Saturday, January 30, 2010

Markets and politics rule the week. Whipsaw action in both

It has been a while since I have commented about the overall market. This has been because nothing much was different in the trend until now. We are currently at a very interesting point on both the Dow and the S&P 500, as the 2 charts above show. We have broken the uptrend line this past week and reverted back just to the critical 3 year downtrend line. If we go below this downtrend line we are headed dramatically lower and could finally have that major 20% correction. However, if we can stay above that line, we may avoid it, at least for now.

We have gone back to the previous, ever important, resistance level of 1090 on the S&P 500 when markets closed lower on both Thursday and Friday. Back in early December, December 5th to be exact, I had said that I expected the correction to begin the end of January into the first 2 weeks in February and we are just about there now. The next 2 weeks will determine where the market is headed for 2010. If you have been following the markets recently, when good news has been the leading story of the day, like how much GDP gained in the 4th quarter, the market did not stay up. And when the market seems to have some bad news, the market has a big selloff on higher volume. The market is prepared to go lower psychologically right now and it may just play out.

The political arena has also added to the volatility when the seat Ted Kennedy held went to a Republican and shook Democrats to their core. They were in disarray. But then the State of the Union speech given by President Obama had many feeling a sigh of relief that it was a great speech which boosted the Democrats morale. Yesterday, President Obama went into the mouth of the beast, being invited to a retreat by House and Senate Republicans, he took them up on their invitation but insisted that the event be televised. Republicans agreed and so it began with a brief introduction and then down to business. The President gave the Republicans a lesson in being honest with constituents and the American people, in an unscripted format. His command of facts was truly impressive and inspirational. The contrast between this President and President Bush couldn't be more striking. One commentator reported one Republican leader as saying that they should never have agreed to have the event televised because the President did so well and making Republican arguments look so empty of substance. Fox news even decided to cut away and trash the President rather than allow their viewers to hear the President answering Republican questions in a masterful way. WE need more of this type dialogue in our politics no mater what side of the debate you are on. It forces competency to rule rather than quick shots from either party. Independents had to like this format and discussion more than both Parties. I hope we see more of it. Stay tuned!

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Saturday, January 23, 2010

Is bad Healthcare reform dead? Does good health insurance reform have a chance now? Look for answers in healthcare stock prices.

With all that has happened this past week, I thought an update on the Healthcare stocks was in order. If you have been reading here for a while, I have said countless times, that if you wanted to know if the proposed Legislation by the Democrats was good for average Americans, just watch the price of the stocks of United Healthcare and Wellpoint.

As you can see from the chart above, back on Dec, 5th, the Democrats conceded that the Public Option appeared dead. On Monday, Dec. 7th both stocks started to rise and gained almost 30% at the peak of each chart. On Tuesday, in Massachusetts voted in a Republican Senator to fill former Ted Kennedy's seat, a significant upset which continues to reverberate throughout the Democratic Party and the News media, this weekend. Again, as you can see from the charts, this election of a Republican, which denies the Democrats of their super majority of 60 votes, also appears to deny the Health Insurance companies the benefits they were hoping to get with the proposed legislation. This is signified by the drop after the market close on Tuesday, Jan. 19th and the market close of Jan. 20th and had continued through the day yesterday.

If you assume for a minute that what is good for Health Insurance companies is bad for average Americans, then this move is good and hopefully will continue. The Healthcare legislation needs to be bipartisan.

My suggestions for this are as follows:
1. What is needed is simplicity, not a 2008 page Bill.
2. Insurance companies must not deny coverage for pre-existing conditions any longer.
3. People should be able to buy Insurance across State lines, as they can do for car insurance.
4. Tort reform is also important and should be included in any proposed legislation.
5. Everyone should be required from age 25 and over to purchase Health Insurance.

This would be a good start for bipartisanship and would still allow an unprecedented victory for the Obama Administration and the Democratic Party.

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Thursday, January 21, 2010

The end of America as we knew it. Blame the Supreme Court

What a week this has been. Today, the Supreme Court erased all restrictions on Corporations for contributions to elections in the form of money, which, according to the Court equates to allowing free speech. They can't give a direct contribution to a candidate (yet!), but can run as many ads and make any documentaries they like, on any campaign issue or about any candidate like the Swift Boat ads were against Sen. Kerry. God, you know what that means? It means that, as of today, Corporations own the vote and your vote is no longer valid. They can spend as much money as they want, to fund anyone's campaign and outspend any person or group of persons. That infers they can buy the votes more easily than they have. Forget about America's Freedoms. You don't have any freedoms left except to leave the country except to hope that we can appoint new Supreme Court Justices who will over rule this decision. But the Corporations will now control much as to who runs and gets elected and will support candidates that favor continuation of this ruling. We're screwed! This is a new form of slavery in my view.

The last hope we had was to remove corporations and their lobbyists from elections and influencing politicians. Now the Supreme Court has opened the door wide. I am sick over this! Don't tell me it doesn't matter who is on the Supreme Court and who gets to fill the open seats. It is the most important decision of a Presidency and Bush got to name 2, Alito and Roberts, both who voted in favor of this ruling along with Scalia, Thomas and Kennedy

Yes voters will be even more mad than they were in Tuesday's election in Massachusetts for the former Senate seat of Ted Kennedy. This morning I got this from someone I love and respect there and they speak for many. Here is their take on the election:

"The bank tax will be a good idea, but the people of Mass just heard about it when the president came to visit.

Maybe I can give you little background on why the people here voted for Brown. It all started when we were never aloud to vote for what constitutes a marriage. How do they know how the liberal state of Mass would have voted, but the legislature wouldn't give us a chance. Is this America or what!!! We have health care for 90% of our people and the health cost in our state are astronomical. Most young families have a $5000.00 deductable. We don't know if the new health care plan is any good because there is no transparency. Our unemployment is high and our housing market is a mess....No one feels secure, not even at our airport. Our tax dollars are going to protect terrorist instead of everyday people. I could go on but I will just say, Brown even won in Ted Kennedy's district.

I don't believe people think the president is arrogant, but he should have kept his compaign promise of transparency. "

That sums it up from this individual and speaks for many in Massachusetts. Add this action by the Supreme Court today and people will feel even more powerless. The worst thing that ever happened was giving Corporations the status on individuals, except no bad Corporation can go to jail, like individuals can.

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Tuesday, January 19, 2010

Health Ins. reform and the Senate seat in Massachusetts

I am still tracking the price of Healthcare stocks since December 4th when everyone learned that the Public Option for Healthcare insurance reform was dead. Since that time both United Healthcare and Wellpoint stock charts have soared. To be more precise, United Healthcare's stock has risen a whopping 29.5% and Wellpoint has gained 28.5%. I have said the best way to know if the healthcare legislation will be good for the average American or for the Heath Insurance companies was to follow the price of these stocks. As many can clearly see, the proposed legislation is good for the Health Insurance companies as they are getting about 30 Million new members to their ranks without much restriction on cost containment thanks to Republicans and Blue Dog Senators efforts like Sen. Ben Nelson of Nebraska's efforts to try to kill any meaningful legislation.

In the charts above, the answer is clear and you can't slap lipstick on this pig to make it look better. This may be why, at least in Massachusetts, the Democrats may lose the former Democratic seat held for 47 years by Ted Kennedy. He is turning in his grave over this mess.

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Monday, January 18, 2010

Our Hospital relief efforts for Haiti are sub standard and expose problems within our Government

Here's something to think about in the aftermath of the earthquake in Haiti. Here we are 5 days after the quake and the U.S. still has not set up outdoor Hospitals to handle the injured. I know President Obama has ordered all resources be applied of the U.S. Government to this disaster, so it's not his fault. But consider this response by Isreal. They have an outdoor Hospital set up and it has Respirators, and medical equipment running off generators. What we have set up is nothing! It makes me thinK that FEMA and other Emergency units of government need better training and more competent individuals in charge. When Katrina happened we all blamed Bush and an incompetent head of FEMA nicknamed "Brownie". Could it be the problem goes down the entire organization? A Congressional audit is in order and it needs to be bipartisan.

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Friday, January 15, 2010

China helps Haiti with a Pledge, but just match Angelina Jolie and Brad Pitt's donation.

Ok, I was looking at the list of countries pledging donations to help Haiti in the aftermath of the 7.0 earthquake. The news said China had pledged $1 Million dollars and had sent 60 rescuers to help save people trapped in buildings. I am thrilled they sent the rescuers but was appalled that China pledged only $1 Million dollars. As I said in the title of this Blog post, Angelina & Brad donated $1 million and the Chinese could at least pledge $10 million given the world came to its country to help in their earthquake not long ago. China needs to learn how to express compassion during a crisis proportionate with their status a a leader on the world stage. Heck, just pledge the money in U.S. dollars if you are worrying, since you worry they may be worth less anyway. While I am at it, let me praise Angelina and Brad for really stepping up to the plate and donating so much money to help the Haitians. God help those poor people suffering beyond imagination.

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Wednesday, January 13, 2010

Haitians deserve a chance at a better life. Will this be the beginning of a better future?

There is a terrible tragedy unfolding from the 7.0 earthquake in Haiti, the poorest of the island Nations in our Southern Hemisphere. These human beings have suffered so much from incompetent leaders they have had this past half century. These people deserve so much better than the hand they have been individually dealt. It is possible that with help from many Nations around the world, they can use this tragedy to free themselves of the past and help rebuild a better future for themselves and their children. I hope this time is the last time and the beginning of a less painful life for the Haitian people. Humanity cries out tonight for help. Hopefully the world will respond dramatically. Let's all help give them a chance at it by an outpouring of help and donations to charities like the Salvation Army and Red Cross.

I feel very blessed tonight I am not in their situation, as it could just as easily been an earthquake here in the San Francisco bay area. I am trying to learn as much as I can about what people need and some of the problems where people must fend for themselves. I am a first responder in my community and the importance of proper training is being driven home again tonight. Be more prepared for a tragedy so you can help yourself and your neighbors and not be a dependent on others charity and assistance. Learn to be a giver yourself.

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Saturday, January 09, 2010

It's time for Pakistan to publicly embrace assistance to go after Taliban extremists on their soil with U.S Special Forces assistance!

The news this morning that the Pakistan Taliban, along with al-Qaida, were involved in the suicide bombing by the Jordanian doctor, Humam Khalil Abu Mulal al-Balawi, of the 7 CIA agents at a U.S. base along the Afghanistan/Pakistan border region. It is proof that Pakistan must crack down on their Taliban extremists. The story, from NAHAL TOOSI and MAAMOUN YOUSSEF, Associated Press Writers, says, "Footage showed Humam Khalil Abu Mulal al-Balawi — whom the CIA had cultivated as an asset against al-Qaida — sitting with Mehsud's successor in an undisclosed location. It essentially confirmed the Pakistani Taliban's claim of responsibility for one of the worst attacks in CIA history, though a senior militant told The Associated Press that al-Qaida and Afghan insurgents played roles, too."

This smoking gun proves beyond question the Pakistanis must do more and if unable, must allow the U.S. to provide more direct assistance including the use of U.S. Special Forces within their borders. It is time for the veil, of not needing help from the US in the form of troops on the ground, be dropped. This problem with Taliban extremists affects the Pakistani people more so than the U.S. and the people of Pakistan need to wake up to this fact or their lives will never return to normal. We must work in concert more overtly and both Pakistanis and Americans need to support this effort without question nor politics involved.

Quoting more from the article, "The development may lead the U.S. to further aid and push Pakistan to crack down on Taliban militants on its soil. The success of the attack also raises doubts about the effectiveness of the Pakistani military's ongoing ground operation against the Pakistani Taliban in its stronghold in the South Waziristan tribal region."

To get more background and read the entire news report from Yahooclick on this link.

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Friday, January 08, 2010

Chart of the Day: Nonfarm payrolls Decade Gains (1940-2009)

This from Chart of the Day this morning. The chart shows clearly the impact of the Bush years of this last decade on Employment and job growth. Our people suffer today (17.5% are either underemployed or unemployed) because of the effects of the lack of job growth. This is an amazing statistic: This past decade is the first decade on record during which the number of jobs increased by less than 20%. To quote Chart of the Day site:

"Today, the Labor Department reported that nonfarm payrolls (jobs) decreased by 85,000 in December while the data for November was revised upward and now shows a gain of 4,000 jobs. For some perspective, today's chart illustrates the percent increase in the number of jobs for every decade since the 1940s (the data goes back to 1939). As today's chart illustrates, the number of jobs at the end of a decade has been anywhere from 20% to 38% greater than 10 years prior. That 20% plus growth has been the case until the decade just passed during which the number of jobs basically ended the year where it began. This subpar job growth is particularly noteworthy due to the fact that the US population has increased by 10% in addition to a significant increase in global wealth during the same time frame."

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Thursday, January 07, 2010

Miscellaneous tidbits

I wanted to update my Blog readers in the face of a very quiet news time right now. Yesterday I bout additional shares of the ETF Ultra Short on Silver, symbol ZSL. I got the shares for $4.07/share. When the speculation on Gold and Silver abates, and the prices in those metals drop, I want to make a nice profit. Since Silver usually drops much more than Silver, I figured that was the better play.

Over the next 30-45 days the market direction will become much clearer with the Earnings season for last quarter being reported for the history books. The real question to ask yourself is this. Will the improvements in earnings this year really be enough to justify these high prices for stocks or will a correction finally happen? Unemployment isn't really going to get better anytime soon so when the Unemployment rate for December is announced tomorrow don't be surprised.

This month is going to be cold for many of us, but we know that it too will eventually end and warmer days will be ahead. Stay warm!

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Saturday, January 02, 2010

Is Shorting Silver still a good idea?

I thought I would update my recent postings with Silver and using its ETF Ultra Short, symbol ZSL. I have shown above the most recent 6 month chart on ZSL and also the 6 month chart on the price of Silver. I got into this trade at $4.24/share and later bought more at $4.54. Current price as of the close of Friday was $4.78/share. You can see from the chart of ZSL that it is now over its 50 day Moving Average line.

In the 10 year chart below of Silver, you can see that the normal price point for Silver is much lower. That in part is the reason I am using ZSL as a trade, because I believe Silver will go back to a more normal range of $12=$13/ounce, compared to where it is now around $17/ounce.

I think this is still a good trade and in the coming weeks of January and February, it will prove profitable. I said in earlier posts I see an unsure market until earnings come out in the beginning of February and coincidentally I see the action the Fed will take to start to allow the economy to make it on its own, causing a drop in Silver in the short term. However long term I see both Gold and Silver increasing in value. This trade is good for only 3 months I suspect.

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Friday, January 01, 2010

Mini Poll Summary for Dec. 2009 on the question, "How long do you believe this recession will last?"

The final results for the 2009 Mini Poll are done and now tabulated. So first, here's the question asked: "How long do you believe this recession will last?" For the month of December there were 33% that see it will be much longer than 2012 and another 33% who believe we are going to be in a Depression. There were 13% who believe it is over now at yearend 2009, and various smaller percentages for 2010, 2011 and 2012 to make up to 100%.

These numbers are interesting because this voting took place during the month people do their Christmas shopping. While the sample size of the vote was only 24, it was interesting how gloomy many see the future.

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