China’s Stock Market Drops off – 8%, But Dow Jones Trader Portfolio Remains Buoyant

Today, regardless of China’s stock market drop of – 8% at last closing, the US indices bounced back this afternoon in positive territory. Friday, the S&P 500 made a new all-time high. This is an impressive feat considering the severity of the dot-com bust seemed not long ago. For some perspective, being in new territory last couple of days for the major stock indices means the market is at a critical juncture.

The sign of "exuberance", or simply better valued equities today since estimates were previously guided lower?!...

The two components working in the market's favor continue to be:

1. Company "earnings"
2. Continued, "low interest rates"
3. Liquidity in the market (i.e.: money coming in)

Furthermore, as we saw last week the real key to the recent rally is the fact that "inflation pressures seem to remain contained”. Thus the catalyst is forever present for stock prices to gain new territory.

- The Dow Jones Index is up .......+ 9.70% year to date.
- The DeanJonesTrader is up + 20.70% year to date.

Bottom Line? The overall data shows steady economic growth and confirms the underlying strength of the equities market; furthermore inflation has fallen back into the Federal Reserve's comfort zone.

If it's good enough for the big boys in corporate America, it's good for us small portfolio holders.

Amongst others, today we are selling holdings of MRK prior to closing bell and possibly locking in on partial (or all gains) in other stocks within the next few days. This is all contingent on market strength or weakness at this critical juncture. GE seems to be poised to break-out to new highs, or possibly reverse? This will be true for all blue chip companies nearing or at their 52 week highs.

The bottom line remains that the market is at a critical juncture. The next few weeks will be telling if we go much higher on volume, or expect a pull back...