trending down with the broader markets many small-cap outpaced the market's fall, including Anthracite Capital (NYSE:AHR), down 30%; Javelin Pharamceutical (Amex:JAV), down 27%; Petroleum Development (Nasdaq:PETD), down 22%; and Flotek Industries (NYSE:FTK), down 20%. 

*****Have you noticed that analysts are starting to downgrade stocks? Sprint Nextel (NYSE:S), Yum Brands (NYSE:YUM), PETsMART (Nasdaq:PETM), MBIA (NYSE:MBI) and Aegon (NYSE:AEG) were all marked down by analysts yesterday.  
Coverage was initiated on American Express (NYSE:AXP) at "Sell" by Ladenburg Thalman. Boeing (NYSE:BA) and Research in Motion (Nasdaq:RIMM) have also been downgraded in the last few days.  

So what gives? If everyone's so bullish right now, why are stocks getting downgraded?  
First, stocks have rallied strongly since March. And second, there's no guarantee that earnings can continue to rise. The analysts may be playing it safe, but investors should take note.  

*****AIG (NYSE:AIG) has doubled in the last three days. If there was ever a company that shouldn't double, it's AIG. The government owns something like 90% of the company. And it's actively selling off its important pieces to pay off debt. It's highly unlikely there will be any return for common shareholders.  

And if a completely speculative stock like AIG is moving, we might expect to see others. And sure enough, General Motors, which now carries the ominous name Motors Liquidation Company (MTLQQ.PK), has very nearly doubled in the last week. I don't think that's a good sign for the health of the stock market.

*****Word is that more traders think the dollar may have put in an important low. That would be bad for stocks and commodities. To follow the action, watch the iShares Barclay's 20+ Treasury Bond Fund (TLT).

When this ETF rallies, stocks are usually selling off. And the chart for TLT shows a pretty decent looking double bottom at $90.

*****The latest FOMC meeting starts today. Nobody really expects the Fed to raise interest rates. Even the inflation crowd has to admit that the economic recovery is too frail for higher rates. Still, judging by the declines in the stock market, investors are nervous about what the Fed has to say.

Alan Greenspan used to try to let his words act as monetary policy. Instead of actually moving rates, he would voice his bearish opinion, in the hope that he could keep a lid on asset prices.

It didn't work. And I hope Bernanke doesn't make the same mistake. There's no substitute for actual changes in rates. And despite the weak economy, investors could probably use a message about asset bubbles and risk.  

*****The Managed America Internet video conference aired last night with great success. You can still catch it if you missed. There's a replay available HERE if you're interested in discovering the trends that will affect your investments for the next couple of years and how you can profit from them.

Ian Wyatt
Editor
Daily Profit

P.S. Investors have been asking me about commodities plays. They know that long term inflation will kick in once the recovery starts to ramp up and that will drive commodities, and the share prices of the underlying stocks, through the roof. My Global Commodity Investing advisory service is benefiting from current commodity prices and will provide one of the only safe havens for profits when inflation picks up. Click here to find out more about Global Commodity Investing.

After initially spiking out of the gate on the government’s plan to unfreeze credit markets by directly injecting capital in banks and guaranteeing loans between banks, the Russell 2000 has steadily descended into the red midday, as traders locked in profits from Monday’s goliath rally. Small-cap gainers today included National City Corp. (NYSE:NCC), Aegon China Insurance (NYSE:AEG) and ChinaTransInfo Technology (Nasdaq:DGLY). Other Market Watch highlights today included:

• Treasury markets were falling hard as the safe-haven push dulled amid strong gains in equities.
• The weakest sectors in today's trading are iron & steel and real estate operations/services. Insurance is one of the day's strongest.
• California-based communications equipment maker JDS Uniphase is the day's most active small cap. Shares are down 12.4% to $6.36.
• The dollar is mixed against the euro and the yen midday and gold is off $2 per troy ounce to $839.
• BMO Capital’s Andy Busch told SmallCapInvestor.com that investors shouldn’t “get too excited by the upmove” today. “The Z factor,” or the unknown impact on companies’ sales or earnings, “will cap this rally as will the terrible . . .