Financial Incumbancy

DJIA

open 11,954.56

close 12,076.11

day high 12,120.80

day low 11,954.56

today's volume 159,618,956

3mo avg. daily volume 167,549,292

Average P/E  13.4

1 year change +18.50%

DJTA

open 5,091.83

close 5,168.14

day high 5,189.49

day low 5,091.83

today's volume 16,228,886

3mo avg. daily volume 16,599,672

Average P/E  20.0

1 year change +19.02%

Watching markets for the last year has been... interesting at best.  Huge moves in the commodities, especially items like wheat, corn and silver.  Silver ran from just over $17.50 an ounce to just shy of $50.00 in about 9 months time.  Following a lovely Fibonacci retrenchment it currently sits around $35.57.  The Dow continues to meander up regardless of the US budget concerns that Geithner has been spouting for the past few months.  

The GOP opened their debates last night.  They seem to be ignoring the all-important argument about which one of them deserves the nomination and seem much more adamant about bonding together in attack of the Obama economic plans over the past few years.  Given the state of employment, inflation and the "growth" of the economy in general here in the US, it does not surprise that this will likely become a battle of "who dislikes the Obama administration the most."  Perhaps there will be some genuine exchange of ideas and Lord willing, plans, but when it comes to our national political structure, I'd bet against it.

Dow Theory seems more complicated to me now than ever.  Decreasing volume and increasing cost.  There are lack of alternative options out there and a potential downgrade of the US debt from its seemingly everlasting AAA rating puts investors on the defensive, hence increased popularity of the underlying assets themselves, and the companies that produce them.  However, with concerns over other major economies like China looming on the horizon, I wonder how those commodities will fare.  When almost half of all items like steel and iron ore are consumed by a single country, the potential for disaster seems much too high for me.  Gold remains the easy alternative, showing promising returns year after year.  As long as the average investment advisor continues to be told by the companies that have captured them that gold is a volatile and speculative investment, I continue to recommend holding the undervalued asset.

Circa 1979, I await patiently the likelihood of increasing interest rates and decreased lending capabilities.  The GOP may know the source of the problem and what has continued to keep it afloat, but a good politician seeks financial and social stability first and foremost, how else can one maintain positions of authority unless the constituency is sated!?  The solution has not presented itself and the other international players rely too heavily on the stockpiles of green paper they have accumulated.  Just like a political election, the incumbent holds almost all the cards, and the US Dollar remains so.  This is a recession, like the wars we fight, that seemingly has no end.