Wednesday, December 31, 2008

Very pleased 2008 is about over.

This was not the best of years for most Americans due to the collapse of the stock market and the Banking system. Many have lost their jobs this year and many are afraid they may lose their jobs in 2009. This is not a good way to live and is very stressful on the body and the mind.

2008 started off very sad for my wife and me, as her Mom passed away on New Years morning. It has been a difficult year with the loss of a family member. We were lucky to have spent the time we did with her these past 13 years. We were also lucky that we were not affected by the economy but very aware that many others are. We changed our giving to charities this year to include our local Food Bank and other human services non-profits that help the homeless. There seems to be a great human need this year and while we all have our stories, it is best to focus on our being luckier than many.

In that sprit, I wish everyone reading here a very Happy New Year and a world filled with more compassion, hope and peace. And it wouldn't hurt if the stock market gained back some of its losses to make more people whole financially.

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Dec. 31st Mini Poll Summary on Recession length

I decided to summarize the Mini Poll data since today is the last day of 2008. While the data has only been compiled since Dec. 26th when I started the Mini Poll. So here is the summary:

First the question:
How long do you believe this recession will last?

Mid 2009 4%
End 2009 35%
Mid 2010 15%
End 2010 15%
Mid 2011 12%
End 2011 8%
Mid 2012 0%
End 2012 0%
Much Longer than the choices you have provided 0%
We are going to be in a Depression 12%

If I summarize by Year:
2009 39%
2010 30%
2011 20%
2012 0%
Depression 12%

So after the New Year begins you can vote again and I will summarize January's data on January 31st and keep this going to measure the mood of those who voted. There were a total of 26 Votes in the past 6 days. Thanks for voting!

UPDATE Jan. 3, 2008
I came across the results of another poll today with a similar but slightly different question. First the question and then the data with a link to that poll below.

Q. When do you think manufacturing will come out of recession?
mid 2009 6%
end 2009 41%
mid 2010 29%
end 2010 or later 23%

The results are comparable to my findings but a little more negative outlook. Here's the link to Industry Week website.

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Tuesday, December 30, 2008

Dec. 30, 2008 market action was with light volume

Markets closed up today and both of my ETF Ultra Shorts lost ground. However, I did not sell them as I still believe we are going to test the previous lows. Low volume days can make swings more than they would be otherwise. If anything, today was a buying opportunity if you believe the market will drop in the next 2 weeks.

All 3 Indexes closed today about their 20 and 40 day Moving averages but not about the 60 day Moving averages. To me the big news of the day was the fact that Consumer Confidence is at 38% compared to over 90% last Dec 30th, 2007 and down from 44.7% in November. Data in other countries support declines in their consumer confidence as well. WE will see what impact that has on the markets the first few weeks in January. But next week we will get Unemployment rates for December.

On a more personal note, I caught a bad cold and am resting today and tomorrow to hopefully shake it. I will post when the news warrants a comment.

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Sunday, December 28, 2008

Headline reads: Across Mideast, Thousands Protest Israeli Assault

I have little to say about these headlines except for one important point. Where were all the protesters when Hamas was sending rockets into Israel? To read the complete news article on the protests against Israel's bombing of Hamas, click on this link.

Unfortunately, the world has come to accept the fact that Hamas will continue to send rockets into Israel, as evidenced by the lack of protests in favor of Israel or against Hamas. This must change, as silent world opinions aid and abet the terrorists in these societies and prevents Palestinians from having Statehood. So in fact everyone loses. The world must say enough is enough of any terrorist activities. People must once again follow Gandhi's footsteps in pursuit of non-violent means to correct unjust acts.

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Stock Market: Where do we head from here?

I took the time this morning to look at all the stocks on my watch list. I have about 40 stocks on my watch list. I noticed that the majority had one thing in common, most were trending down on the MACD lines. The MACD is a tool which measures convergence and divergence of the moving averages. You can get a good definition of it at this site Investopedia. It showed me more evidence that the 3 major indexes, the Dow, S&P 500 and the Nasdaq, are trending negative going into the last week of the year and most likely the first week in January.

Given the escalation of the conflict between Israel and Hamas on the Gaza strip, the Futures are pointing negative since the close on Friday. With the retail sales looking abysmal it will not be surprising to see the markets get shaky tomorrow, even with light volume. I do not believe it is too late to buy the ETF Ultra Short of the S&P 500, symbol SDS as it closed at $76.11 on Friday after paying out an $11.46 dividend to shareholders.

Check back here during the week for updates on the market.

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Saturday, December 27, 2008

Israel gets frustrated with rocket attacks and responds.

The State of Israel retaliated strongly against Hamas rocket attacks on its people by bombing police and Hamas security locations on the Gaza strip with over 100 bombs killing over 200 and wounding over 400. Some voices, within Israel, are concerned over the size and appropriateness of the response by their government. But it is difficult to restrain themselves, when their citizens face getting killed daily by rockets .To read further click on this article.

I don't know how I would respond if I were subjected to rocket attacks daily. I know I would be damn mad about it and would probably take matters into my own hands to stop it. I can't blame the Israelis for lashing out, as diplomacy with the lunatic Hamas group is impossible. They would rather fight all the time, it seems to me and between them and Hezbollah and Hamas there will never be peace. These 2 groups are sponsored by Iran. I hope that our new President will be firm with them and not appease these groups. There must be a high price paid by Hamas or others for the attacks on Israel, or Israel will never have peace. They are just thugs! Hamas must keep its word in negotiations or they deserve what they get. The Palestinian leader Abbas has kept the peace in the West Bank with his security forces. He has been searching for peace with Israel but as long as Hamas continued to rocket Israel peace was elusive once again. Maybe after this is over reason will set in. I am always hoping for peace.

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Friday, December 26, 2008

Market action week ending Dec. 26th

Well a very quiet week in the market as volatility calmed and the VIX Index dropped to 43.38 to close out the week. The Put To Call ratio ended the week at 0.78, which is much lower than it has been these past 2 months. It has been as high as 1.47 since October. All 3 Indexes are below their 20 day Moving averages, and to me that adds to my confidence that we are headed lower in early January.

Not enough volume to draw any conclusions as to emerging trends. We are in a tight range and will stay there for the next 4 market days next week. It is time to raise cash and pay any bills to reduce taxes you might need to pay this year. I will pay my Property taxes in full before year end. Besides the State of California is almost broke and probably need the money as soon as they can get it. For those not familiar with statistics regarding California, the Unemployment rate is currently 8.7% compared to 6.7% nationally.

Happy New Year. See you back here often. I try to publish something daily but don't always succeed. Leave a comment and don't forget to vote in my Mini Poll on the right margin about the recession.

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A new Mini poll: How long do you think the recession will last?

I have posted a new Mini Poll to get your opinion as to how long you think the recession will last. Don't forget to vote. If we can keep this poll going we might be able to get glimpses of the shift earlier than the market and be able t take advantage of the data. Thanks.

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Thursday, December 25, 2008

What to look forward to on this Blog

I want to give a special thanks to all of you who have visited my site and become return visitors. I have surpassed 34,000 visitors now with them reading over 55,000 page views. As the expression goes, "I couldn't have done it without all of your help!"

As you have noticed, I have added writing about the stock market and investments these past few months. I use to write a weekly Newsletter on the Nasdaq and did so for 5 years. I had told my readers to go to 100% cash 6 weeks before the bubble burst and after 9/11 told my readers to buy back stock with a vengeance when the market was going to open, after the initial drop in the market and that they wouldn't be sorry. I have predicted the bottom of this market at 7,300 on the Dow, give or take a few hundred too.

So if you like this new feature I am planning on continuing it. I have no idea how the news is going to be for the new Obama Presidency, but I suspect we will all have some complaints sooner of later after the initial flurry of proposals comes out and gets passed quickly by the Congress. I will write about it here. As long as there are checks and balances and a stop to pandering to the wealthy, we will support this President. But I for one want to see proposed legislation on regulations which have claw back provisions when execs walk away with Millions for companies which prove to have significant problems like the Auto Industry did and the Investment Bankers did as well. It's time to stop the robbery of shareholders hard earned money.

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Wednesday, December 24, 2008

Merry Christmas? Do the best you can!

I know, it is depressing to hear the news about how awful things are right now. Today they announced 586,000 filing Jobless claims for the week and that many aren't shopping. But come on, there is more to Christmas than worrying about the future. How about being in the moment and being grateful for the blessings we have had this year. Let me recount some of those things to be happy about this Christmas.

First, we are alive and enjoying being able to just breathe. If you don't consider that a blessing try living without it. Most likely you you have a house to live in or an apartment and aren't reading this from a homeless shelter, nor are you homeless. You also must have a computer unless you are reading this from your local library computer. Now for the more existential blessings.

This is the last Christmas we have to have George Bush as President and Dick Cheney as Vice President. Those bad days end in only 27 days. That will end listening to a President who uses poor grammar, has difficulty making complete sentences and can't pronounce the word "nuclear". It will mean the end of the use of torture and the beginning of restoring our image around the world.

We will have a new President and, with him, will come the hope of the economy turning around, a focus on healthcare for all, a plan to reduce Global Warming with investments in Green technology and the creation of millions of new jobs, through initiating infrastructure projects across America. This will mean new schools, less crowded classrooms, improved technology in those schools, better roads, bridges fixed and other projects to help jobs and our local communities.

We can bury our heads in the sand and leave the recovery to the new president and his team or we can think how we are individually contributing to getting us out of this mess and on to a recovery. So I want to wish you all a very Merry Christmas. Enjoy your family, enjoy your own company if you are alone, and think about what is good in your life even if it's just that you are alive and still breathing. And Santa is coming to your town tonight. God Bless.

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Tuesday, December 23, 2008

ETF Ultra Short funds drop big time today but don't be alarmed

The reason the ETF Ultra Short of the S&P500, symbol SDS, dropped so much today was because the Funds are required by law to distribute profits at year end. That happens at the close today. You will notice the dividend per share will be $11.46/share. That is almost exactly what the share price drop is today. These will be Short term Capital Gains and in taxed accounts you will be required to pay a tax on the gains. For some it may be the only gains this year.

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Sunday, December 21, 2008

Recession or Depression: What's the difference?

I was reading an old book I have had for about 25 years. It is an historical recounting of the conditions in society in the 20's and 30's focusing specifically on the stock market crash of 1929 and then the Great Depression of the 1930's. Yes stock prices for companies like IBM, GM and other top quality names had gone from hundreds of dollars per share, down to the single digits during the Crash and some had committed suicide by jumping out of windows in NY City. But what was surprising to me was that many didn't see any difference in their own surroundings in towns and cities across America, unless they were looking carefully for differences. For example, during the Great Depression there were less trucks on the roads and less cars. There were more people hitchhiking than usual, as many were transients looking for cities and towns where there was work. None noticed that trains had fewer cars attached. Nor did they notice the length of the Unemployment lines, unless they too were looking for work. When and if they were fortunate to go out to a restaurant, there was always an opening in those, where in better times, were filled to capacity and you couldn't even get a reservation.

There were more visible signs in more seedy areas, like the length of the soup kitchen lines and the homeless shelters, which extended around the block from their entrances. Other signs were the number of people applying for any job that had openings with skill sets much higher than were needed for the job. There were more panhandlers in major cities and the migration of those panhandlers to cities in warmer parts of the country. Hospitals were more crowded with people who were sick and had no place to go or live. Doctors helped patients without knowing whether they were going to be paid at all. Remember it lasted a number of years from the stock market Crash of 1929 through 1930, 1931, 1932 and 1933 into 1934.

The real difference between a Depression and a Recession can be boiled down to this. If you are working and secure with some savings and you see the news with high Unemployment, it is most likely that we are in a Recession, even a bad recession, but if it is you who are out of work with not much savings and more insecurity, you are in a Depression. So open your eyes during this holiday season and, if you can, help those less fortunate who need a helping hand, a warm smile and possibly your friendship. You see, their suffering is all around us and, in this season of hope and charity, we must open our hearts and our wallets. Merry Christmas. Donate to your local Food Bank or Homeless Shelter.

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Saturday, December 20, 2008

Market Outlook for next 3 plus weeks

Well the week was a calm one with the range on all 3 indexes much tighter than in previous weeks and months. It got everyone settled down but it was difficult to make any money in the market with such a tight range. We have not been able to get above the 60 day Moving averages. We have settled in between the 40 Day and 60 day Moving averages. With the coming slow 2 weeks of the holidays, I don't see much going on except tax loss selling by individuals. Then in the first and second week in January I see a pullback in all three of the Indexes.

The main indicator for what was happening this week was the Volatility Index, symbol VIX. It went down to close at 44.93 for the week. It opened the week at about 56 and closing at about 45 results in a 20% reduction in Volatility. We are not yet back to the August lows of 20 but the trend continues down. As the Volatility Index drops, it is more difficult to make any money on Index trading of the Dow, Nasdaq or S&P 500. So that is why for the week the ETF's didn't gain much nor lose much. I am hoping for a breakout the first 2 weeks in January. That will be the time to cash in to the upside should that be the direction or to the downside, which I see more likely.

Several stocks I watched this week were these. Ford for example has not returned to where I sold it, $3.26. The bailout created some buzz at the opening but then fizzled as I had predicted. I also own a stock called Beacon Power, symbol BCON. It has been shorted since July and that has driven the price down significantly. But there was life returning to the stock this past week on increased volume, a good sign. I look in the coming month for a retest of the lows in MGM timed with the market drop. I have heard the impact continues on the Stip in Vegas so I think they will have a disappointing holiday season.

Unemployment is rising with no relief in sight going forward. This is going to have a continued negative effect on the psyche of everyone. Just yesterday while Christmas shopping I overheard people talking about the poor state of the economy, their jobs and concerns they would get let go by their employers but were going to buy a few small presents for their kids anyway. I have never heard anything like this before during Christmas shopping. I heard similar conversations in 2 separate stores. That stinks. Let's at least try to be more positive out there folks!

Merry Christmas, Happy Hanukkah and Happy New Year.

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Friday, December 19, 2008

Market Outlook on Quadruple Witching day

Today is Quadruple Witching day for Options to expire for the end of 2008. Markets oversees are down but the news is that the Auto Industry bailout will be announced by President Bush. Ford Motors and GM stocks are up in pre-market about 10%. 3 Month LIBOR rates are at a new low at 1.50%. Having said that, the past 2 days have been down as I had predicted they might be and I don't see that they will rise today. Is it possible, yes. But going into the first week in January I see the markets having a very difficult time. So being on the Short side is the only strategy that makes sense for this timeframe. I see the markets rising near January 20th inauguration of President-Elect Obama. Just the magnitude of the proposed stimulus should help give hope in the markets.

I still own all my ETF Ultra Short shares of the S&P500, symbol SDS as well as TZA, which is a small cap ETF Short play.

Since many will be away I want to wish everyone a very Merry Christmas. Remember holidays with family can be healing. And everyone needs to be healed this year. If you haven't given to any charity this holiday because it has been tough, reconsider giving to your local Food Bank. They can really use the added help this year. God Bless.

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Thursday, December 18, 2008

Do you believe in Santa? Don't, or you will wake up feeling awful in early January!

Well respected Harvard economist Martin Feldstein was on CNBC this morning and made a few surprising comments about the economic mess we are in as a Nation. First, he said, we will be lucky if we were at the bottom of this mess by the end of 2009 but he believes it will go well into 2010 and possibly 2011. He expects double digit unemployment and for it to also continue for a very long time. He said Credit markets are too dysfunctional and that the dramatic cut in interest rates, by the Fed, will have little, if any, effect in solving our problems. The side effect of the rate cuts are a reduction in the value of the U.S. dollar with respect to other currencies like the Euro and the Yen. And we have set the stage in years ahead to have to deal with Inflation for sure.

These comments were sobering and were made before the release of the Unemployment numbers. The Weekly jobless claims were 554,000 and continuing claims were 4.38 Million jobs lost. The Euro is now at $1.46 to the U.S. Dollar. Futures still look a bit up, as many want a Santa Claus rally. But even with a Santa Claus rally, the day of reckoning will come inn the first few weeks in January. There is no other thing to expect given the state of affairs. So if you want a make believe feeling everything is getting better, believe the rally enjoy your day or week, spend your money for Christmas, but don't come back here looking for a handout or sympathy in early January.

Art Cashin said he is concerned that when the Fed lowered interst rates it will have an effect on Money Market Funds, where millions of Americans moved their money in hopes of dividends He is afraid that since rates are now so low, that hundreds of billions of dollars may get pulled out of Money Market Funds causing another crisis, because they won't be paying any dividends.

A dose of reality will save you if you're irrational right now.The only reasonable play is being short the market into January using ETF's which are very liquid and easy to trade. We are nearer the top of the range between 7,300 and 9,500 on the Dow right now and may get closer to the upper band before Christmas, but watch for the lump of coal on Christmas morning.

We have been a "consumption" based society all my life and we really need to change that to a society which "saves" some of its income for rainy days. We can't live paycheck to paycheck and have no safety net and we shouldn't be teaching our children too either.

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Wednesday, December 17, 2008

OPEC cuts 2.2 Million Barrels of output. So why aren't we buying it cheap?

OPEC has announced cuts of 2.2 million barrels of oil today to try to prop up prices. Russia joined OPEC and supported the cuts. Here we have a chance to buy oil cheap and we should have and add millions of barrels to our National Petroleum Reserves, but we haven't bought any since May of 2008 when oil was $126/barrel. Now it's near $40/barrel and the Bush Administration won't. There should be little doubt that this was the final Bush/Cheney Administration support of their oil buddies, instead of helping average Middle Class Americans. We all know oil is going to go back up again to at least $70/barrel and many say $100/barrel again. We had a chance to stabilize prices closer to this level by buying more oil at these prices instead of having Opec cut production.

We will look back and wished we had. There should be no question where Bush and Cheney's allegiance is, it is definitely with Oil companies here in the U.S., and at the expense of us all.

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Dec. 17, 2008: The day after the Fed goes "All in."

So yesterday was a barn burner and the market rose above the 40 day Moving Averages on all 3 Indexes, the Dow, Nasdaq and the S&P500. So it would look like we are going to keep going up, Right? Don't believe it. It was best said this morning on CNBC by John Vogel, the Founder of Vanguard, that the Fed is pushing on string. He said they had to do it, but it doesn't make everything good again nor drive people to lend again.

I think we are still in for a rough time in the market. I still consider a conspiracy theory they are doing their best to get consumers to shop for Christmas presents as it can raise all boats. But have you looked at people shopping lately? No one is carrying any bags home. They are just walking in the Malls and stores as if they are on some exercise program.

Near the close yesterday I loaded up on TZA which is the 3x Short trade following small caps. I bought the shares at $53.50. So the gains I had on Monday were wiped out yesterday when the stock dropped over $13/share from the market rise after the Fed announced their unprecedented action. If the market does drop in the next week or after the holiday, these shares will provide unusually high returns. I still own all my SDS ETF Ultra Short shares. Yesterday it went back down to the lows of my last purchase at $81/share and even a little lower settling in at $80/share. I do not plan to sell these shares until I make a good profit on them. This should happen in January, as I believe we will test the lows before Jan. 20th Inauguration of President-Elect Obama.

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Monday, December 15, 2008

What's in store tomorrow for the market with the Fed expected to lower interest rates?

I can't see a rally happening as the Fed will then almost be out of ammunition to help the economy. Most are expecting a 50 basis point reduction in rates. That will leave them with only 50 basis point reduction one other time before the rates are at zero! Everyone will yawn after the announcement and the markets will go lower from where they are.

I have been watching the 3 Month LIBOR rate and it is lower than it has been in quite a while, now at $1.87%. CNBC commentator Matt Nesto said that playing the range is a good way to make money and he cited about a 20% range is possible and people are making money on these trades. I agree. But you have to be at your computer to play the most recent range as it is tighter than previous Market volatility.

So my choice is to keep my ETF Ultra Shorts for now. Today they had a positive gain as TZA was up over 9% and SDS was up 1.6%. Clearly TZA was the winner today.

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Market outlook: The week of Dec.15th

I was watching 60 Minutes last night, and (if you haven's seen it please do) when I heard we are at the beginning of a second wave of Mortgage foreclosures, which will peak in 2010-2011. This is just awful going forward. It shows that even if the stock markets rise, it is only temporary. The news is going to depress people for the next few years and we are all going to be wishing the pain would stop for so many. Even President Barack Obama will have difficulty getting in front of this mess. I can't think of a single thing to turn this coming crisis around and that is unusual for me.

So my outlook for the market, not only for this week but for many weeks and years is not good. This temporary bubble of a recent rise in the markets is truly temporary. After the holidays we are going to face another round of reality and scary market drops. The best place to be will be on the Short side of the trades. ETF's such as SDS, DXD, TZA and others will be the place to be. Even if the market rises, it is not going to go up enough to get the shorts to dump them, because all they have to do is wait a bit for the bad news to put a damper on any rise. short term trades to get any profit will become a skill worth having.

This Friday's Options Expiration is quadruple witching, so watch for considerable volatility in the market. Playing the channel should work if you traded near either end of the range between 73,00 and 9,500 on the Dow and respective ranges on the Nasdaq and the S&P500. I still own my SDS and will be looking for a way to sell it if we get nearer to the extreme. If it doesn’t get there this week, I will just keep holding it and either hold or add to my position in it. Good luck my friends.

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Sunday, December 14, 2008

Car Czar names: I have several

Who could help the Auto Industry restructure itself and be competitive enough to reinvent itself? I have several names. The first one who comes to mind is on other's lists. His name is Mitt Romney. Mitt knows the Auto Industry, is very smart, has the bench strength to draw from his earlier days with Bain & Co. He would be a good choice and another way for President-Elect Obama to bring former rivals into the tent of his Administration. I could support Mitt as the Car Czar and he would do a great job.

But another name came to me and who could be even more successful than Mitt. His name is Lou Gerstner, formerly CEO of IBM, who was brought into the company in 1993 to save the company and change its culture. He finished his role in Dec. 2002 and did a great job, as evidenced today by IBM's success in the market place. Lou didn't work in the Auto Industry but he does know how to change a company and get it on the right track. He was CEO of RJR Nabisco and most recently was CEO of the Carlyle Group where he retired from in Oct. 2008. He wrote the book, "Who Says Elephants Can't Dance?".

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California Budget Gridlock: When are the people going to rise up?

The mess California finds itself in is every Californian's concern. And the answer to get out of this $14 Billion deficit requires regular people to get involved in ways we haven't ever before. In California and only 1 or 2 other States, it requires a 2/3 vote to approve the State budget. That is 67% of the elected officials voting in favor of the budget. We have been without a budget for many, many months and we now risk being bankrupt as a State. The legislature is within 3 votes needed to pass the budget, but Republicans, on ideological grounds, are opposing it. Does this sound familiar?

So what can we do as citizens of the State? Well, first we could all support a budget change to a needed 50% plus one majority to pass the budget. But that law can't get passed because the Republican minority wouldn't vote for it, as their power would be gone because California is predominantly Democratic and a Progressive State.

One thing not explored is what powers Governor Arnold Schwarzenegger really has to end this crisis. He has called a State of Emergency and the Legislature is meeting to try to resolve the problem but no one is budging on their positions and the stalemate continues. Reporters this morning are saying that small groups of non-government people are working behind the scenes to come up with some solutions. This is very good news if true.

But one thing that needs consideration is some local pressure from citizens in the communities where the 3 Republican votes are needed, and those vested interests need to abandon their ideological views for more pragmatic ones. Many people will lose their jobs and people need to care about all Californians plight with this budget mess. I for one, would be willing to pay more California taxes, as most Californians also would. For those Republicans who are tired of paying California taxes, leave the State and go find another home where you can have such a beautiful place to live but don't have to pay taxes. It's called Nevada! But no one really lives there.

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Saturday, December 13, 2008

Shocked a Governor would want money for appointments? Not me.

For many this is earth shattering to know our government officials wanted to be paid for favors. Let me shed a little light on the topic. It has been going on in major cities for at least 5o years that I know about and I'll bet the real old timers could tell you stories of happenings in their times that would also shock you. Why is it that some know about this and have for many years and some are ignorant of a more shady surrounding going on all around them growing up? It is the fundamental difference of people who are "street smart" and those who are not. Being street smart keeps you safe when you grow up in cities. Suburban kids haven't got a clue.

I grew up in the streets of Boston, specifically the part called Dorchester, a community of low income people whose kids grew up to be laborers and ruffians. To survive in this environment you had to be street smart or you got beaten up by others or worse. Growing up we knew where the power was in the community. It wasn't with the police, it was with those who paid the police on the side to ignore illegally parked cars, fix traffic tickets, or even paid off to judges to reduce a sentence or to let someone go. In those days there wasn't a lottery. Instead there was a local Bookie who took bets on "the numbers" and the horse races, paid the winners off and even loaned money by "Loan Sharks" at incredibly high interest rates over short periods of time. It was a very dangerous place to grow up, but because survival demanded being street smart, many learned valuable lessons in life.

I'm not trying to glamorize this life, but to wake up people that corruption has been here for a very long time and it is naivete to think otherwise. So it is well known that the Illinois Governor was corrupt. Most everyone knew it but no one dared do anything about it. It took Special Prosecutor Patrick J. Fitzgerald to uncover this and stop it in its track. He is the same Special Prosecutor who helped prosecute "Scooter" Libby in the outing of Valerie Plame.

Many out of fear have been silent about corruption. Many use the excuse, "It's none of my business". Well it is! It is all of our responsibility, because we have allowed it to go on for at least a generation. Illinois, and specifically people in Chicago, have a chance to change this condition if they are brave enough to demand things change. It is why many of us voted for President-Elect Obama for President for a chance of a different kind of politic, rather than the same old politic of the past.

I am not proud of how I conducted myself as a kid. I was very scared most of the time growing up. My parents never knew what was going on in the streets or in the neighborhood. They were good people that minded their own business and didn't socially mix with any of our neighbor. They were Irish and we were Italian, and the only Italians for a square mile. I saw things and knew of things I shouldn't have. I was afraid to talk about them. Trying to fit in, I went along with the status quo and appreciated the small amount of money which came my way through playing cards at first, and then hosting bigger card games where I received a weekly take. Even today I still fear full disclosure of events back then. But maybe someday I will add more to this topic.

When I was 19, I decided to leave Dorchester, go to school, and make something better of myself. As an Executive Coach, I have devoted my life to helping others face their fears in business and in their personal lives and hope I have made some small difference. But, I have never forgotten where I came from and know it is the same all across big cities in America. Those who have street smarts know what I am talking about, and those who don't, have no clue. Wealthy families never have their kids exposed to environments where it was necessary to become street smart. And so stories like the Illinois Governor and the selling of a Senate seat for money, are unfathomable. I wish it weren't so.

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Friday, December 12, 2008

Where are we headed in the stock market now? Unfortunately back to the lows!

Today will be Black Friday in the stock market. The failure of the Congress, specifically the Republicans in the Senate, to pass the rescue bridge loan for the Auto Industry, along with a few Democrats, will scare everyone in coming days. Portfolios will take a haircut and ensure this Christmas is bleak for retailers as well. You are watching the slow unwinding of our economy and unless their is strong leadership to stop this decline we are headed for the Great Depression of 2009.

The Dow is down over 260 before the pre-market opens in 45 minutes. I expect it to be much worse today. The Democrats in Congress are looking to President Bush to save the day and to agree to use TARP funds to come up with the loan. I can hear the argument the Democrats are using to convince the President. It goes something like this.

Mr. President you came to Congress fearing a calamity in the Banking and Insurance Industry and asked us to trust you and Hank Paulson with approval of $700 Billion in TARP money. In fact Mr. President, you submitted only a 1 page document asking us to just trust you, with no strings attached to the money. We added about 400 pages of requirements to the package but nevertheless we passed the legislation to basically give you cart blanche for the funds. Now for only $14 Billion of that $700 Billion, we are asking you to return the favor and save the auto industry at least till March. It costs only 1 month for what we have allowed you to spend in Iraq. So Mr. President, you can once again feel omnipotent as one of your last final acts, and approve this money and walk away a hero to the very Middle Class you nearly destroyed in your 8 years as President.

Getting to the market, if you have bought and held the ETF Ultra Short of the S&P500, symbol SDS, you are sitting pretty this morning. If you also added to your position you are going to see very good gains today and possibly Monday as I see Monday as a possible culmination of the drive to the lows of the market and retesting next week around 7300 to 7500 on the Dow. When we get there we may have Capitulation in the markets worldwide. Ford is down in pre-market to a low of $2.12/share. It may be a good buy back down below $2.00 as something will come along when Barack Obama becomes President on Jan. 20th and pass the funds needed with the new Congress. GM will most likely close factories to save cash until then.

Hold on for a tough ride just before Christmas. And if you are an Auto worker, I am sorry for your situation and the pain you will be going through, at least short term. You didn't create this mess, it was the leadership.

UPDATE 1:20pm P.S.T.
Comments by Paulson regarding the prospect of using TARP funds to provide a bridge loan for the Auto Industry, had the effect of neutralizing the negative outlook of the markets, at least for today. It does not put off the inevitable market pullback, only delays it. That's fine right now. We need a break as the stress can be too much for some. I will write more this weekend on the market so stay tuned.

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Thursday, December 11, 2008

Headline reads, "$14B auto bailout dies in Senate." What a shame.

Part of the breaking news story said " Sen, Harry Reid called the bill's collapse "a loss for the country," adding: "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight." Early overseas stock market reaction is as follows. The Hang Seng index is now down 1000 points and the Nikkei is down almost 500 points.

So here we are and the collapse of the Auto Industry loan, and I stress the word "loan", got whacked by Senate Republicans this evening. We still have the politics of the past from the remaining Republican Senators like Mitch McConnell, John Ensign, Bob Corker, Richard Shelby and others who are willing to allow hundreds of thousand of people to loser their jobs which is most likely to cause additional foreclosures over a few Billion dollars because of their so called "principles". If so, why did they pass a $700 Billion bailout of Wall St. without any such concerns. It is hypocritical and shamelessly without compassion during their declared, most important religious holiday for the Christian Right of the Republican Party, Christmas. We now know who the Grinches are, Republican Senators who need to be removed from the Senate next election. I am appalled at what I have just witnessed. I will tell you this, they are playing with fire and this lack of compassion for the people is what can trigger riots in the streets.

I hope you can see the inequity here and the hypocrisy of their position. $14 Billion versus a Trillion dollar bailout so far without any strings attached for the Banking and Insurance system. It doesn't even count the $12 billion a month we are spending in Iraq and all the Trillions this Administration poured down the drain in putting us into debt our children and their children will have to pay off. Disgraceful!

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Market still fading today. But where is the expected sharp drop?

The jobs report today showed an additional 50,000 job losses and the U.S. Dollar has weakened. These are both more bad news to take the wind out of the sails of the Bulls. If the dollar keeps dropping we are in trouble because foreigners like China won't keep bailing us out and then imagine how a long string of Dominos falls, when just one falls on another. I am sensing more fear creeping back into the market and wouldn't be surprised to see a major selloff here timed to the Senate action, or lack thereof, on the Auto Industry Bridge loan rescue plan.

Watch the auto industry share prices today and tomorrow fall. Ford closed yesterday at $3.25 and GM closed at $4.60/share

So I don't know what is holding up this market. The news continues to be bad but it seems some Institutions are trying to prop up this market with some small wish that some will do Christmas shopping. I guess if you are reading this you aren't shopping either. Bah humbug!!??!

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Wednesday, December 10, 2008

Market action Dec. 10th, 2008: In a word, Fading!

Market action rise today was limp at best. Volume today was lower than yesterday's volume. Volume usually increases from Monday to Thursday each week. So the very fact the market did go up, it did so on weak volume. That is a negative sign for the market. Republican Senators Shelby and John Ensign are mounting opposition of a loan to the Auto makers, unless they file for bankruptcy protection first. The Democrats don't have enough votes within their party to pass this, and Democratic Senator Bacchus of Montana, stated his opposition to the bailout.

There are headwinds building to drive the market back down and is flying in the face of the Bulls who want to try and keep this recent gains and secure a new base. As I have said repeatedly, we will retest the lows before we have any chance of mounting a sustained rally.

Market action re Auto Industry

I decided to sell my stock in Ford given the Republican use of a filibuster of the Bill to provide a bridge loan to the Auto Industry. I sold my remaining shares at $3.26. I recommend others do the same. as you can and will be able to buy them back cheaper. Many think this only has implications for the Auto Industry. They are incorrect in that assumption. It will also affect the Technology sector as many autos today are equipped with GPS, TV's, phones, computers and other technology based features. It also affects the equipment manufactures that make equipment to test your car and do diagnostics when there are problems with it. This filibuster is ill conceived and can plunge us back to the bottom range in the Dow, S&P500 and the Nasdaq. Listen to CNBC commentators arguing over this bailout.

Buy Ultra Short ETF funds like SDS, currently at $83.65/share

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Are all Bailouts created equal? No!

So we have all seen how quickly the Congress and the Government came up with $700 Billion bailout for Wall Street when a number of Investment Banks faced bankruptcy. It took a few weeks after the initial Paulson proposed legislation was only 1 page in length. When all the bargaining was done with Congress, the final Bill was 400 pages and did not contain a provision that a percentage of the TARP money had to be loaned out, and not just held by the Banks. Then we saw a bailout of AIG followed by a huge loan guarantee of $300 Billion of Citigroup.

Now after weeks of negotiations between Democrats, Republicans and the White House over a Loan to the Auto Industry, much is being made about how tough an agreement this loan will have and even then might not get Republican support with the votes. Seems to me there is a double standard here and this issue shows why many in office have lost the election. They still don't get it. Until they show support for average Americans as they have a chance to do here, they will become irrelevant to the rebuilding of America.

Where were all the concerns before? Where were the checks and balances on the out of control spending by this Administration over the past 8 years. Where were the checks and balances on the $12 Billion per month we are spending in Iraq? You know the answer to that one., there weren't any! We are now a Debtor nation thanks to that past 8 years of an uncontrolled Bush Administration and both Democrats and Republicans are to blame as well as the rest of us for continually reelecting incompetent government officials. Hopefully President Obama will reverse this trend.

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Tuesday, December 09, 2008

Illinois Gov. Blagojevich arrest on corruption charges: The effect on the Obama stimulus package

Of all the stupid things to do, Illinois Governor Blagojevich is accused, by Federal Prosecutor Patrick Fitzgerald, of corruption and the complaint alleges that he was trying to sell Obama's Senate seat for money. This is unbelievably stupid. I guess this is why we should allow some wiretaps.

The effect may have many of us wondering whether a stimulus package for the States is a wise thing to do, given corruption across all of our government. The new mantra for everything involving government should now be Oversight, Oversight and more Oversight! You can throw in another word if you like: Regulate, Regulate, Regulate! I am speechless. This has significant implications for awarding contracts and cronyism.

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Obama's stimulus strategy: Will it work?

Here is another question I have been thinking about for over the past month or so. It is probably the most important question of our time. Much is hanging in the balance including the future of our country.

The first place to start thinking about this question is focusing on what is the purpose of a stimulus. There are several results we are hoping a stimulus package will create. The first is to save jobs and keep people working while we wait for the economy to stabilize. The second derivative effect we are hoping for is additional job creation from these jobs. The trouble with investing in cement projects like building schools and roads is that they do not grow the economy to be self sustaining for the long term. These are short term events, with no life beyond building the project. When the roads are fixed, it's done. When the school is built, we just take crowded schools and make them less crowded by moving students and teachers into them. True stimulus needs to have a multiplier effect. But where could a stimulus create a multiplier effect? The answer is in new technology!

New technology is a part of President-Elect Obama's stimulus package included in his proposal for the Greening of America with solar energy, wind power and other renewable technology, which will reduce and eliminate our dependence on imported oil from the Middle East. But we will need much more of an investment in this area, if we are to stop the transfer of wealth from the U.S. to the Middle East. There needs to be investment in specific technology which will create new jobs in new areas where America can take the lead. Finding new sources of energy for the planet is a very important one, given the negative effects coming from Global Warming. Building more fuel efficient automobiles is good, but building new cars, which use alternative green technology, is better.

What else has a multiplier effect of creating job, which create additional jobs? Can you think of places where job creation creates more jobs? Leave a comment.

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Monday, December 08, 2008

Hope is alive in the markets but are there many believers?

The market rise yesterday was significant for one reason, all three Indexes broke above their 20 day Moving averages. Even in the face of announced layoffs by a number of companies today and Friday's poor unemployment figures, the Bulls want to shrug off the bad news and are trying to change the negative psychology pervasive across the country. If there is enough money on the but side this can have a very positive effect. However, if it can't be sustained, the market can easily slip back and retest the lows.

Volume was decent but not unusually high for a Monday. If Volume increases with the prices rising it will give hope to all. I wish it true for everyone. I just can't buy the argument we have bottomed out without a retest of the lows. Some on CNBC this morning have only one explanation for the market rise, a Santa Claus rally. Several commentators have said they don't trust the rise as they know every day after 4:00pm there will be bad news from some company.

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Pre-market Monday, Dec. 8th, 2008: Is the rally real?

Many of my friends don't believe the rally is for real. But many counter with the fact that the stock market is a leading indicator and usually 6 months ahead of the news. This weekend Congress, President-Elect Obama, along with the Bush Administration, have worked out some differences on a bailout for the Auto industry. Markets in Europe and Asia all had big rally's overnight and in the early hours. So it seems as though we are off to the races at the open, and you can expect a significant rally up about 300 points early in the day.

But again, is this enough to dispel the market overall fear? The answer to me is No! Most of us believe that more jobs are going to be lost going forward, more home foreclosures, tight credit and not much good news. So this rally is a relief rally based upon the worst news any could imagine from the bad jobs report last Friday, where 533,000 jobs were lost, behind us and no other news expected for a while.

So what to do. Well, first don't sell your Ford stock. Enjoy the ride today, as it will go up to $3.50 today for a nice gain. And because of the bailout, it will continue to $4 and above per share. If you believe as I do, that there will be a pullback eventually here and retest the lows, you are going to be given another opportunity to by the ETF Ultra Short fund, symbol SDS for around $83/share. If you buy this here you will most likely make a good return. So folks who believe we are in a Dow range between 7,300 and 9,500 will be looking to add to our Short positions using ETF Ultra Short funds. Yes, we may rally for a few days this week, but ask yourself this question, Are we going to have the worst of this financial crisis behind us 6 months out?

UPDATE 1:15pm PST.
I took my own advice today and purchased more shares of SDS, this time at $80.50/share with a limit order in for that price before I left for a client. The shares of SDS actually hit a low of $80.06 today. Ford closed up as well at $3.38/share after hitting $3.54 today, which was another lucky guess.

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Saturday, December 06, 2008

Use it or Lose it says President-Elect Obama. Why didn't Paulson say the same to bailed out Banks?!

In his Saturday radio address, President-Elect Obama says he is planning to give the States money as a stimulus to boost jobs and the economy, but he said, the money will have strings attached that they must use it for the specific purposes or they will lose those funds.The question I have for Hank Paulson, Treasury Secretary, was why he didn't have similar strings attached to the Banks, when he bailed them out with the TARP money approved by Congress? He should have required a certain percentage of the funds be used for loans for cars, mortgages, student loans and small business ventures. But not only didn't he require it, but neither did the Congress!

When are thse folks going to wake up. I swear they are asleep at the switch and this feels like the blind leading the blind.

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Friday, December 05, 2008

Market outlook for Friday Dec. 5th, 2008: Unemployment jitters rule the day! UPDATED

Going into this Friday Unemployment numbers, there is a lot of anticipation of a negative number with many saying they won't even believe a positive number. Yesterday's market action resulted in all three Indexes down. The Dow lost 215 and is now at 8,376. All three Indexes continue to stay below its 20 day Moving Averages. The big 3 Auto makers had their day with the Senate trying to convince them that their plans for recovery are real and that they should just be given a bailout. This seems highly unlikely as Sen. Chris Dodd and Sen. Harry Reid don't seem inclined to even take the vote. Not sure if that is because they don't have enough Republican support or if they don't also have enough Democratic support. Seems like most are coming around to the original proposal that they must go into bankruptcy, as a precondition for any funds.

So what will happen today? It seems unlikely of a positive move up today or even going into next week. I noticed that the volume yesterday was not high compared to previous days of the week. Thursday is usually the highest volume day of the week with Monday the lowest volume day of the week. Usually Friday's are about the same volume as Tuesday's. But this week has set up that today may be the greatest volume day of the week.

I just am hard pressed to believe there are going to be any buyers yet. So with some still selling and no buyers the forces of energy point down for all 3 market indexes. SDS continues to look attractive to me going into the next week. This cloud is also affecting the Christmas Retail sales and that shoe will drop in early January. I believe it is going to take until we have a new President, before there is any hope our economy has a chance for recovery. So we are in the most negative time right now. If we can get through this period we have a chance to reverse the psychology of the average investor. We should all be grateful we have at least some hope with the inauguration of President-Elect Obama on January 20th. He has inspired the Country and is doing his best even before taking office that he knows what he is doing and is a different kind of politician. Thank God.

I will update this after the Unemployment numbers are out and the market reacts. Going into the numbers at 5:00asm PST, the Dow Futures point to being down about 40 points.


Well the Unemployment rate numbers came in worse than expected. The number of jobs lost were 533,000, which will scare many of those still employed. The Unemployment rate rose to 6.7% and would have been much worse except the fact that many unemployed have given up looking for work. To put this in perspective, President-Elect Obama wants to create 2.5 Million jobs over 2 years which is about 100,000 jobs created every month. In today's numbers that loss of 533,000 jobs represents about 5 months to gain back in a best case scenario. markets will react negatively. Only Short positions like SDS will help save or minimize the effect of the drop in market value. In my view this accelerates the possibility of help to the Auto industry. Today's numbers strengthens the case for a bailout quickly even if modest enough to review it again after Obama takes office. This makes Ford more attractive today to me.

The Dow finished up 259 points to close at 8,635 surprising even me after a terrible Unemployment report this morning. The market shrugged off the news and appeared to finish strongly and on higher volume than the previous 4 days. All 3 indexes, the Dow, S&P 500 and Nasdaq Composite, closed above their 20 day Moving Average. And while Volume was the best of the week today it was not convincingly higher to give more credence to the move up. I am still a doubter and the safe side of this market is Short, not Long. If the Bulls can get some strong volume going, it might be convincing but many just have been burned before and are reluctant to take a plunge back in. I will write again in the premarket on Monday, so check back if you are following this Blog for a market outlook. I may write over the weekend on other topics like the Auto bailout, prevention of home foreclosures and other topics of interest.

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Thursday, December 04, 2008

Market outlook for Dec. 4th, 2008: Uncertain today

Premarket indicators show a down market at the open. Today Congress starts the first day of 2 days of hearings with Auto Exec's. Sen. Harry Reid says he doesn't have the votes yet for a bailout package and today will be great theater in those hearings. Some Senators are still talking about a possible bankruptcy needed by one of the auto makers, most likely referring to GM, as a way to warn the other 2 to be very careful about their direction setting and planning for their future. It is not popular to bail out the auto industry and I am sympathetic with that view as I beleive bankruptcy is a prerequisite for bailout. It could be done in a prepackage, as I have written about here and much more accomodation could be gained by doing so from both Exec's and the Unions.

Jobless Claims were down a bit as announced today but tomorrow's Unemployment headline will culminate in setting direction for next week. Job layoffs announced today by AT&T and Dow Chemical adding to the list of companies trimming their workforce and adding to the gloom out there.

I am sticking with my SDS as I still believe the market will go lower and possibly retest the previous lows. I will not do any trading today but tomorrow I will decide where we are headed and write about it here.

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Wednesday, December 03, 2008

Market Outlook for Wednesday, Dec. 3rd: Down market

It is shaping up for a very volatile Friday when the Unemployment rate for Nov. and the Jobless Claims report comes out. They are projecting about 320,000 jobs lost in November but think it may be even worse.

If you bought the ETF Ultra Short Fund shares of SDS when I did, you might be able to cash out on Friday at about $118 or higher. I will not have outstanding orders going into the weekend as next week will be very tricky to predict. Think about how this is also affecting the psychology for Christmas shopping. It will not be a pretty picture in January when we review Retail Sales figures.

It is my view we will retest 7,500 previous low of the Dow in the days and weeks ahead and may go further down to the 7,200-7,300 level, which is where the bottom was to me and I have been saying so for months now. Even so, it isn't much lower from 7,500 but it would connect to the uptrend line from about 1985. We must and will hold at those levels. Hopefully from there we will stabilize and start the climb again with President Obama unveiling his
hope" for America.

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Tuesday, December 02, 2008

Market action during Tuesday, Dec. 2nd: Sold 1/2 Ford shares today

I sold 1/2 of my Ford shares this morning for an 80% profit. The remaining shares I own have an average share price of less than $0.10/share and I plan to keep them. The reason I sold half the shares was to return the cash I had invested for other uses such as playing the channel of the market. Having more cash in my tax deferred account allows me to move more quickly in buying ETF Ultra Pro shares, like SSO, and Ultra Short shares like SDS and TWM, to take advantage of the big swings in the market. The more frequent trades I can make with AT LEAST A 20% RETURN THE QUICKER MY ACCOUNT BALANCES WILL GROW AND THAT IS MY GAME PLAN.

This trade today settles on Friday so I will have more liquidity to respond to opportunities rather than waiting for them.

Markets are up so far today having reached a peak so far when President-Elect Obama was speaking to the National Association of Governors, in Pennsylvania, about stimulating the economy through the States, on infrastructure and investments on Renewable Energy programs.

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Tuesday, Dec 2nd market outlook

All 3 Indexes, Dow, SP500 and Nasdaq are now below their 20 day Moving average. It was a big drop for the Dow having lost 679 points yesterday. The facts confirmed a pullback was in order and as sure as the sun rises, the market pullback was no real surprise Monday. What was a surprise was the amount of the pullback all in one day. The patterns of the candlestick for the day are the Hammer pattern suggesting the reversal of the previous trend, which was up for 5 straight days before this drop on Monday.

So what's ahead? We may have a rally Tuesday, since the drop was so severe, but I do not expect it to return to the close of the markets on Friday, until it goes down more in the days ahead and possibly retests the lows achieved a week ago last Thursday. I repeat, I do not expect the market to go back up, until we go lower. I have put orders in for the purchase of SSO at $18.20 and have also put in Sell orders for SDS at $120-$125/share. These orders are limit orders and Good till cancelled. If we stay in a tight range neither order may execute. But I am willing to accept as a strong possibility. I may need to wait for a breakout either to the upside or downside before either order gets filled.

I have kept my Ford shares and will watch the price to either add more shares on more of a pullback or to sell on a rise again within my $3.00 to $4.00/share.

Hope this is helpful to you, as many more visitors are reading these market entries this past month or two. Thanks for visiting and for some of your private emails to me.

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