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Cutler's Stock Market Blog
➜ ➜ HERE IS MY TAKE ON CRAMER vs STEWART
MARKET MANIA 2009-10-8 (Thursday Evening Update) OCTOBER MARKET MANIA MADNESS STOCKS STAY STRONG AS INDUSTRIALS COLLECT 61 POINTS TO 9792
GOLD - MAKES A NEW ALL-TIME RECORD HIGH!
October 8 (Thursday) – Once again two days of pullback in stocks failed to gather downside momentum and led to an immediate turnaround which has now been up in 3 of the past 4 sessions, with yesterday’s loss only a minimal one. Analysts are coming out raising their outlook for stocks. There’s been a flurry of new issues hitting the street. And the NYSE Daily New Highs list hit a number not seen in over 2 years. Earnings season started and Alcoa(AA) greeted investors with this nice report, their first profit in several quarters. At the same time the Chain Store Sales had enough good news buried in the not-so-good news that allowed the tone of equities to remain positive. Topping all of these things was the falling DOLLAR which is on the precipice of a technical breakdown that has some worried about a more rapid collapse in our currency. Naturally this led to sharp gains in commodity prices. The NYSE Advance/Decline Line was positive by a 2.5-to-1 ratio. NASDAQ gained 13 points to 2123. The DOLLAR was sharply lower and is on the verge of downside acceleration. And while the linkage between our falling currency and rising stocks has been highly correlated, a sudden rapid decrease in currency valuation could unhinge that linkage and create an aggressive move by investors toward selling stocks. GOLD moved to another new all-time high firing up $12 to $1057. OIL was also strong adding $1.80 to $71.37. There’s a lot going on and many key things to watch closely. Tomorrow is mild as far as new economic reports with only the International Trade data to be released before the market opens. I am growing more concerned about the underlying condition of the stock market. There are too many factors now in play that can trip things up. And with enormous profits off the March lows to be locked in to secure yearly results, it would only take one trigger to create an avalanche of selling that quickly snowballs. Technically, there remains that KEY REVERSAL from Sept.22 and as long as that remains in place, a top is being formed. Bulls are hoping to push stocks up through that high point because it then allows for another quick 500 to 1000 points up just on the enthusiasm and emotional stamped it would create. When a positive market runs into resistance and is able to overcome that barrier, it usually results in a strong rush of buying. That’s why it’s true that the best (and hardest to capture) moves occur near the end of a trend. GOLD at $1200. That’s what I’ve been calling for all along. Now that number coming into range. I have held that investors should keep mining stocks as an overweight in portfolios, even as I have become completely defensive on equities. Once the psychological transition from skepticism to belief to conviction in GOLD as a rising asset is accepted, not only will the prices in the metals and the stocks go much higher, but investors will start chasing those smaller, lagging companies that are not considered Blue Chip equities. Some of those can have quite a run. Things are getting exciting now!!! Have a great weekend. Keep America strong! – Speak out against government corruption! – Keep Liberty and Freedom in your sights!
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2009-10-6 (Tuesday Evening Update) OCTOBER MARKET MANIA MADNESS DOW INDUSTRIALS FIRE UP THE RALLY SURGING 131 POINTS TO 9731
October 6 (Tuesday) – Stocks were greeted with mostly positive action from across the pond and our market opened with a cheerful bump. The Chain Store Sales numbers did not disappoint and stock rallied. The DOLLAR was under pressure again, this time as rumors circulated that a group of countries would start trading energy in non-Dollar denominated currency. Though the report was denied, the greenback remained under pressure all session and the commodity plays were again ripping to the upside. The DOW INDUSTRIALS were up as much as 180 points until gradually giving back 100 of those and threatening to incur a reversal that would reinforce the Key Reversal of Sept.22 Late buying helped save the day and most averages were up from 1.3 to 1.8%. Breadth was strong as marked by the NYSE Advance/Decline Line which was net positive by a 4-to-1 ratio. NASDAQ recovered 35 points to 2103. The DOLLAR closed lower and is at a critical juncture of support which if broken, could go into a more rapid deceleration. GOLD rocketed to a new all-time higher surging $24 to $1042. OIL added approximately half a buck closing at $70.96. Trading volume has been quite light, particularly in this 2 day rally. It seems that there is good price action but not enough juice on the up days. This is reminiscent of many historic failed rallies when there is an aura that equities cannot go down because of this that or the other thing while it is indeed in a period of distribution. The one area where I have been confident as an investor has been the precious metals and today’s push to all time record highs is a step in the direction of my original upside target: GOLD at $1200. Wednesday starts the earnings parade and Alcoa(AA: $13.89) is first out of the gate after tomorrow’s close. On Thursday well get Pepsi(PEP: $60.87) and Marriot Intl(MAR: $27.00). FAILED STIMULUS PACKAGE
Despite the vigor of the stock market, the economy is not showing the same trajectory of recovery. In fact, the headwinds are starting to blow harder again. The administration made a huge mistake by not focusing exclusively on job creation and small business stimulus. Instead, they passed a bogus package that heaped a $787 billion debt on the American people and not much in return for it. If I were president - my entire focus on domestic policy would be on job creation and economic growth - not on an eco-phony Cap&Tax bill, not a $1 trillion overhaul healthcare bill, not on union-strengthening card-check, not on mega public tax dollars directed toward "community organizing" through radical Czars. The stimulus was suppose to be an emergency bill designed for jobs and heavy on important needed infrastructure - complete failure, completely off target – that’s what happened when left in teh hands of extreme leftist Madame Liar Pelosi who was put in charge while the bill was largely constructed by radical/socialist groups such as Apollo Alliance and Tides Foundation, influenced by the sociopathic tendency of ‘social engineering’ by Soros - fortunately, Americans are finally waking up this nonsense! Make sure you read this article: Soros: Obama's Puppeteer - The Man Behind The Curtain. THERE WILL BE NO BLOG ON WEDNESDAY EVENING –
NEXT BLOG UPDATE SCHEDULED FOR THURSDAY Keep America strong! – Speak out against government corruption! – Keep Liberty and Freedom in your sights!
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2009-10-5 (Monday Evening Update) OCTOBER MARKET MANIA MADNESS DOW INDUSTRIALS KICKSTART WEEK JUMPING 112 POINTS TO 9599
October 5 (Monday) – With little meaningful influence arriving from overnight action across the ocean investors were looking for the stock market to rebound from the 2 week decline. After a little early waffling about stocks gained a bid and were buoyed higher by the somewhat encouraging ISM Non-Manufacturing Index which rose to above 50% for the first time in well over a year and reversed 11 straight months of contraction. Weakness in the DOLLAR triggered strength in the hard asset groups which had been among the hardest hit in the recent setback. Energy, aluminum, cooper, metals & mining were all up strong. Banks and retail stocks were also nicely higher. Breadth was good and the S&P500 outperformed the narrower indexes with its 1.5% rise. The NYSE Advance/Decline Line was robust with net gaining issues outnumbering the decliners by a 5-to-1 ratio. NASDAQ recovered 20 points to 2068. The DOLLAR remained under pressure throughout the session. GOLD popped higher by $14 to $1017. OIL reversed early weakness to tack on about .37 to close at $70.37. With help from the lone economic report, the stock market also benefited from initial support at key moving averages, which often serve to buffer a decline at least for one good bounce. Buying the pullback has been the charge of the Bulls and tomorrow will be telling if today was just a bounce or if there is going to be a serious challenge mounted to take out the Key Reversal which has ruled the technical condition since a week ago Wednesday. There is not much to affect stock prices from economic data tomorrow though Weekly Chain Store Sales can sometimes be a trigger. We’ll pay close attention to market behavior. Meanwhile, I am loathe to put forth any new stock recommendations at this time. Nouriel Roubini, who successfully called the economic breakdown, gave an interview to CNBC today.
He states that the stock market is too far ahead because the economic recovery is going to be very sluggish. Watch clip here. Keep America strong! – Speak out against government corruption! – Keep Liberty and Freedom in your sights!
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2009-10-4 (Sunday Evening Update) OCTOBER MARKET MANIA MADNESS INDUSTRIALS END DOWN WEEK OFF ANOTHER 21 POINTS TO 9487
October 4 (Sunday) – Stocks tailed off again on Friday closing out its second straight losing week. Efforts to rally were muted by the worse than expected Unemployment report which was a disappointment by nearly every measure. The Factory Orders data wasn’t helpful either. The latest Auto Sales figures were off 41% showing that Cash-4-Clunkers did absorb pending demand and has left a void in the car market. Stocks closed well off their worst levels. The NYSE Advance/Decline Line still finished skewed negatively by slightly more than a 2-to-1 ratio. NASDAQ lost another 9 points to 2048. The DOLLAR was slightly lower. GOLD gained back $2.40 to $1002. OIL was moderately lower, ending at $69.22. Last Tuesday I stated the following: The 10000 level on the DOW INDUSTRIALS is proving to be a tough nut to crack. If the market is unable to take out the Key Reversal put in place last Wednesday, the technical condition will clearly point down. We all know that many of the most horrific and gut-wrenching market declines have occurred in October and if ever a downside smash was set up perfectly, we have the perfect scenario. CURRENT STOCK MARKET PSYCHOLOGY: With the market having corrected by approximately 4% one would think the ‘buy the pullback’ crowd will be ready to step up and start scooping up the new price structures. Of course as more signs of a sputtering economic recovery emerge, investors may lose their nerve and decide to wait for more of a correction. After all, it is October and everyone knows what kinds of nasty things can happen to stocks in October. Plus, there is that ominous Key Reversal from a week ago Wednesday (Dow Industrials – 3 month chart). On Monday, aside form the weekly Treasury Auctions we’ll get the ISM Non-Manufacturing Index. Investors really need to see something encouraging here as the report is released 30 minutes into trading. My initial downside target for this correction is DOW 9275, however I also have measurements near 8900 if a more extended freefall occurs. Earnings season kicks off on Wednesday with Alcoa(AA) and nerves are running high that top line growth is still non-existent. Monday is the day the Bulls need to show that they still have everything under control. Somehow, I believe while there may be some buyers around in the morning, if there are no substantive overnight surprises from overseas, this market is still vulnerable to increased selling. Keep America strong! – Speak out against government corruption! – Keep Liberty and Freedom in your sights!
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2009-10-1 (Thursday Evening Update) OCTOBER MARKET MANIA MADNESS STOCKS HIT SKIDS WITH INDUSTRIALS WALLOPED 203 POINTS TO 9509
October 1 (Thursday) – Anyone miss me? I didn’t think so! The tone of the stock market has taken a sudden and dramatic change for the worse. Yesterday’s weakness was followed by an increase in selling pressure today. Stocks opened on a mildly downtick, reacted poorly that the long roster of economic reports, particularly the Jobless Claims, and then selling pressure increased when this ISM Manufacturing Index showed weakness. Oh No! Economic recovery seems to be slipping away. Cash-4-Clunkers were an exciting event but it appears to have pulled forward whatever pent up buying was out there. In testimony today, Bernanke’s comments added to the selling pressure as he talked up the DOLLAR which immediately caused more pressure in equities and commodities. Stocks faded again in the final hour and the DOW INDUSTRIALS lost a full 2%. But the damage was worse in the broader market with the S&P500 and NASDAQ both losing closer to 3%. The NYSE Advance/Decline Line was awful with a negative breadth ratio exceeding 5-to-1. NASDAQ was hit hard for 6 points closing at 2061. The DOLLAR was higher today. GOLD closed lower by $9 to $999. OIL closed mildly down after a big surge yesterday, ending at $70.36. On Tuesday I stated the following: The 10000 level on the DOW INDUSTRIALS is proving to be a tough nut to crack. If the market is unable to take out the Key Reversal put in place last Wednesday, the technical condition will clearly point down. We all know that many of the most horrific and gut-wrenching market declines have occurred in October and if ever a downside smash was set up perfectly, we have the perfect scenario. Little more need be said lest we see how stock react tomorrow to the monthly monster, the Unemployment Report as well as the Factory Orders data. That technical Key Reversal in the market is suddenly looking like the dominant force for trend forecasting at the moment – and it says the stock market rally from March has ended and the new trend is down. Tomorrow must be a huge up day in order to open up a near-term invalidation of this recently developed technical condition. Keep America strong! – Speak out against government corruption! – Keep Liberty and Freedom in your sights!
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2009-9-29 (Tuesday Evening Update) SEPTEMBER MARKET MANIA STOCKS TURN LOWER AS INDUSTRIALS DECLINE 47 POINTS TO 9742
September 29 (Tuesday) – After yesterday’s bold gains the stock market followed through with a higher opening today However the rally failed after a half hour and never regained its footing. Though there was never any broad based decline, the sellers had the upper had for the balance of the day, suppressing every intra-day rally attempt. The early economic news was modestly encouraging but the 2 key reports on sentiment, Consumer Confidence and the State Street Investor Confidence Index were both negative and investors didn’t like that much. The NYSE Advance/Decline Line was only negative by 110 units and there were some strong sectors in the down market. NASDAQ fell 6 points closing at 2124. GOLD fought off early selling to close up by $2 to $991. OIL slipped about a quarter of a dollar to end at $66.60. The 10000 level on the DOW INDUSTRIALS is proving to be a tough nut to crack. If the market is unable to take out the Key Reversal put in place last Wednesday, the technical condition will clearly point down. We all know that many of the most horrific and gut-wrenching market declines have occurred in October and if ever a downside smash was set up perfectly, we have the perfect scenario. There is so much economic information to hit the street the next 3 days volatility is almost certainly going to pick up. Tomorrow we’ll get the ADP Employment Report, GDP (1st revision) & Chicago PMI. Thursday is a monster day with new information from the dreaded weekly Jobless Claims as well as finally the Motor Vehicle Sales, Challenger-Job Report, Personal Income, ISM Manufacturing Index, Construction Spending & Pending Home Sales. The on Friday comes the big whooper, the Unemployment Report and toss in Factory Orders to boot. Data overload to be sure. Plenty there to either trip up the stock market or to trigger it through the 10000 target so many are looking for. It’ll be exciting. I remain very defensive about equities. I like the precious metals.
Tom Schatz - ON HEALTHCARE Some health care reform proposals on the table are financially misdirected, according to Tom Schatz, president of Citizens Against Government Waste. Check out his perceptive interview this morning on CNBC here.
THERE WILL BE NO BLOG ON WEDNESDAY EVENING – NEXT BLOG UPDATE SCHEDULED FOR THURSDAY Keep America strong! – Speak out against government corruption! – Keep Liberty and Freedom in your sights!
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2009-9-28 (Monday Evening Update) SEPTEMBER MARKET MANIA INDUSTRIALS POWER BACK TO UPSIDE JUMPING 124 POINTS TO 9789
September 28 (Monday) – Even though the Japanese market took a fairly big hit last night, things were more positive in Europe which set the tone for improvement in our markets. Stocks opened firm and remained strong all day although there was some giveback in the LAST HOUR. Holiday volume was rather low. Still, many market indexes added close to 2%, a solid day. The uptick in M&A activity continued as $14 billion in new deals were announced. Breadth was very good as the NYSE Advance/Decline Line enjoyed a strong 4-to-1 upside balance. NASDAQ turned higher by 39 points closing at 2130. The DOLLAR managed to stay firm today posting modest gains. GOLD was moderately higher most of the session but actually ended lower by $1 to $991. OIL jumped a dollar to $67.04. The thing to watch is to see if the DOW INDUSTRIALS (6-month chart) can take out the Key Reversal it put in place last Wednesday. Such a move would again invalidate the technical implications and reinforce that there is still more to go on the upside. Certainly today’s rally was a good running start. Tuesday morning brings a slug of new important new information with Same Store Sales, Case-Shiller Home Price Index & Consumer Confidence data. The economic reports build up to a crescendo late in the week with the Jobless Claims and finally the Unemployment Report which could show a print of 10% nationally out-of-work. My view remains defensive. I view the rally as weakening despite today’s clear show of strength. And I would hesitate to be piling into stocks at this juncture as many are suggesting. Keep America strong! – Speak out against government corruption! – Keep Liberty and Freedom in your sights!
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2009-9-27 (Sunday Evening Update) SEPTEMBER MARKET MANIA DOW SLIDES FOR THIRD STRAIGHT SESSION OFF 42 POINTS TO 9665
September 27 (Sunday) – After a third declining session in the stock market on Friday when most market averages lost roughly half a percent, people are wondering if the rally since March is drawing to a close. It isn’t that 3 days of red numbers dampens so much optimism and enthusiasm so quickly, but the support for further upside required from an improving economy is not materializing. Breadth on Friday was only marginally negative as the NYSE Advance/Decline Line saw losers lead winners by about 300 issues. But a new factor showed last week as a sudden flurry of IPO’s hit the street and most of them failed to hold syndicate bid on their first day of trading. Even the big Chinese online games company Shanda Games(GAME: $10.75) fell 14% after pricing at the tops of its expected range at $14. Of course one trading day means little, but in a market devoid of IPO’s and a stock market that is up 47% by the DOW INDUSTRIALS since its low in March, the market psychology of poor New Issue trading cannot be comforting. NASDAQ eased lower by 20 points closing at 2090. The DOLLAR showed strength today, bouncing off a critical support level, which led to a negative effect on most other markets. GOLD lost ground all day but recovered to decline only $3 to $992. OIL gained a fraction of a dollar to $66.09. With no economic reports out tomorrow’s stocks will be relying on improvement in overseas markets to stem the recent slide. Tuesday, however, is another story with important new information on Same Store Sales, Case-Shiller Home Price Index & Consumer Confidence data. I’ve said too many times that the stock market rally had long ago discounted reasonable expectations for economic recovery. But recent data points imply that any recovery is likely to be muted, with out much help from consumers. It would be too easy to dismiss the recent uptrend based purely on what we saw last week which resulted in a lower market. After all, September is still up by 2% and not succumbing to its historical pattern of falling equity prices. Of course, the month ain’t over yet. Nevertheless, the upward momentum is cracking and whether or not a serious downturn has started yet or not, the underpinnings appear to be weakening. And let’s not forget the Key Reversal on Sept. 22 (a day that historically has presented major trend changes) which remains in effect from a technical standpoint, so there must be a pretty good rally this week to invalidate the effect of that.
Thomas A. Johnson Furniture, located in Virginia, is thriving amid a tough economy. The store's founder, Thomas Johnson, talked to CNBC. America is still the greatest place on earth full of many success stories. Take a few minutes to listen to a businessman who came to our country from Ghana with $20 in his pocket: Thomas A. Johnson. Keep America strong! – Speak out against government corruption! – Keep Liberty and Freedom in your sights!
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2009-9-24 (Thursday Evening Update) SEPTEMBER MARKET MANIA BACK-TO-BACK DECLINES AS INDUSTRIALS SLIP 41 POINTS TO 9706
September 24 (Thursday) – Since my last blog the stock market has produced two consecutive declines, for about 120 points on the DOW INDUSTRIALS. That of itself is not a sign of imminent danger, especially given the scope, breadth and measurement of the rally since March. However, there are certain indications from these 2 trading days that do create some worry. Aside from the negative seasonal pattern which we’ve talked about and some the measures of extremes that often coincide with market tops, market participants need to recognize that there euphoria that has engulfed the atmosphere is not healthy. Breadth was pretty weak again today with the NYSE Advance/Decline Line negative by a better than 3-to-1 ratio. Nearly every sector was under pressure. Even though the dread weekly Jobless Claims report came in surprisingly lower than expected, it seemed the weakness in the Home Sales report had more of an impact on the markets. NASDAQ fell by more than 1% losing 24 points closing at 2107. The DOLLAR showed strength today, bouncing off a critical support level, which led to a negative effect on most other markets. GOLD was dumped by $15 to $994. OIL has become quite volatile lately with multiple point reversals and today it reverted lower by nearly $3 a barrel to $66.11. COPPER as also closed lower today. I said on Tuesday – “Things could get very interesting this week, especially tomorrow.” – So far, that would be the case. Tomorrow’s economic releases will be very important given the sudden increase in fear based trading. These are Durable Goods Orders, Consumer Sentiment & New Home Sales. I’ve said too many times that the stock market rally had long ago discounted reasonable expectations for economic recovery. But recent data points imply that any recovery is likely to be muted, with out much help from consumers. That is troubling. Famed investor Julian Robertson of Tiger Management was interviewed on CNBC today and to listen to his outlook was also troubling. And given how he correctly projected the current financial crisis – he is at least worth listening to. KEY REVERSAL DAY
I said above there are some concerns arising frmo the last 2 days of market action. The most important one occurred on Wednesday, when the DOW INDUSTRIALS made a new recovery high above 9900 intra-day and then reversed to lose those gains and closed with a loss of 81 points. Making that new recovery high and then closing lower than the intra-day low from the prior session on Tuesday constitutes a key reversal day. This is a big technical warning flag. Now, we all know this market has fought off negative implications from certain patterns and formations that previously traced out on charts. But this is a little different and much more of a technical threat to the advance in stocks. Here is a 6-month chart to view the key reversal. RED FLAG. Have a great weekend everybody! Keep America strong! – Speak out against government corruption! – Keep Liberty and Freedom in your sights!
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2009-9-22 (Tuesday Evening Update) SEPTEMBER MARKET MANIA INDUSTRIALS REGAIN UPWARD TRACTION ADDING 51 POINTS TO 9829
September 22 (Tuesday) – The stock market continued to forge higher today as the market opened firm, fought off brief early selling and traded back toward the earlier highs with a firm underpinning. The NYSE Advance/Decline Line was clearly positive with net plus 2.5-to-1 ratio. Most released economic data was discouraging, though it was not enough to halt this unstoppable market. Not every sector was strong, but most were. Retail and healthcare did not participate well and technology was mixed. Most other areas were up, especially the commodity groups as the US DOLLAR is now sitting right on the edge of making a 1-year low. NASDAQ pushed up by 8 points closing at 2146. The DOLLAR was weaker after a brief hint of trying to move higher the last couple days. GOLD surged $11 to $1016. OIL reversed the big setback of yesterday to gain nearly $2 a barrel to $71.50. COPPER was firm today and most copper stocks were up 3% or more. Things could get very interesting this week, especially tomorrow. Tomorrow’s highlight will be the FOMC Meeting Announcement on interest rates at 2:15pm (EST). There will be much gaming of markets in anticipation of this statement. Would not be surprised of the market is steadily and cautiously bid up into the public statement. After that, anything goes, especially if the DOLLAR makes a definitive move one way or the other. I read an interesting article that analyzed key dates that marked historical turning points in the stock market. It said that an uncanny number of major turns take place around Sept. 22. That date is today and nothing happened. Of course, we all know what can happen in October. We’ll know soon enough. They’ll be no blog tomorrow – see ya in 2 days. Due to other obligations, there will be NO BLOG on Wednesday evening!
Keep America strong! – Speak out against government corruption! – Keep Liberty and Freedom in your sights!
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2009-9-21 (Monday Evening Update) SEPTEMBER MARKET MANIA SELLERS DOMINATE DRIVING INDUSTRIALS DOWN 41 POINTS TO 9778
September 21 (Monday) – Often times what the stock market does on a quadruple options expiration Friday, it tends to reverse that move the following Monday. With today’s weakness that is precisely what happened here. Most market averages sold off moderately, opening with a good push down and then stability.... followed by some improvement as the day wore on. Most sectors were trading lower although there was strength in a few pockets, most notably in technology. But there may have been something different going on today. Breadth was particularly weak as the NYSE Advance/Decline Line was negative by a clear 2-to-1 ratio. While not singularly alarming, the negative breadth does raise an eyebrow to spot a change in the market’s tone. NASDAQ fought the decline and managed to add 5 points closing at 2138. The DOLLAR rallied today which seems to be the action which causes weakness in nearly every other asset. GOLD slipped $3 to $1004. OIL took a drubbing falling $2.56 to $69.46. COPPER managed to hold the line close to unchanged. The Leading Economic Indicators came in exactly as expected for the fifth straight monthly gain, but was unable to spur a rebound in stocks. Tomorrow is a light day for economic data but there will be interest in the Chain Store Sales numbers as well as the FHFA House Price Index and the results of a series of Treasury Funding Auctions. Given recent trends one would expect the market to step right back into rally mode based purely on upward momentum. However, I am not a buyer here and as you all know, have pared down equity holdings to a very low level. The few stocks I have liked over the recent months are performing quite well, but I do not want to make any new recommendations at this juncture. Keep America strong! – Speak out against government corruption! – Keep Liberty and Freedom in your sights!
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2009-9-20 (Sunday Evening Update) SEPTEMBER MARKET MANIA STOCKS FORGE HIGHER AS INDUSTRIALS TACK ON 36 POINTS TO 9820
September 20 (Sunday) – The stock market stands within a stones throw of DOW 10000. It appears there is little to prevent that level from being pressed this week. Everything has the market momentum pointing higher. Even when I stated back near the lows that the billions being poured into short-term gov’t paper at near-zero interest rates would eventually lead to a massive market move once that money decides to move back to equities, I seriously underestimated the size of the move. Even factoring in that there would be short-squeezes, it still seemed that this level or recovery would be a far stretch. I’ve already taken my portfolio down to skeletal levels as far as equity exposure. At this point my few long positions are hedged so I’m almost in a market-neutral position. The euphoria that has permeated the atmosphere makes me run the other way – and experience reminds me that stocks always fall faster than they rise – much faster. On Friday the NYSE Advance/Decline Line slanted net positive by 500 issues. NASDAQ regained the 6 points it lost the day before closing at 2132. The DOLLAR was little changed but is flirting dangerously close to significant prior lows. GOLD slipped $6 to $1007. OIL gave back .62 to $71.85. Tomorrow’s Leading Economic Indicators are expected to rise for the 5th straight month. Thos could well be the catalyst that drives the DOW INDUSTRIALS to the magic mark. Recent statements declaring the recession as over by Fed Chairman Bernanke and other high profile market figures have bolstered the confidence that has helped keep stock prices rising. The biggest factor to watch is the currency. The US DOLLAR (chart) is in steady decline (set chart to weekly), though still above its 2008 lows. While this movement down has created impetus for all other assets to move higher, there comes a point when devaluation no longer is viewed favorably. Just one of those pesky delicate balances that never seem to manage themselves when they are most needed to behave well. I continue to favor GOLD as a main investment opportunity, looking for a move to $1200. BIG-CON ACORN EXPOSED! Many of you will recall that I spotlighted corruption and fraud by ACORN, as far back as last November. I affectionately referred to this government-sponsored scam as BIG-CON-ACORN. Unless you are living in a tent in the desert, you know this nasty element is now the subject of various charges and investigations. The House and Senate have each passed bills to defund this corrupt organization. This is very good news for the American public. There are plenty of properly run community aid groups. We don’t need to fund deep corruption with our tax dollars. I previously suggested that the ACORN story could be the largest criminal exposure story since Enron and Watergate. I’m sure there is more to come. If anyone has not kept up with the incredible video tapes and the many stories that are coming to the surface, here is an excellent website to keep track of it. Keep America strong – remove the embedded corruption!!!
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2009-9-17 (Thursday Evening Update) SEPTEMBER MARKET MANIA DOW INDUSTRIALS END DOWN BEGRUDGINLY LOSING 7 POINTS TO 9783
September 17 (Thursday) – Well, the stock market finally had a down session, though given the 100+ advance yesterday, today’s retreat was a mere token by any calculation. The large slate of economic reports the past 2 days were largely showing improvement, albeit modest. Even Housing Starts showed moderate improvement depending upon which measurement frames one wants to consider important. Today the stock market appeared to suffer from the kind of overbought condition that finally, temporarily, creates some resistance. After all, expecting markets to rise in 9 of 10 sessions is unrealistic and well outside the bell curve of normality. Weakness was not only evident in nearly all key indexes and averages but also with the NYSE Advance/Decline Line which was negative by roughly 400 units. NASDAQ declined 6 points to 2126. The DOLLAR was little changed but is flirting dangerously close to significant prior lows. GOLD dropped $4 to $1013. OIL was little changed at $72.48. There are no economic reports on Friday. However, it is quadruple witching, expiration day, which means nothing really. Markets are overextended, but have been for awhile. The flow of capital into stocks continues to buffer any pullback. And that action creates a self-fulfilling market psychology that the stock market is unwilling to decline, so it begets even more buying. And the upward momentum continues. Many have their sights set on DOW 10,000, which was a big number the first time it was tackled in March, 1999. I’ve been way wrong about getting g defensive on the market early summer. But my gains this year are significant, my exposure to risk now is low – and I’ve been this game long enough to know that just when everyone is caught up in something…. Something else happens. I fully expect something else and am prepared to wait it out, while using a very defensive approach toward investing. Have a great weekend!
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2009-9-15 (Tuesday Evening Update) SEPTEMBER MARKET MANIA NEW RECOVERY HIGH AS DOW PUSHES HIGHER BY 56 POINTS TO 9683
September 15 (Tuesday) – Once again the Teflon market moved higher on the psychology that what cannot go down must go up. The economic reports leaned favorable, although the inflation numbers were scarily high. This Retail Sales report was pleasantly positive, though some of the improvement was directly attributable to Cash-4-Clunkers. The stock market is acting like a magnet, pulling in all the capital that was formerly looking for a safe place to hide. Now, with stocks up 55% or more depending on your measuring stick, people want to plow their safety reserves back into equities. Breadth was very good again today with the NYSE Advance/Decline Line slanted positive by better than a 2-to-1 ratio. NASDAQ added another 10 points to 2102. The DOLLAR edged quietly lower and has positioned itself perilously close to making new lows soon unless something arrives to reverse the slide. GOLD had a good day moving up $7 to $1007. OIL jumped by over $2 to $70.75. Bullish investor psychology was further stoked today when Fed Chairman Bernanke stated that it appears that the recession is over. Well known market strategist Barton Biggs was interviewed here on CNBC today and offered that he advises putting 100% into the stock market even at these levels. He was unabashedly bullish stating he expects the stock market rally to continue straight up. He was talking about another 20 to 30% higher before the stock market even experiences a correction. He must be right as the stock market defies all logic to continue higher despite every indication that suggests the rally should be in its final phases. I personally thought it would have ended 10%-15% ago. Even though I disagree with his forecast, admittedly, even I fell victim to the urge to buy (noting that I am currently in a very defensive high cash position) and purchased shares of SAIC(SAI: $17.73) today. Granted this is a fairly defensive stock which did not even participate in today’s rally, but my purchase went against the discipline I have been maintaining. Warning: Since I am a much disciplined individual this move of mine today may be the straw that breaks the camels back…. We will see! More important economic news coming on tomorrow morning includes: Consumer Prices, Industrial Production & Mortgage Application data. The market psychology implies investors have enjoined a feeling of invincibility. This cannot be healthy. The further stock go higher the more I’m inclined to believe that when the rally ends, the decline could be very sharp, very swift. But if Wien is correct, there is no need to be concerned at this point.
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2009-9-14 (Monday Evening Update) SEPTEMBER MARKET MANIA INDUSTRIALS RECOVER FRIDAY LOSS GAINING 21 POINTS TO 9626
September 14 (Monday) – Today was reflective of the precise market psychology that has dominated financial markets. Any weekend analysis will easily produce a list of factors both on the sentiment front and the fundamental front that suggests a stock market looking fatigued. Sure enough the NIKKEI fell over 200 points, European markets were trading lower and US futures were pointing lower, this certainly would be the start of a downturn. Nope - after an opening sell-down of 60 points, pressures soon eased and a gradual improvement back to even ensued. After a couple hours of sideways trading with no further evidence of selling pressure evident, the market scampered to a firm close. The DOW INDUSTRIALS regained all that it lost on Friday and most key indexes gained at least half a percent. The NYSE Advance/Decline Line was strong by a 2-to-1 ratio. NASDAQ added 10 points to 2090. The DOLLAR edged quietly lower and has positioned itself perilously close to making new lows soon unless something arrives to reverse the slide. GOLD finished lower by $6 to close at $1000. OIL continued lower by .50 closing at $68.78. A big day tomorrow with reports out on Producer Prices, Retail Sales, Empire State Mfg Survey & Business Inventories. I would not even begin to venture into how these reports might drive markets tomorrow. It is clear the trend is up and there is a reluctance to go lower. So we arrive at the same market psychology. Everything suggested a lower market today, yet prices rose. This stimulates a psychological view or perhaps even a psychosis that this can only mean stocks will go further up. This is a cycle of reinforcement that drives markets up to unsustainable levels. Sound familiar? As we all know, stock prices always fall faster than they go up. Remember that. Prepare for it.
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2009-9-13 (Sunday Evening Update) SEPTEMBER MARKET MANIA WINNING STREAK OVER AS DOW INDUSTRIALS SLIP 22 POINTS TO 9605
September 13 (Sunday) – Stocks closed out a strong week with minor weakness. Most market averages fell by small amounts. The DOW INDUSTRIALS bobbed and weaved around the unchanged level until modest selling won the arm-wrestle match by the closing bell. One glaring exception was the DOW TRANSPORTS which advanced a stellar 2%. Most attributed that sectors strong sponsorship to FedEx(FDX: $77.32) which jumped over 6% upon boosting its 1st quarter outlook. Despite modest declines in most market averages, breadth was mildly positive on the NYSE Advance/Decline Line with more than 300 units higher versus lower. NASDAQ declined 3 points to 2080. The DOLLAR edged quietly lower and has positioned itself perilously close to making new lows soon unless something arrives to reverse the slide. GOLD finished the week with an up tempo as the metal rallied $9 to close above the 4-digit level making a new high of $1005. OIL got crushed by $2.65 closing at $69.29. There are no key economic reports issued on Monday, however the rest of the week brings a bonanza of critical information that will influence trading. On Tuesday alone we will see Producer Prices, Retail Sales, Empire State Mfg Survey & Business Inventories. Lately investors have been able draw upon any new information as a reason to push stock prices higher. But with so many indicators pointing toward a market top forming, at some point a reversal might be triggered. Obviously with the higher valuations expectations are commensurately higher as well. And that equates to higher potential for disappointment. Until there is a trigger, the only thing seeming to be higher, is the stock market. If there is a trigger out there, it is the potential of the US DOLLAR to crack important technical support and glide into more of a freefall. My view is that the equity markets would not take kindly to that development. However, the GOLD market will probably love it. I look for an accelerated advance toward the $1200 level. I remain negative for stocks. Recommend no more than 25% portfolio weighted in equities. I continue to favor mining stocks such as Goldfields(GFI), IAMGOLD(IAG) & Yamana Gold(AUY) and a few other stocks such as Visa(V), Pfizer(PFE), Halliburton(HAL) and special situation software company Guidance Software(GUID).
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2009-9-10 (Thursday Evening Update) SEPTEMBER MARKET MANIA STOCKS STAY STRONG AS INDUSTRIALS RALLY 80 POINTS TO 9627
2 VIEWS - FROM TOP ANALYSTS WHO CALLED BIG MARKET TOP & MARCH BOTTOM
September 10 (Thursday) – Another strong market pushed most averages to brand new recovery highs. The DOW INDUSTRIALS opened lower but with no serious selling around and investors not too disturbed by the modest improvement in the Jobless Claims report, a firming trend developed. Weakness developed late in the session cutting an 80 point gain in half but buyers rushed in during the final 30 minutes to pressure the short-sellers and close with a strong tone across the board. Breadth was strong again with the NYSE Advance/Decline Line better than 3-to-1 positive ratio. NASDAQ jumped more than 1% or 23 points to 2084. GOLD started out very weak but rallied to the plus side and gained $3 to $995. OIL added $1 to $72.33. Tomorrow the stock market shoots for its 6th consecutive up session and sets its sights on DOW 10000. Obviously my expectation that the rally had run out of gas was way premature. The reports tomorrow on Consumer Sentiment, Wholesale Trade and Import/Export Prices may be the catalyst to drive stocks higher. The Bulls are using any bit of data to press the bids up and pressure short sellers to cover. There are so many data points that imply the stock market should be making a top here, but it would be redundant of me to drag them out again just to reinforce a case. The momentum is up and until it reverses, the other factors do not mean anything other than to make a point that the big picture is very risky.
The big speech on Obamacare wasn’t the big game changer some had hoped for. Though in one brief moment there was a spark of excitement. After Obama lectured and ran off the same-old same-old list of bullet points for the healthcare bill and called his opposition ‘liars’ multiple times, someone in the chamber got tired of it and shouted back at Obama, ‘you lie.’ This was a great moment in that the freshman Congressman from South Carolina, in those 2 words, reflected all of the accumulated public sentiment that had built up during the summer of town hall meetings. Congressman Wilson called Obama out on his claim that illegals would not be covered by any healthcare bill. Obama was not telling the truth as there is no language requiring identification of citizenship, and Democrats shot down every single amendment that was structured to target preventing illegals from participating in the care program. So Wilson did tell the truth as he knew what the facts really are and for that he is to be rallied around. The TRUTH is always to be respected, especially when it shows up in Congressional chambers, a place where truth is often elusive! ANALYSTS WHO CALLED THE MARKET TOP AND THE MARCH LOW Meredith Whitney and Charles Nenner are just 2 of many professionals who predicted the collapse of the financial markets and the decline of the stock market. Whitney, once a top-ranked investment house banking analyst now has her own firm. Her approach is fundamental with rigorous in-depth analysis delving inside the quality of bank financials. She has a skill that is sharp and a unique ability to community her views with great detail. Given her astute observations and cogent perceptions to warn investors, her current assessment is well worth listening to. Nenner is purely a technical analyst. He uses charts and patterns and price history to determine risk levels. He also was prescient about the trouble which overcame the financial markets and was equally stellar in his correct view that a major market rally was looming some 6 months ago. Invest a few minutes to hear his current outlook.
_________________________________________________________________________
Sept 10 – Interview with Bank analyst Meredith Whitney on CNBC.
Whitney discusses her analysis of the banking sector, the outlook for the housing market
and the overall financial condition of the economy.
Sept 9 – Interview with Technical Analyst Charles Nenner on CNBC. Nenner discusses his technical view of the stock market and the precious metals market.
_________________________________________________________________________ Here is a bonus: With the S&P500 now up over 53% in 24 weeks. Doug Short (dshort.com) has produced this 80-year chart which goes back to 1928 which highlights the only 2 times in the past 80 years when the stock market has produced a gain of this magnitude compressed into this time frame. The chart reveals that other than the current market rally, the only other comparable period occurred at the bottom of the stock market crash in 1932. That can point to both good and bad news. The good is that the implication is that the low in March with the DOW INDUSTRIALS around 6500 could mark the final low for the entire cycle. The bad news is that when this rally ends, which may be soon, it should lead into a market that trades in a range where the upper boundary is defined by the next peak and the lower range would be somewhere down near the March low. Note how in 1932 the P/E Ratio was 5.6 at the lowest point and conversely, how the current P/E of 13.4 is approximately 2.5 times that valuation level.
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2009-9-9 (Wednesday Evening Update) SEPTEMBER MARKET MANIA STOCK MARKET POINTS UP AS INDUSTRIALS RALLY 49 POINTS TO 9547
September 9 (Wednesday) – Just as the stock market had finally strung together 4 straight down sessions, it has now just as easily countered with 4 up sessions. Punch… counter-punch. The DOW INDUSTRIALS opened quietly quickly tripped higher by 80 point, sold down to the unchanged level after lunch and rallied in the final hour. The midday selloff may have been triggered by the Fed’s Beige Book which talked about a sluggish economic recovery. The broader indexes were a bit stronger that the key average. Breadth was solid with the NYSE Advance/Decline Line tilted positive by a 2.5-to-1 ratio. NASDAQ rose 1% or 20 points to 2058. GOLD once again crossed above the $1000 mark intra-day but was unable to sustain the gains, closing down $6 to $990. OIL maintained yesterday’s tremendous advance closing up slightly at $71.35. Given the upcoming speech on Obamacare tonight it is interesting to note that healthcare stocks were among the strongest today, after being under serious pressure yesterday. Most of the hard asset plays were weak today. Retail and discretionary sectors were leading the way higher. Technology was mixed.
There are some key technical triggers that could spur this stock market higher, launching toward the DOW 10,000 zone. How the market responds to Obama’s grand theatre as well as tomorrows dreaded weekly Jobless Claims and the report on International Trade. Asset managers keep pushing more capital into the markets based on missing the train. This type of behavior often leads to excess that ultimately resolves itself in sharply falling prices. What I just described is the Bubble/Bust cycle. This is the one Obama keeps saying he’s going to eliminate, but until he either eliminates free markets (which seems to be part of his philosophical makeup) or somehow finds a solution to the human traits of fear and greed, he will not be able to keep his promise on this one. GOLD STRUGGLING AT THE $1000 LEVEL Although GOLD for the second day running could not sustain a higher move, all signs point to higher prices ahead. We project a move to $1200. The US DOLLAR is flirting dangerously close to a technical breakdown which would cause an accelerated decline. There are many plusses to a lower currency, not the least of which is the direct way it bolsters international trade. But a rapid decline to a new lower base is probably not a welcome development by the many world capital bases that keep investing in dollar denominated assets, especially our Treasury paper. This prospect alone is reason enough to maintain precious metal stocks as part of a core investment holding.
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2009-9-8 (Tuesday Evening Update) SEPTEMBER MARKET MANIA POSITIVE VIBE SPURS DOW INDUSTRIALS TO RALLY 56 POINTS TO 9497
GOLD - BRIEFLY SURGES THRU $1000 BEFORE FALLING BACK
September 8 (Tuesday) – Prior to the opening bell there was a positive vibe that carried over from the prior week and it seemed another big up day could be coming. The DOW INDUSTRIALS opened firm and rallied 65 points, but it was unable to gather momentum trading in a narrow range all session (1-day chart). The NYSE Advance/Decline Line was positive by a 3-to-1 ratio. GOLD ended slightly lower after surging across the 4-digit marker early on, closing at up to $994. OIL had a huge day surging over 4% to close at $71.34. Not surprisingly, energy and oil service shares were among the top performers today. Bank stock did not participate along with most other groups today. Healthcare stocks were under serious pressure while most other sectors were enjoying upticks. Selling was generated in advance of tomorrow’s Obamacare speech. News reports were speculating that Democrats were backing away from requiring the ‘public’ option as a condition for passing a bill. Democrat Howard Dean continues to junk up the airwaves repeating that anyone who likes their healthcare can keep it. But he always fails to address how that can be true when so many small business owners will be tempted to opt their employees onto the new government option, hence, they will NOT keep their current healthcare program. Even the schoolchildren addressed by Obama today understand what Dean does not – that in order to keep one’s plan they must be guaranteed that they will not be cast onto any government option. Now that September is underway, the seasonal factors are clearly in play. All of the historical patterns we’ve discussed our linked up with clearly suggest that stock prices face the most headwinds in this period. With the enormous gains already since March and the unlikely chance that the economy or employment will show much upward mobility, it is not a propitious time to take fresh cash to apply toward equities. That is exactly why we spent the past few weeks systematically reducing our stock portfolio to a skeleton group of holdings. GOLD SPIKES ABOVE $1000 BUT CLOSER LOWER The yellow metal spiked toward $1009 before reversing and losing all its gains on the session. Still, the push through the psychological barrier is an indication that this market is ready to move through to higher levels. This is exactly what we’ve been looking for. Some say this market projects inflation coming at a faster rate than expected. Others say the move is telegraphing a collapse in the US currency. This one year (link) GOLD CHART suggests the long sideways consolidation pattern is drawing to a close. We project a move to $1200.
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2009-9-7 (Monday Evening Update) SEPTEMBER MARKET MANIA STOCKS REGAIN FOOTING AS INDUSTRIALS RALLY 96 POINTS TO 9441
GREEN JOBS CZAR - ORIGINAL JOB APPLICATION FOUND!
September 7 (Monday) – The stock market closed out the week with a traditional pre-holiday rally. The DOW INDUSTRIALS rose slightly more than 1% and other sectors fared even better with the S&P500 up 1.31% and NASDAQ added 35 points to 2018 for a 1.79% gain. The NYSE Advance/Decline Line was very solid with breadth showing a positive outcome by more than a 4-to-1 ratio. GOLD closed out the week nudging up to $995. The precious metal is poised for a major breakout through the $1000 level which could accelerate a run to the $1200 price area. OIL ended the week hovering just above $68. (DOW INDUSTRIALS 1-year chart, weekly closes) On the deal front, Kraft Foods(KFT), Inc announced it will pursue a $16.7 billion takeover bid of Cadburry Plc(CBRY.L) (article). On Monday the NIKKEI had a positive session running up 133 points to 10320. Tonight, world markets will set the tone for Tuesday trading in the United States. There are no major economic data releases to affect trading. Seasonal patterns are now pointing to the negative column as the Sept/Oct period historically produces lower stock prices. After the extensive market rally since March, this expectation is heightened. I continue to remain defensive on the stock market. Our most recent stock recommendations made a few months ago such as Visa(V), IAMGOLD(IAG), Olin Corp(OLN) have been very strong. But I am not advocating anything more than a 20%-25% net equity exposure at this time. ORIGINAL JOB APPLICATION! GREEN CZAR JOB OPENING - Radicals May Apply - No Experience Necessary
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Job Description: the Obama administration seeks outspoken individual to create 5 million green jobs - candidate not required to have ever created a job or managed a payroll - however, candidate must have experience speaking in public forums on environmental issues - preference will be given to those who can expound upon the pressing problem of whites spewing pollutants into black communities - providing references to radical associations is a plus - the ability to communicate an in-depth understanding of racial lessons learned from Columbine will be given priority consideration - openly admitted communists and candidates possessing a history of extensive affiliations with revolutionary movements and/or Marxist politics preferred. ------------------------------------------------------------------------------------
Send Resume to: Valerie Jarrett, %The White House
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2009-9-3 (Thursday Evening Update) SEPTEMBER MARKET MANIA EQUITIES HALT SLIDE - LATE PUSH HAS DOW UP 63 POINTS TO 9344
THE POWER OF GOLD - APPROACHING $1000 an OUNCE
September 3 (Thursday) – With stocks on a 4 day slide and usually positioned to rally coming into the Labor Day weekend, traders expected a rebound. Of course, the onslaught of economic data, including this dreaded weekly Jobless Claims report that showed a very slight improvement, would factor into play. The ISM Non-Manufacturing report was not as helpful. The trading day was mostly uneventful save for the final hour which found a steady flow of buyers to push the market up to its high point of the session. Though it should be noted that the internal action was a counterbalance of yesterday’s activity and the NYSE Advance/Decline Line was positive by better than a 3-to-1 ratio. Nearly all indexes were down fractions of a percent. NASDAQ gained 16 points to 1983. OIL gained a little to $68.14. THE POWER OF GOLD Once again GOLD stole the show surging another $14 to $994. At one point the precious yellow metal nudged up close to the psychological $1000 market before backing off. It appears that forces driving investors toward this hard asset are converging just as we have said it would. The mining stocks were superior performers today and this chart of IAMGOLD(IAG), one of our favorite issues and one we’ve recommended here frequently, shows a clear upside breakout. The entire GOLD mining sector reveals strong upside breakouts from long consolidation periods. My advice has been clear all along that this sector should represent a strong overweight in all investment portfolios. I believe the big payoff is developing. If GOLD can punch through $1000 with conviction, the breakout will attract momentum players and drive the price up to $1200 minimum. Shares of companies will have some amazing days, much more eye-popping than we have seen this week. Tomorrow morning will be the mother of all economic reports, the monthly Employment Situation which might have a dramatic impact on trading tomorrow. The late run-up today suggests traders believe the numbers will be better than excepted. Obviously, the Bulls would like to close out the pre-holiday weekend session with strength. I continue to look for the market to move down to 8950 during the next week or two.
Americans are standing strong against the threats against our freedom. The current administration has moved so far left it is beyond the scope of American values. There are admitted communists, such as Van Jones, now providing direct counsel to our president. The healthcare reform is merely one step toward implementing a government controlled society. Radical lefties once again are planning to use the race card, only this time the American public, including the many moderate and conservative members of the black community, will not allow such distortions and snow jobs to succeed in pressuring and intimidating the citizenry to give into the socialistic aspirations and ‘social justice’ agendas of the intolerant Liberal community. Today, one particular dialogue was distinctly and intelligently put forth by Star Parker in an interview with Neil Cavuto this afternoon. It could not have been said better. GO America GO!
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2009-9-2 (Wednesday Evening Update) SEPTEMBER MARKET MANIA STOCKS SLIDE 4TH DAY RUNNING AS DOW DECLINES 29 POINTS TO 9280
September 2 (Wednesday) – Suddenly, things have a different feel. The economic data has been mixed, but some signs of stability are evident in the numbers. Today the market should have been able to use the positive data points to reverse the 3-day decline and reinvigorate the rally. While the widely watched stock average bounced up and down around the unchanged axis, the underlying trend on the tape smacked of heaviness, meaning selling more than buying. This is borne out looking at the NYSE Advance/Decline Line which was again negative by roughly 700 stock issues. Nearly all indexes were down fractions of a percent. NASDAQ fell less than 2 points to 1967. The real story today was GOLD which soared $23 advance to $980. Precious metals stock rocketed higher with some closing up 10% in a single session. OIL was hardly changed, lower by a few pennies to $68.02. The DOLLAR was weak and BONDS rallied moving interest rates lower. Tomorrow is another huge day for economic reports, including: Chain Store Sales, the dreaded weekly Jobless Claims, ISM Non-Manufacturing Index, Treasury Funding Announcements and the weekly Money Supply after the close. This is day stocks must regroup or the seasonal factors I‘ve been talking about will become the dominant psychological force which will lead to a poor month for equities. I have been looking for a move down to 8950 and the downside may be gaining momentum.
I am very proud watching Americans standing up for individual freedom and rejecting the thugocracy and radical associations of the current administration. I said after the elections that LIBERAL HUBRISM would not withstand 4 years under the hot lights of intense public scrutiny. It is obvious to everyone now that the far-left ideology could not withstand even 8 months of daily scrutiny. Americans overwhelmingly reject these concepts and the polls show it. Once again Americans show the stuff they are made of when confronted with threats to freedom and civil liberties. Ironically, it is the Liberals, who claim to have a monopoly on free speech, intellect and civil liberties, who are the one that act vehemently to clamp down, suppress and destroy those who express opinions and ideas contrary to their own. Just take a hard look at what these Liberals attempted to do to the CEO of Whole Foods, to hurt him his company and his employees…. all for contributing a fresh idea to the public debate on healthcare. Americans are right to reject the Liberal activism. Bravo Americans. Let’s take the country back.
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2009-9-1 (Tuesday Evening Update) SEPTEMBER MARKET MANIA STOCKS GET HAMMERED AS INDUSTRIALS OFF 185 POINTS TO 9310
September 1 (Tuesday) – Stocks opened on a mild downtick following a modest 2-dey decline. Within a few minutes the selling subsided and as has been the case for months, the small correction attracted buyers and pushed the market into positive territory. The ISM Manufacturing report jumped above 50% showing positive activity for the first time in 18 months. Pending Home Sales data also showed improvement. As exciting as these implications for the economy were, the stock market began falling and eventually dropped by close to 200 points, ending lower by 1.96%. Most averages were off more than 2% and NASDAQ declined exactly 2% or 40 points to 1968. Broad selling pressure was evident as the NYSE Advance/Decline Line was powerfully negative by a ratio of 5-to-1. GOLD started out lower but then, despite strength in the DOLLAR, managed to reverse itself to produce a $7 advance to $958. OIL was hit hard again, losing another $1.73 to $68.23. It is important to observe that momentum is now starting to give off signals that upside pressure has weakened. With all the good economic news and the early try to halt a mild 2-day decline, stocks should have moved higher today. This is troubling. Tomorrow we will be bombarded with economic reports, including: MBA Purchase Applications, Challenger Job-Cut and ADP Employment Report, Non-Farm Productivity, Factory Orders and the FOMC Minutes. Wow. Given the sudden setback in the stock market, it is important that the net result of these reports imply that there is reason to have confidence that the economy, especially employment will show improving trends. Otherwise, it could be a bad day, maybe even a hard sell down below DOW 9000 to the 8950 number I’ve been looking for. It is noteworthy that GOLD managed to seek higher levels despite strength in the US currency. This is telling. It also confirms my belief that the one market sector which justifies an overweight investment exposure is the precious metals. Tomorrow could be a wild one!
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2009-8-31 (Monday Evening Update) AUGUST MARKET MANIA SELLERS DOMINATE AS INDUSTRIALS FALL 47 POINTS TO 9496
August 31 (Monday) – With weakness in most overseas markets, including a dramatic 6.7& plunge in China and a negative 300 point reversal in Japan after voters went for a major displacement of the ruling party, the US markets anticipated a lower opening. Even the surprise of two major multi-billion dollar deals (DISNEY Buys MARVEL & BAKER-HUGHES Buys BJ Services), reminiscent of the old merger-Mondays, failed to lift spirits and stocks fell sharply at the open. The DOW INDUSTRIALS held at minus 100 points and spent the rest of the session in a narrow range from down 65 to 95 points. Some late buying trimmed the losses with the DOW losing half a percent. Most other indexes fell closer to a full percent. The NYSE Advance/Decline Line was decisively negative by a ratio of 2.75-to-1. NASDAQ took a 19 point dump to 2009. GOLD slipped $5 to $951. OIL was under tremendous pressure today losing over $3 a barrel to $69.64. The Chicago PMI Business Survey rose to 50%, but that did not seem to help the mood today. Once again, the DOW TRANSPORTS (6-month chart) led the way lower, losing 1.5%. This is a troubling factor, given the leading nature of this market sector. Tomorrow is an important day to prevent the stock market from stretching into a third day of losses. There are a bevy of economic reports due out including: Auto Sales, ISM Manufacturing Index, Construction Spending and the Pending Home Sales Index. There is growing concern that Asian markets may be signaling that the western world should not be holding its breath for the kind of leadership in economic recovery everyone has been looking abroad for. And I’ll remind everyone one more time about the historical negative trends for stocks in Sep/Oct time frame. Here is an excellent link to a chart and a 3-part series analyzing monthly trends for equities (courtesy of dshort.com). Enjoy!
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2009-8-30 (Sunday Evening Update) AUGUST MARKET MANIA WINNING STREAK ENDS AS DOW INDUSTRIALS SLIP 36 POINTS TO 9544
GOV'T PONZI SCHEME - CASH FOR 'FILL-IN-THE-BLANK'
August 30 (Sunday) – For the first time in more than a week, the stock market declined. Most key averages were little changed, some higher some lower. The NYSE Advance/Decline Line was within 20 issues of being dead even. NASDAQ rose 1 point to 2028. GOLD jumped $7 to $956. OIL added .37 to $72.86. The Michigan Consumer Sentiment index was not helpful to those looking for signs of an economic upturn as the indicator fell slightly. The game is for the Bulls to keep pressure on the shorts to force prices higher, even though the market rally is way up in no-man’s land now. One day of a mild downtick is nothing close to proof that the rally is finally over. However, market internals, and some leadership problems with the DOW UTILTIIES & TRANSPORTS are signaling potential trouble ahead. We are also entering the Sep/Oct season which produces, historically, the most consistent windows for declining stock prices. CURRENT INVESTOR SENTIMENT OFFERS WARNING SIGN I am a very strong believer in ‘sentiment’ numbers as a contrary indicator. However, for the majority of time these indicators are little more than white noise. But when extremes are reached, alarm bells must go off. It must be respected that Advisory Sentiment has reached its highest level since 2007. This article (w/chart) contains the information. Here is a second article on the topic, including a discussion of ways to interpret the readings. In all of my years as an investment advisor and money manager, nothing alerted me more toward potential changes in market direction than when sentiment indicators universally moved toward the same extreme. We are starting to see this happen. GOVERNMENT PONZI SCHEME LARGER THAN MADOFF’S! A Ponzi scheme is simply a deceptive circular plan to attract capital to replace capital that someone promised to deliver but lost in an investment or a transaction. Stealing from Peter to pay back Paul. The government is now embarking on the greatest Ponzi scheme ever! You see, most Ponzi schemes are NOT started because a person wakes up one morning looking for a complex way to deceive investors (though it does happen that way sometimes). But typically, a Ponzi scheme is something that evolves over time. A person takes money from an investor promising to provide a certain return on that investment. The person entrusted with the funds either misuses, abuses or makes poor investment decisions and blows the money. Instead of confronting the loss, the scheme starts to deviate from the original plan believing that he/she can correct and rectify the decision with one more good investment idea. So, they go get more investor capital from a few new people that they sometimes might use to bailout the original investor(s) and then the endless treadmill begins, like a hamster caught in the wheel. In the case of Madoff, the scheme grew and grew and grew as his reputation for supposedly being a great asset manager kept attracting larger sums of capital for investment purposes. Cash for Clunkers is the starting point for the US Gov’t Ponzi scheme. Now they want to do Cash for Appliances. My wife wants them to do Cash for Bathroom Remodeling (to help the local construction guys). I want Cash for Coins (about $1 dollar for each penny will do just fine!) So here are we, the tax payers, forced to cough up capital so that our neighbors can buy cars, appliances and who knows what else. This is the ultimate Ponzi scheme, the only problem is – we, the suckers, the taxpayers, aren’t even being promised a return on our money. It’s just gone. The next time some government official is on Capitol Hill grandstanding on the horrifying swindle and deceit of Bernie Madoff, someone needs to point out the hypocrisy of government embarking on the grandest Ponzi program the world has ever known. Congress is preparing to return to Washington. The stock market is on a short-squeeze fairy tale ride. Obamacare will add untold billions, trillions to the deficit in all forward projections. Those who support this legislation monstrosity and claim it will solve the deficit problem are smoking something. Anyone who says this is either lying or stupid… and neither is credible. Cap&Trade will incur the largest tax ever on the American public. Investors know the debt is unsustainable. The stock market rally is reaching absurd proportions.
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2009-8-27 (Thursday Evening Update) AUGUST MARKET MANIA 8 STRAIGHT DAYS UP AS INDUSTRIALS ADD 37 POINTS TO 9580
August 27 (Thursday) – The challenge for today was to push the stock market higher for its eighth consecutive session and that’s eventually what happened. Stocks were not strong on the open, although the market average was buffered by the pre-market buying in BOEING(BA: $51.79) which had a good press release and ended the day 8% higher. Reports on this revised number on GDP along with this dreaded weekly report on Jobless Claims were not helpful and the DOW INDUSTRIALS actually slide to 60+ point loss before holding steady. Then something triggered a bunch of midday market reversals. The DOLLAR suddenly got very weak, OIL and GOLD just as suddenly went from loss to gains and the stock market reasserted an upward direction. People are getting touchy out there! Most market averages ended modestly higher and the NYSE Advance/Decline Line was positive by roughly 250 issues. NASDAQ rallied 3 points to 2028. GOLD climbed $4 to $950. OIL jumped $1.30 to $72.74. Despite this positive close, some recent warning signs reappeared. Both the DOW UTILITIES and DOW TRANSPORTS were lower today. I pointed out yesterday how the latter may have put a technical double top in place and as often a leading market average, this must be monitored closely. Lately some technical patterns have turned out not to be reliable, but eventually even that will change. Tomorrow will bring out new data on Personal Income and Consumer Spending which will point out exactly where the consumer stands right now. This is a key as no economic recovery can have |