Saturday, January 31, 2009

January 2009 Rewind - The Inaugural Fall

January was a month of great anticipation leading into the New Year and the Presidential Inauguration. However, inaugural balls were soon followed by market falls, as bailout and earnings uncertainties quickly overwhelmed early optimism. This January, the S&P 500, Dow Jones Industrials and NASDAQ 100 cash indices got off to a rocky start, posting major losses of -8.57%, -8.84% and -2.59%, respectively -- reportedly the worst January for the Dow in 113 years.

Economic news for the period featured massive layoffs last seen during the World War II era, Treasury Secretary Geithner's protracted confirmation on alleged tax "discrepancies," ever evolving rumors of a "bad bank" asset purchase program, the controversial $820-plus billion "stimulus" program, mostly negative earnings, and the worst quarterly Gross Domestic Product reading since the early 1980's.

Style-wise, Large-Cap Growth stocks outperformed (PWB -3.1%). Sector-wise, Healthcare and Energy held relatively fast (XLV -1.2%/ XLE -1.8%), as the Industrials and Financials finished significantly lower (XLI -12.0%/ XLF -26.2%). While there is always a chance for an oversold rebound ahead, one has to wonder how much we can reasonably expect from a market whose "belle of the ball" remains the proposed extent and developmental status of various government relief programs.

Sentiment: Mixed
Volatility: Moderate-High (VIX 38-57)
Direction: Negative

[Click to Enlarge/ Additional ETF Analyses Posted on Market Rewind]

The Style-Box was calculated using the following PowerShares™ ETFs: Small-Growth (PWT), Small-Value (PWY), Mid-Growth (PWJ), Mid-Value (PWP), Large-Growth (PWB), and Large-Value (PWV). The Sector-Ribbon was calculated using the following Select Sector SPDR™ ETFs: Materials (XLB), Industrials (XLI), Energy (XLE), Staples (XLP), Discretionary (XLY), Financials (XLF), Technology (XLK), and Healthcare (XLV). The Standard & Poors 500, Dow Jones Industrial Average and NASDAQ 100 may be traded through ETF proxies, including the SPY or IVV, DIA and QQQQ, respectively.

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