Thursday, July 30, 2009

Market review

So Continuing Claims are down a bit today and the Weekly Job Claims are down a little over 8,000 but you would think by the commentary on CNBC this morning that everything was turning for the better and we are almost at a point where we are coming out of the recession. Bah, humbug! You can't believe that hype really, can you? I surely don't. Look folks, let's face it, many are on vacation and things are slow in business this summer, including layoffs. Restaurants might be surviving based upon summer vacation visitors and many stylists might be getting some business because people wanted their hair done before their vacation. But I tell you things are no better out there and this Fall, which by the way is only 2 months away, is going to bring back more unemployment. Don't be lulled by complacency that things are truly better, by just buying into an overbought market. You will surely be disappointed and lose some capital if you do. Next week they will have the Unemployment report for July and while it currently stands at 9.5% unemployment in June, I expect a creep up for July, maybe to 9.7%.

But remember the Consumer Confidence numbers came out this week and were down from the previous month. June numbers from the Conference Board for Consumer Confidence was 49.3 and in July it was 46.6 and when the economic outlook is good this number is usually over 90 to as high as 120. So most Americans don't see things improving going forward, and are concerned about whether they will have a job or not. Many writers of economic newsletters are wondering about whether there is sufficient capital to truly have a free market right now and they fear it is manipulation that has created this rally. I am concerned about this too. It is in Wall Street's interest and now the Federal Government to have the stock market rise to give us all the confidence that things are getting better and therefore we should trust the stock market with our capital and invest. I would like to share one line of a recent report I have seen and must keep confidential. Here it is: "even if the Chinese lent the U.S. all their $2 trillion, it would only cover this year’s U.S. borrowing. Where is the U.S. going to get next year’s? Because next year, it’s going to need even more. Let me be as clear as possible. There’s no way out of this without major structural changes. It’s not going to be just a disaster. Catastrophe is a better word."

The Put to call ratio is about 0.92 and the VIX closed yesterday at $25.61 and remember what I have said all along: Preserve capital and we will have a major stock market correction sometime before the Options expiration for October. We are still in the range from 7,800 to 9,300 on the Dow and have not gone above that level yet. If you want to try to capitalize on the move up in the market, go for it but have your hand on the trigger to sell. You have to have the time to watch the market to be able to do it though.

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Anonymous Jerry Wechsler (Minneloushe) said...

Thanks for the update, Charles. Unfortunately, I'm getting killed on the TZA at this point, however. If anything else goes up, I could average down.

I hope any downdraft does not hurt our good-hearted President.

7:52 AM  
Blogger Charles Amico said...

You aren't the only one getting killed on TZA my friend. Me too! I should have sold at $27 and cut my losses but I still believe we are going to have a major drop in the Fall. If we don't this loss on TZA will sting.

10:09 AM  

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