This is The Wall Street Digest Hotline Update for Friday, March 2, 2007, at 6:00 p.m. EST.
Traders did not want to be long over the weekend, putting the bears in charge today. At the close, the Dow dropped 121 points, closing at 12,114, while the Nasdaq lost 36 points, closing at 2,368. Oil closed down $0.36 at $61.64 per barrel, and gold closed down $21.00 at $644.10 an ounce.
I would not base any investment decisions on today's market slides; the buyers went home very early today. Liquidity is abundant, with relentless cash takeovers and stock buybacks still taking place by cash-rich corporations.
Bull markets end when the Fed reverses money supply growth and raises interest rates to slow inflationary growth! None of that is happening now. The Fed is very accommodating and is verbally supporting the economy and the stock market.
Let's take a look at the market on Monday before we make any portfolio changes. Do not purchase any new positions until we see signs of a market bottom.
The U.S. stock market is still substantially undervalued. Stay close to our telephone/e-mail/website Hotline Updates. An unusual buying opportunity will unfold at the bottom of this correction, which could be days or weeks ahead.
The next Hotline Update will be on Tuesday, March 6, 2007, at 6:00 p.m. EST.