Wednesday, September 30, 2009

Bank CEO salaries in US compared to Europe and Asia: The Movie "Corporation" by Michael Moore says it all!

Article on compensation for our bank CEO's, which by the way many had to be bailed out, shows huge differences that will amaze you. Here are some excerpts from a Reuters story:

"US Bank CEO Pay Dwarfs Rest of the World: Study
Published: Wednesday, 23 Sep 2009 | 10:07 AM ET
By: Reuters

You wouldn't know it by his pay stubs, but Jiang Jianqing heads the world's largest bank.

Jiang, chairman of Industrial and Commercial Bank of China, made just $234,700 in 2008. That's less than 2 percent of the $19.6 million awarded to Jamie Dimon, chief executive of the world's fourth-largest bank, JPMorgan Chase.

The contrast illustrates the massive differences in pay among the CEOs of the world's top banks. The compensation of the CEOs of the largest U.S. banks towers above what's paid to banking chiefs in other parts of the world, according to a Reuters analysis of pay at the 18 biggest banks by market value.

Excessive compensation at banks is expected to be discussed this week when the Group of 20 nations meets in Pittsburgh. But consensus on the issue remains a distant hope as there continue to be vast differences in how bankers are paid, from the CEO on down.

The United States is home to four of the nine largest banks in the world — JPMorgan, Bank of America, Wells Fargo and Citigroup. It is also home to four of the six most handsomely rewarded bank CEOs.

'The U.S. executive pay levels have always dwarfed pay for companies elsewhere in the world," said Sarah Anderson, a fellow with the Institute for Policy Studies, which is critical of Wall Street, and co-author of the recent study 'America's Bailout Barons.

'They have claimed it is impossible to recruit people without paying such compensation. Yet, if you look at the pay levels in Europe and in a lot of Asian countries, somehow they manage to find people who can run major global firms while making a fraction of what they make in the U.S.,' she said."

This is just one example of the greed I have talked about in a previous Blog posting, "The greed of Wall St. and the Banks have put US second to China". You wonder where your healthcare dollars go? They go to the salaries, bonuses and stock Options the Healthcare Insurance company CEO's get from what you pay for Health insurance. Most are just greedy. Ever wonder why the "Generation X" is always focused on me, me, me and are spoiled? They learned it from their rich parents who gave them everything they ever wanted, so that now they feel entitled. Ever wonder why people have spent so much beyond their means for the past 25-30 years? Blame the corporations and their advertising, which says you can have it all. And then you must borrow on Credit cards you can't pay back, to have it all.

If you want to see a better story about this. than I can write here, be sure to see the new Michael Moore film, "Corporations" coming out across the country on Friday, Oct. 2nd. It is must see entertainment, which is very real and will shock you to the core. The real question is this, will you do anything about it after seeing the movie? Will you become more frugal, live within your means and teach your children what the word "No" means?

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Tuesday, September 29, 2009

The greed of Wall St. and the Banks have put US second to China

The headline news today is from Paul Volcker. Here's some excerpts from Bloomberg's article:

Volcker Says China’s Rise Highlights Relative U.S. Decline
By James Tyson and Michael McKee

Sept. 29 (Bloomberg) -- Former Federal Reserve chairman Paul Volcker said the rise of China and other emerging economies has underscored a decline in the comparative economic and intellectual leadership of the U.S.

“I don’t know how we accommodate ourselves to it,” Volcker, an economic adviser to President Barack Obama, said in an interview with PBS’s Charlie Rose taped yesterday in New York. “You cannot be dependent upon these countries for three to four trillion dollars of your debt and think that they’re going to be passive observers of whatever you do.”

The former Fed chairman also said unemployment at 9.7 percent will slow the pace of recovery from the U.S. recession as Americans default on mortgages and consumer loans. Moreover, commercial real estate loans are likely to cause further losses for banks.

“This recovery will be slower,” he said. “We can’t just pump up consumption and pump up housing again.”

Most of the people who did this to America were leaders in the financial system of our country and they have ultimately relegated our country to a more diminished place in the world economically. Yes, we still have strong Military power, but eventually this sellout of our way of life because of their greed will affect Military spending too. We have no other choice. We're broke while the wealthiest of Americans participated in this scam on America. They were supposed to be so smart, but couldn't they have seen derivatives produced no real products for consumers or really added any substantive assets to our country. It was all just paper (money) and it made our real wealth disappear as we have now nothing but debt and we owe it all to China.

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Monday, September 28, 2009

Concerns about the National Debt

It seems that the Republicans have gotten the public attention in ensuring the National Debt does not grow under President Obama. The outrage has manifested itself in "Town Hall" meetings this past August and continues in any public gatherings with politicians in well organized attacks on proposed healthcare reform or should I say health insurance reform. I thought I would once again set the record straight by posting today's chart. You will need to click to enlarge it, but it is clear which Presidents have increased the National Debt over the past. Oh, and the chart does not show all the debt under George W. Bush. He actually added over $4 Trillion to the national debt so make sure you extend the chart up to $10 Trillion, as the chart only goes to $7 Trillion for President George Bush (source). Under President Clinton, you will notice he turned the trajectory of the curve only to have it turn up again under Bush. I ask you, where were the Republicans worrying about the National Debt under Reagan or under the past 8 years of George W. Bush when the Republican controlled Congress passed huge tax cuts for the wealthiest Americans? Or spent money on the Iraq war "off budget" never accounting for the hit on our debt as we borrowed money we didn't have for a war we should never have fought.

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Gates interview about President Obama: A comparison made without every saying a single negative word about President Bush

So in the news from yesterday was an interview with Secretary of Defense, Robert Gates. Here is some of the comments from the interview on working for President Obama:

"He is very analytical," Gates told CNN Chief National Correspondent John King. "He is very deliberate about the way he goes through things. He wants to understand everything. He delves very deeply into these issues."

Gates, who previously worked for 27 years in the CIA under six presidents, was the first defense secretary to be asked to remain in office by a newly-elected president when Obama kept him on.

The Pentagon chief was diplomatic when comparing Obama to other former occupants of the Oval Office.

"I'm not going to get into comparing the different presidents, Gates said. “I very much enjoy working for this one."

Now if you want to get the answer to the question, how is President Obama compared to George W. Bush, the answer is staring you in the face. Here's how I would speak for Gates were he to speak the words himself:

He is NOT analytical. He shoots from the hip about the way he goes through things. He could CARE LESS about understanding everything. He NEVER delves into these issues. I Hated working for Bush!

Need I say more? :)

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Sunday, September 27, 2009

The Dow: Where are we going over the next few months?

I added more information to the Chart of the Dow which should give you a more complete view of where I see the Index going and what are the barriers of resistance that should prevent the Dow moving up much more any time soon. You can click on the chart to enlarge it and get a better view of it. The 2 dotted red lines will show you the range I believe the Dow will stay between in the next few months. You can see from the 2 Blue lines that the range has tightened over the past 2 moths and we are now at the resistance level of 10,000. The low end of the range here is 7,800 and it is not unimaginable that the Dow could reverse and go as low as 7,800 again, especially with earnings about to be issued for many companies over the next few weeks. I expect earnings to be good but not stellar as the bar was set so low by analysts. They will make their earnings BUT the top line revenues will disappoint. And that will validate the Consumer has all but stopped spending on unnecessary items. Christmas will be more uneventful this year than it was last year as many more are now unemployed. Oh, speaking of Unemployment, the numbers for September will show a higher Unemployment rate yet again and may go over 10% this time. Professor John Stiglitz, economist from Columbia University, has recently said (see Video clip on Bloomberg) unless we have greater than 3.5% GDP we will continue at least a 10% Unemployment rate for 2 years or longer. He believes many will not even file for Unemployment benefits as benefits will run out.

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Friday, September 25, 2009

Market summary for week ending Sept. 26th

It has been a while since I posted about the market. The reason for this is that my outlook remains much of the same. It looks to me that we are hitting the glass ceiling on the Dow and S&P 500, as both Indexes have pulled back slightly the past 4 days. Does this mean we are just going to go down every day? No. I said we won't go and stay over 10,000 on the Dow before we have polled back enough. I think we can still go back to 7,800-8,000 range, as I have said consistently on my Blog.

We have not broken the uptrend line as you can see on the attached chart below. I have drawn 2 Blue lines showing the range of this rise. I would like to see it break below the lower line soon, as that would confirm a correction is occurring and we should then go lower. I do not think we can have a Bull market rally until we do. I have no crystal ball on when this will occur as the market could go sideways without a breakout to the upside. That would mean we would stay below 10,000 but just not drop. No one I respect believes this rally is for real, but that may be why it continues. The market likes to make everyone wrong. :)

Saturday, September 19, 2009

Canadian Healthcare system proven better than U.S. and 47% less cost!

This excerpt from a Bloomberg news article should debunk the claims of inferior Canadian Healthcare. Here's the headline and a link at the end to the entire article by Pat Wechsler.

Canadian Health Care, Even With Queues, Bests U.S. (Update1)
By Pat Wechsler

Sept. 18 (Bloomberg) -- Opponents of overhauling U.S. health care argue that Canada shows what happens when government gets involved in medicine, saying the country is plagued by inferior treatment, rationing and months-long queues.

The allegations are wrong by almost every measure, according to research by the Organization for Economic Cooperation and Development and other independent studies published during the past five years. While delays do occur for non-emergency procedures, data indicate that Canada’s system of universal health coverage provides care as good as in the U.S., at a cost 47 percent less for each person.

“There is an image of Canadians flooding across the border to get care,” said Donald Berwick, a Harvard University health- policy specialist and pediatrician who heads the Boston-based nonprofit Institute for Healthcare Improvement. “That’s just not the case. The public in Canada is far more satisfied with the system than they are in the U.S. and health care is at least as good, with much more contained costs.”

Canadians live two to three years longer than Americans and are as likely to survive heart attacks, childhood leukemia, and breast and cervical cancer, according to the OECD, the Paris- based coalition of 30 industrialized nations.

Deaths considered preventable through health care are less frequent in Canada than in the U.S., according to a January 2008 report in the journal Health Affairs. In the study by British researchers, Canada placed sixth among 19 countries surveyed, with 77 deaths for every 100,000 people. That compared with the last-place finish of the U.S., with 110 deaths.

Infant Mortality

The Canadian mortality rate from asthma is one quarter of the U.S.’s, and the infant mortality rate is 34 percent lower, OECD data show. People in Canada are also 21 percent more apt to survive five years after a liver transplant.

To read the entire article click here.

Here are some links to related articles:
What About Physician Salaries? ( A comparison of US vs Canadian doctors salaries)
The US and Canada: Different Forms of Medical Rationing

And last but not least, this one from a newspaper of 2 patients, one from Canada and one from Michigan who both had babies on the same day. Very interesting indeed!
Oh, Canada, where health care for all 33 million is free

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Wednesday, September 16, 2009

Correction now close at hand

The Dow closed today at 9791 or within 200 points just shy of 10,000 and the point of a correction. The S&P closed at 1068 or within 32 points of a correction as well. Looking at a 3 year chart of both indexes below you can see the Red line resistance level. I have used this chart a number of times in the past 2 months. If we should happen to actually cross over these lines, in my view it will be only temporary. September Options expiration is on Friday so let's see what the action brings tomorrow and Friday. And what if we go over both of these red lines? The expression is irrational exuberance and another expression comes to mind: The bigger they are the harder they fall!. If you haven't taken your profits, it isn't too late. Protect yourself and consider raising some cash. Protecting profits is a good thing.

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Tuesday, September 15, 2009

The Healthcare debate: President Obama can learn something from Republicans!

The difference between Republicans and Democrats can be summarized in a very simple simple way. Republicans play to win in everything they do and Democrats play not to lose. If the Republicans were leading healthcare reform, there wouldn't be any compromise with Democrats and they would continually be adding new ideas to what they wanted passed. They would be scaring people into voting for their plan because, they would say, the country needed this reform and it was the patriotic thing to do. The Democrats on the other hand, start with a lofty set of ideas and piece by piece start eliminating sections of it in their fear of not offending the opposition. The Republicans are willing to change the Rules of the Senate and anything else they can think of, including provisions which violate our Constitutional rights, to win. The Democrats already concede they need 60 votes to the Republicans to pass this legislation, instead of the 50 votes normally used for majority rule. It's time for the Democrats and President Obama to grow some big ones and be willing to do the same! Change the game right now and go it alone because you will own it anyway. Better it be something you want than be explaining why it didn't work later. If not now, when? Now is the time. What better time to be willing to change the Rules than for a noble cause.

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The disconnect between Wall Street and Main Street

Yes I believe the U.S. stock market is being manipulated by a few trading firms and I believe that it will be impossible to keep this up indefinitely. The Government has used all its tools to print money and throw it at the banking and financial system in order to keep it afloat. It has also done a lot to keep the auto industry from total collapse. It has bailed out Freddie Mac and Fannie Mae, Citi and Bank of America. But there are many other industries still facing collapse such as the Airline industry, which has been on life support for over a decade as well as the entire travel industry after 9/11/01.

We hear talk of regulation coming for the banks and insurance industry, but is has been a full year now since the collapse of Lehman and there are no new regulations in place. As recently as yesterday, President Obama called for new regulations on both and said that Wall Street hadn't learned its lessons from the crisis as he claimed that they were repeating some of the same things that got us in trouble in the first place.

So if markets are being manipulated and so far it seems to be working, does this mean we will survive this going forward. The answer is a simple No! I was asked yesterday what I thought might be a trigger to take us down again. I said that while we are able to control and manipulate our markets here in the U.S. as well as banking and financial institutions here, we can't manage and manipulate the world. I fear it will be a country in significant trouble financially that will start the next drop down. I do not believe it will be in the EU, but I do believe it will be either a country in Asia, the Middle East or Eastern Europe or Russia or one its satellite neighbors. I do not have any data or indicators other than conjecture and a strong hunch. But one thing I do really believe, the U.S. government will not be able to stop it. I fear we are in for a long struggle and a widening divide between the far right of the Republican Party and the rest of America..Eventually Wall Street must reflect what's really happening on Main Street. Right now they are totally disconnected and the stock market in my view is very over bought.

By this time in October we will know if the two differing views get reconciled, as Oct. 16th is Options expiration. This coming Friday is Quadruple Witching Options expiration for September.

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Monday, September 14, 2009

The lost decade: Would you believe I'm talking about the U.S.?

The official Unemployment rate shows us at nearly 10%, while the unofficial rate is close to 17%. But in fact since 1999, the U.S. has not created any additional jobs. When President Bush was President the creation of new jobs never kept pace with the rise in population. So while they did add jobs, it was never equal to, or greater than, the required number of jobs just to break even. That's a full 10 years, a decade, where the U.S. has not created new jobs. When many hear the term "the lost decade" they think Japan. The Lost Decade, according to Wikipedia, is the time after the Japanese asset price bubble's collapse, which occurred gradually rather than catastrophically.
The Lost Decade consists of the years 1991 to 2000 and was when economic expansion came to a total halt in Japan during the 1990s. The impact on everyday life was muted, however. Unemployment ran reasonably high, but not at crisis levels. This has combined with the traditional Japanese emphasis on frugality and saving (saving money is a cultural habit in Japan) to produce a quite limited impact on the average Japanese family.

But more and more we will remember that from 1999 to 2009 was the time we lost a decade for creating jobs. It is also a decade of lost momentum in creativity since creativity leads to new products which in turn leads to job growth. The U.S. has been stagnant these past 10 years. Most technology today was invented before 1999 and the first 5 years of this past decade was used to bring most of those products to market. But over the past 5 years we have not been fueling the engine of creativity, as we had in previous decades. One exception might be biotechnology, where medical advances have been relatively steady.

If we are to get out of the doldrums of a bad economy, we must invest more in Research and Development at a time when we don't have spare resources. Indeed the next 10 years are going to be difficult at best from the economic dislocations and imbalances we face today. There are too many variables to manage and our government has a lot of balls in the air right now. They are doing their best as they inherited this mess, lest we forget.

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Wednesday, September 09, 2009

Consumers paying off debt

According to Bloomberg news report this morning, "A record $21.6 billion drop in borrowing by Americans added to evidence that consumer spending will be slow to recover as banks and credit-card companies tighten lending standards and households pay down debt.

Consumer credit fell by 10 percent at an annual rate in July to $2.5 trillion, according to a Federal Reserve report released yesterday in Washington. The drop was more than five times larger than economists forecast. Credit fell for a sixth month, the longest series of declines since 1991."

Still think the stock market rise has been justified? Add this to your calculus, Extreme Luxury car purchases (Bentley's, etc) are down over 50% from last year's comparative sales. Even the super wealthy have trimmed their spending side.

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Tuesday, September 08, 2009

A reposting on my market outlook

I had posted these 2 charts back on August 8th, a full month ago as to where I thought we were going to go on the Dow and S&P 500 between August 8th and Options expiration in October. Here are those charts again:

Now I have taken the chart from the close today, Sept. 8th to show we are still within the Red and Blue band.

As you can see clearly nothing has really changed from that posting.

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Saturday, September 05, 2009

Are we bottoming in job losses?

Are we bottoming in the Unemployment rate at about 10% or are we headed for another round of significant layoffs? This is an important question as much of the recovery in the stock market is based on the former rather than the latter viewpoint. Many who argue, that we are at bottom of this recession and should be turning around, use as one of their arguments, that employers may have over shot in layoffs and will soon be forced to do some hiring. I do not see this as true in one key industry, technology. And over the past 3-5 months, it has been the Tech sector which has led some of the recovery. But Tech jobs have not been cut too much and many could argue that they are still over-employed as a sector.

Many Techies though who are unemployed have been looking at going into other sectors like healthcare and Green technology. Still, as long as the Tech sector looks like it may recover from the recession, there probably is a lot of extra labor employed and not yet trimmed in these companies. It is reports like this which fuel keeping extra workers. If things ever do slack up on the demand side of the equation, many see a much higher percent Unemployment picture. However, according to a KPMG survey that seems unlikely unless new data emerges. Here's the August 21st full story.

"The survey found eight out of 10 executives expect business conditions in the technology sector to improve in 2010, with 78 percent expecting stronger revenue and 72 percent expecting improved profitability.

A survey of 130 CEO and other C-level hardware and software company executives conducted by audit, tax and advisory firm KPMG found the respondents believe that the technology sector will recover from the current economic crisis substantially more quickly than the U.S. economy, with senior business leaders expecting improved revenue and profitability in 2010 and about half seeing an improved job picture.

In the KPMG survey, two-thirds of these senior technology executives said they thought their industry would fully recover from the current economic crisis ahead of the overall U.S. economy. Silicon Valley-based executives were even more bullish  77 percent expect the technology sector's recovery to outpace the U.S. recovery. About 43 percent of the technology leaders surveyed expect the U.S. economy to recover after 2010 while 39 percent predict the economy will recover by next year. The survey found eight out of 10 executives expect business conditions in the technology sector to improve in 2010, with 78 percent expecting stronger revenue and 72 percent expecting improved profitability.

'The results are in line with recent earnings reports in the technology sector which suggest business conditions are starting to improve,' said KPMG partner, global chair and U.S. leader for the organization's information, communications and entertainment practice, Gary Matuszak. 'There are also reports of software industry sales expanding five to ten percent annually after the recession, so while it's far from blue skies in the industry, the worst seems to be behind us.'"

I'll let you decide what you believe will happen. But remember, the Consumer is the key to a recovery and I don't plan on buying any big ticket items for a long time. I may not even buy smaller ticket items, but that is why God gave women the shopping gene. :)

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Dear Mr. President: Stand tall on Healthcare and against Republican attempts to derail the Public Option

I thought the Civil War was settled back in the 1800's. It seems today, with the minority Republican party of the South, they are fighting it again today. Their hate speech has made me wonder what country I live in, as it doesn't seem like the country I grew up in, and then again, it does. I remember the prejudice against blacks in the 50's living in Boston. It was in Boston as well as the South, but it looked different even though it didn't feel different for many Black's living there.

Well, I am getting sick and tired of the return of those feelings as the Republican Party of the South seems to be against almost anything associated with Barack Obama. I do distinguish those Republicans of the North as different than those in the South. The latest "outrage" is the planned address to students in schools across the country by President Obama on Tuesday. Their outrage is based they say on the fact they don't want President Obama pushing his "socialist" agenda on their children. They say they haven't seen the speech and want to review it before it is delivered. They say he is going to push his policy on the right to abortions. Are these people mentally competent? Of course they aren't. They pass for what was wrong with their education when they grew up intolerant of others and they want that agenda front and center today. These supposed well educated people don't believe in Global Warming, Evolution, the law, the Constitution (only the part about the right to bear arms and carry guns to a Presidential speech), that President Obama was born in the United States, that President Obama's healthcare plan is not going to kill seniors using death panels and other things to name a few.

I am afraid this country has headed, and we have arrived, at an Un-Civil War, where words are used to smear and defame good people and a President, duly elected by a majority of its people, and take down tis President in any way they can. Talk of secession in Texas is just one sign where these people's heads are at. I say let them go secede, as we would all be better of without them. Let them be a part of Mexico, if Mexico will have them.

The Republicans of the South use bullying tactics against non-violent Democrats and Independents. They are proud to use weapons to settle their arguments. They are very dangerous, but we should not cower from their challenge to what we believe in, either. That is why President Obama needs to endorse the Public Option for Healthcare next week, in his speech. The Republicans will give him no quarter on anything they believe they can stop him. This appeasement will do nothing but encourage them to continue even harder to destroy his agenda and him. The best way to deal with them is to stand tall and strong even if we lose this fight as the American people do want reform and change we can believe in and we will be stronger in the midterm election and the next Presidential election and defeat them and ensure that many more people will be helped and healthcare costs will have been managed down. Mr. President don't cave in to the crazy ones. We will stand with you if you stand tall. But it is first up to you to lead by example.

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Friday, September 04, 2009

August Unemployment rate: Worse than analysts expected.

AUGUST UNEMPLOYMENT RATE HITS 9.7% WHICH WAS MUCH HIGHER THAN EXPECTED. AND JULY NON-FARM PAYROLlS WERE REVISED DOWN. The July Unemployment rate was 9.4% by comparison. This is not what economists expected and foretells of a higher Unemployment rate over the next few months. June Non-Farm Payrolls were also revised downward. Dow Futures first went down on the news and then up, but don't believe it. The market most likely will be down by the end of the day going into the long Labor Day weekend.

According to Mohamed El-Erien, Pimco's Co-CEO, who was on CNBC this morning, the recovery will not have the lubricant it needs to fuel the economy, as Banks can't lend money, as they are in bad shape themselves. It will depend on wages from workers and their willingness to spend.

UPDATE: 6:00pm PST

The market made me wrong again today as we closed up in all Indexes. A dear friend of mine said to me today that whatever the market should do, it does the opposite. I think he's right. I know this call today, regarding the market closing down before the long weekend, was wrong.


Thursday, September 03, 2009

Gold vs. Silver vs. U.S. Dollar: Where to invest?

All the talk about investing in Gold since November 30, 2008, I thought that I would show you that while it did move up significantly from the low at the end of November, Silver would have been a far better investment. Looking at the chart above, Gold’s advance ( the Red line) was about a 23% gain, but Silver (the Blue line) had a 62% gain! Now looking at the U.S. Dollar currency (the yellow line) during that same period, the dollar has dropped about 15%. The Dow has gained 10% in that same period, the Nasdaq gained 35% and the S&P 500 gained 17%. Clearly the best gain came from Silver. If inflation does start to creep into the equation (and I believe that is still a ways off), then Silver will yield a better hedge and return than Gold and may even be much better than owning stock securities as this period has shown us in the chart.

On any pullbacks, Silver will lose significantly more than Gold, so one strategy could be to sell Silver before a market correction, which I anticipate over the next 2 months and Buy Gold instead. When the correction appears to be abating and looks like we are in for a rally, Sell the Gold and Buy Silver. But whatever you do don’t keep cash, as it has lost already about 15% of its value.

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The quiet before the storm: Volume will pick up to the downside in the coming weeks

This is the last official week of summer vacation as school starts or has started for many. The stock market should pick up trading volume in a significant way. For example, in the 6 month Chart of the Dow above, you will notice that while the price went up, volume was declining significantly. When price rises and volume declines on a stock, it is a very bearish sign according to experts such as Martin Pring, who wrote the book, "Technical Analysis Explained." That is why it is so easy to predict this market correction this fall.

I wrote a piece back on August 23rd titled, "The Put to Call ratio hit an extreme on August 21st". In that piece I said it was a clear signal to sell, as the put to call ratio went as low as 0.59. I received some flack on that call and I responded by saying that the data showed it was statistically significant to at least 2 sigma, meaning it was at least 95% confidence level the data point was unusual since 1/2/08 to that day. Looking back now, the Dow closed at 9595. Yesterday's close has the Dow at 9280. That's a 3.3% decline so far.I expect more to come. So while there are many disbelievers of using such data as an indicator for Buy and Sell signals, so far this one has proven valid. My guess is that many will not want to go into the long weekend holding on to shares so we will see a negative day on Friday as the Unemployment numbers for August are reported. And no matter how the numbers come out, the market will sell off.

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Wednesday, September 02, 2009

Market outlook: More of the same for the foreseeable future.

More of the same for the foreseeable future. That isn't too encouraging for those long the market but with ADP's jobs numbers coming in at a loss of 298,000 jobs, things aren't going to get much better. They had expected a job loss of only 213,000 jobs.

Yesterday, the Dow had dropped 185 for the day and at one time it was down 199 points. The put to call ratio is now at 0.93 and the VIX (Volatility Index) closed at 29.15, up 3.14 points. This is the highest it has been since the beginning of July.

I am still holding the ETF Triple Short Bear Funds, TZA and FAZ. Yesterday TZA closed at 15.76, up almost 7 % for the day and this with the highest volume it has had in 6 months. FAZ closed at 26.39, up almost 14% for the day, with its highest volume also in more than 6 months.

As I have said many times, I expect the market to be in a correction mode till October Options Expiration. We are headed lower most likely back to 7,800-8,000 or so and depending on the economic indicators projected for the 4th quarter this year, we could test 6,400 sometime in the first quarter, possibly as early as January when Christmas Retail Sales numbers will become evident.

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Tuesday, September 01, 2009

Mini Poll summary for the month of August: How long will the recession last?

Below is a summary of the Mini Poll data for August as compared to December, January, February, March, April, May,,June, July.

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

Data for December, then January, February, March, April, May, June, July and August:
Mid 2009 4%, 17%, 10%, 12%, 4%, 7%, 3%, 2%, - (Date passed)
End 2009 35%, 25%, 24%, 21%, 25%, 11%, 6%, 14%, 9%
Mid 2010 15%, 13%, 12%, 3%, 33%, 19%, 14%, 7%, 9%
End 2010 15%, 10%, 4%, 18%, 15%, 15%, 9%, 12%, 7%
Mid 2011 12%, 17%, 10%, 3%, 4%, 4%, 6%, 2%, 2%
End 2011 8%, 0%, 10%, 3%, 4%, 4%, 6%, 7%, 0%
Mid 2012 0%, 0%, 2%, 3%, 2%, 7%, 0%, 0%, 0%
End 2012 0%, 0%, 2%, 0%, 0%, 19%, 29%, 33%, 46%
Much Longer than the choices you have provided 0%, 0%, 10%, 12%, 0%, 11%, 14%, 12%, 11%
We are going to be in a Depression 12%, 19%, 18%, 24%, 13%, 4%, 14%, 10%, 18%

If I summarize by Year:
2009 39%, 42%, 34%, 33%, 29%, 18%, 9%, 16%, 9%
2010 30%, 23%, 16%, 21%, 48%, 34%, 23%, 19%, 16%
2011 20%, 17%, 20%, 6%, 8%, 8%, 12%, 9%, 2%
2012 0%, 0%, 4%, 3%, 2%, 26%, 29%, 33%, 46%
Depression 12%, 19%, 18%, 24%, 13%, 4%, 14%, 10%, 18%

Sample size for December was 26, for January 48 votes, for February 51 votes, for March 39 votes, for April 48 votes, for May 27 votes, June 35 votes, for July 42 votes and for August 57 votes.

Again, the major change seems to be the change in the year 2012. This validates the Consumer Confidence numbers as for June they dropped from 54.8 in May to a 49.3, then 46.6 in July and August's number while higher is still relatively too low for an economic recovery at 54.1. That's a 3 Month drop in Consumer Confidence at a time when Retailers are deciding what to order for Christmas from Manufacturers. It does not bode well for the holiday season this year for Retailers and the recovery.

As I said last month, as Unemployment increases so does despair! This Friday we get August Unemployment numbers and might get that 10% shock number as last month came in at 9.7%. Feel free to click on my comments button below this post and add some personal examples to what you see daily that has you thinking how the economy is doing. Thanks for voting.

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