Wednesday, July 2nd, 2008 Recap

It was an ugly day in the market with the DOW being down 1.46% to 11,215.51 and the S&P 500 trading down 1.82% to 1261.52. Several of the commodity related stocks were hurt today although the commodities themselves did well. Oil & copper were both up today but the stocks related to those commodities didn't fare as well. This is very confusing to me because commodity stocks should rally when the commodities they sell go higher. Also, the near term news is expected to be bullish for commodities as the ECB is expected to raise interest rates tomorrow. This should weaken the dollar further and provide more support to already strong commodity prices. I don't understand how this could be bearish for these stocks, but it definitely was today. Tomorrow was already setting up to be a bad day in the market, but now I really have to wonder how bad it will be if the stocks that should be rallying can't rally.

News specific to my portfolio:
My portfolio was down 1.8% today so it outperformed the S&P, but not the DOW. That brings my record against the S&P to 2-1 and against the DOW I'm now 6-2. I had two big losers in the portfolio today. US Steel (X) and Bucyrus International (BUCY). The news that I have been getting about the steel sector says that the steel companies have been raising prices like mad and they are still doing good business. The coal companies have been doing well because of short supplies and rising prices as well. I know both of these companies will announce great earnings for the second quarter, but since the stock market is more of a forward looking vehicle, the perception of what the company will do going forward is always more important than what the company has done in the past. A couple of days ago I was talking about X nearing $200. Today it closed just above $153 per share and is down over $43 in the last week. That seems very excessive to me, but the stock may go down more tomorrow. BUCY has not sold off quite as much as X, but it is still way off of its highs. I still believe in the story for both of these stocks, but I've learned over the years not to get in the way when the market tells you that you're wrong. Swift action may be required to avoid losing even more. Hopefully, the market will turn in our favor.