A Record Breaking Day

Yesterday was a relatively good day. SCUR, although down, managed to hold above $7.00. CLRK gained 0.31 to close at $16.99. It would have been nice to see CLRK break $17.00, but I’ll take a 31 cent gain any day.

The big news for today is that the Dow is within 53 points of the record close of 11,722.98 it set on January 14th 2001. The futures are all pointing up this morning and all indications are that the Dow will be able to break the record close today. If this happens the market psychology will shift to a more positive one and we should see the markets on a break out and pushing on to new highs. Seeing the Dow at new highs will spur a lot of the little guys to get into the markets. There’s no way that regular folks will want to miss out on the rising market. They’ll want to get in and make some money too. So in they’ll pour. The institutional guys will wait and watch for signs of a market top. When everyone is in, they will start selling and pull the rug out from under the market. Then the little guys will get burned.

Greed has a funny way of influencing behavior. Many of the guys that will get burned will be the same ones that got burned in the internet bubble. But greed has a way of wiping out their memories, a kind of selective amnesia if you will. Greed is also the same emotion that will allow these people to hold stocks to the bitter end. They won’t want to sell stocks below where they bought them. So rather than sell and take a small loss, they will ride these stocks down until margin calls force them to sell and take a bigger loss.

The one thing that can throw a wrench into the Dow’s record is this mornings report on fuel inventories due to be released at 10:00am EST. Right now oil is down $0.44 to $61.01, so my guess is the market thinks that the oil inventories will come in higher. Although oil managed to consolidate over $60, I see it dropping further, which will be good for the markets.

So we’ll look to see the Dow post a new record close and CLRK should cross $17.00 and SCUR should also rise. I’ll need to revisit my price target on SCUR in the short term for tomorrow.