Heyer Capital, LLC

investment management and timely advice from a local CPA (Fox Valley, Wisc.)

a hold at the 50 day

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As the market made its recent retracement, the S&P 500 found important support at its 50 day moving average.

Why? My guess is foreign buyers that are tired of our low yielding Treasury bonds. Other market commentators note that there is an enormous amount of credit (what we used to call money) flowing in from overseas. Our dollar exchange rate may be very low in the eyes of those overseas, and therefore it makes our dollar-denominated assets look cheaper to them.

As the market dipped to the 50 day line, it reached a spot of traditional institutional buying or support. Maybe those traditions extend across the oceans.

Now that the 50 day line has acted as support, it will be very important for the SPX (S and P 500) to find support there again if it retraces lower. If support fails where it once held, I suspect that would be quite a negative tell on the market.

Oh, and congratulations to those who own index funds that are just now getting up to the price level of seven years ago. What about dividends? Let’s talk inflation while we’re at it.

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Written by heyercapital

June 15, 2007 at 3:24 pm

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