Market Trending …. It will take time for full recovery 08-12-10

The Dow Jones dropped 265.42 points, or 2.5%, at 10378.83 with all the 30 Dow components declining. The stock market, commodities and riskier currencies fell over worry about the weak US recovery and slowing growth in China. With all three major US indexes turning negative for the year, we continue to believe that the recovery is occurring, but it will take a lot longer time than anticipated.

The market is currently concentrating on the economic numbers that have mostly been negative while corporate earnings have mostly exceeded projections. Most of the inflows for investing now have been in T-notes and bonds which have driven the 10-year Treasury note to a 4 month low of 2.69%. With yields hovering at such a low level we continue to like the stock market for risk adjusted returns. Concentrate on high dividend and yield stocks. This will pay you while you wait for the market to continue to return. For more aggressive investors, we continue to add to emerging markets and commodities.