Thursday, September 30, 2010

New milestone for WeThePeople visitors

I had to update my Blog Tracking data. Evidently a day or so ago I crossed over 60,000 Visitors have come to my site and they have viewed over 95,000 pages. This covers 1403 posts over that period. While that might look impressive, it isn't as I have had this web site for a few months longer than 5 years. Anyway, I want to thank you all for visiting this site. This past year I think I have had about 5-6 really great posts. They are difficult to write and they take the most time on my part, and that can be fleeting, as other matters often take priority. I will strive to do a better job and increase not only the quality of my posts but the diversity of topics again. I have enjoyed writing about the stock market and the economic news, but I also like pulling together apparently non related facts and weave a story that shows they are very related and often affect peoples lives. Wish me luck. :)

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Market comments for Sept. 30th.

The economic data released today were the Initial Jobless Claims, Continuing Claims, the third estimate of Q2 GDP and the GDP deflator. First Initial Jobless Claims came in at 453K. Expectations were for 450K. The prior week was revised upwards from 465K to 469K. Continuing Claims came in at 4.457 Million. Expectations were for 4.450 Million. The prior week was revised upwards from 4.489 Million to 4.540 Million.

Third estimate for Q2 GDP came in at 1.7%. The prior estimate was 1.6% while the GDP Deflator came in at 1.9%. Expectations were for 1.9% and the prior estimate was 1.9%.

We are awaiting the Chicago PMI number at 6:45am PST which is only 5 minutes away now and I will post it here in a moment but first, the market reaction to the other released numbers were to be expected, always up. The Dow is up about 100 points right now. It doesn't matter if news is good or bad, the market goes up, while your dollar becomes less valuable and able to purchase goods. This play by the Fed will eventually have to be corrected and it will be painful indeed.

Tomorrow, Personal Income and Spending data is released as well as Univ. of Michigan Sentiment Index for Sept.. Also tomorrow, Construction spending, the ISM Index and Auto and Truck Sales.

OK, now here's the Chicago PMI. It came in at 60.4 for Sept. Expectations were for 55.0 and the previous month it came in at 56.7 for August. This is a better than expected number and while the stock market was already up almost 100 points before the news, CNBC is reporting the market is now up because of the PMI number. Can you believe that reporting?! The Dow is now up 95 points.

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Tuesday, September 28, 2010

Market comments for Sept. 28th

I was waiting to post this morning for the Consumer Confidence number to be released. Well it was and it did definitely disappoint with a reading of 48.5 with expectations set for a number of 54.0 so that this is the first number below 50.0 in a very long time and not good for the market. The number for August was 53.5. The number is often a good predictor of Consumer Spending. This is another one of those rare numbers which the government can't manipulate. These are quite grim numbers according to analysts on CNBC this morning.

One other note on the market. Both the S&P 500 and the Dow had Hammer Candlestick patterns yesterday at the close and I did expect a down day in spite of the early market rise. See both charts below and the 2nd last candlestick, as this is today's chart so far through this morning. I know, easy to say after the fact, but it was true. I have been very consistent about this indicator which often marks a reversal in trend is about to happen.

That's all the data to be released today. Earlier the Case Shilling 20-city Index was released and it came in at 3.18% vs an expected number of 3.1% and June's reading of a revised downward number form 4.23 to 4.21%. Originally the expectations were for the number to be 3.3% but it was revised earlier.

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Monday, September 27, 2010

Market comments for Sept. 27th and the week

I had been away this weekend, hence the lack of any updates. But here in the table below are the expected Economic indicators to be released this week. As usual, Initial Jobless Claims on Thursday is very important. Expectations are for 450K Initial Claims for the week. Last week the data surprised all by coming in at 465K. If this week rises at or above 465K, we could see a sell-off.

Also important this week will be the Consumer Confidence number and the 3rd estimate of Q2 GDP. Personal Income and Personal Spending is also important. However, having said that, the markets appear not to be data driven but investor psychology driven. Notice I did not say Consumer Confidence or Univ. of Michigan Sentiment Index. The Bulls want to drive this market up because they see no problem out there that the Fed can't handle (substitute the word "handle" with the word "manipulate".

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Friday, September 24, 2010

Market comments for Sept. 24th and the implications beyond. (UPDATE)

Before I get into reporting on the Durable Goods Orders data being released this morning for August, I thought I would comment about the manipulation of the stock market and give some evidence to support such a claim. Looking back over the past 10 years of chart data available for the Dow and for the S&P 500 and comparing both Indexes to the 10 year Treasury yield, one can see from the charts below that the S&P has more closely tracked the 10 Year Treasury yield much closer than has the Dow. The Dow is only comprised of 30 stocks and is more easily manipulated than the 500 stocks making up the S&P.

The gap today from looking at the 10 year period is -55% for 10 year Treasuries vs. the Dow, while the gap for 10 years Treasuries vs. the S&P is -35%. However, even more importantly, both Indexes are signaling a significant drop is in order for both Indexes.

You can clearly see the pattern tracks each other over the 10 year timeframe, but that the gap between each comparison is at its greatest, as of the close of the market yesterday. We are do for both the Dow and the S&P to drop significantly to close these gaps. And with the Fed looking at continued quantitative easing the current 2.56% Treasury yield on the 10 Year Treasuries is not going to go up in yield any time soon.

Here are 1 year charts of the Dow vs 10 Year Treasury yields. They tracked together until about May and when the 10 year yield dropped the Dow held and finally has gone up and widened the gap in the past 2 months, with the widest gap in the past 10 days. Something has to give here, and I strongly believe it will be the stock market. The big question of the day is whether it will happen during the month of October. If it's not the stock market going down, then 10 year Treasury yields are about to rise sharply against the Fed's wishes.

OK, now for the data on Durable Goods Orders for August. The prior month of July came in at +0.4%, but expectations are so low for August, they have expectations of -2.0%. If you also look at Durable Goods orders ex-Transportation, expectations are for +0.5%. July's data had come in at -3.7%. So here's the data:

Durable Goods Orders for August came in at -1.3% vs. latest expectation of -2.0% which was revised down from previous expectation of -1.4%. So we came in very close to the original number of -1.4%, but the news stories are saying now "much better than expected."

Durable Goods Orders ex Transportation for August came in at +2.0%. July's data revised downward to -2.8% for July.

I will update this post for New Home Sales to be released at 7:00am PST, so come by again. Expectations are for 270K New Homes sold for August. July's data was 276K New Homes sold. I might add that previously the expectation was for 291K New Homes to be sold in August, but it had been revised downward. They most likely wanted to say see they beat the new expectation versus missed the old one. Isn't that managing people's psychology as a delusion? I think so! Oh, and by the way, the same thing was done to expectations on Durable Goods Orders. They had originally expected a -1.4% for August, but now with -2.0%, they have a chance to beat it, thus trying for an induced market rally. It worked as Dow Futures went form +60 to +103 on the news.

Let's summarize here to take stock. Durable Goods orders for Aug were down -1.3% from July. Now July's number was revised up from +0.4% to +0.7%, so the real question is how do they calculate this months data? Do they calculate it by saying we are down -1.3% from +0.4% last month or do they calculate it from being down -1.3% from +0.7% the previous month? It is based on dollar volume of Goods Ordered, but they show only percentages. Hmmmm, I smell a rat! What do you think?

UPDATE: 7:00am

August New Home Sales were Unchanged from July. July's New Home Sales were down a whopping
-7.7%. So here's the goody. July's New Home sales were revised up from their initial 276K to 288K homes. August data came in at 288K, so no difference from July. Now you've got to love this, expectations originally were for 291K New Home Sales to be announced but recently that number was revised downward to 270K New Home sales. So now, with 288K new Home Sales, the media and gov't can say that the number was better than expected! Simply Amazing!!!

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Thursday, September 23, 2010

Market comments for Sept. 23rd (UPDATE)

Initial jobless claims were announced this morning. Expectations were for 440K claims and the number came in at 465K, so it was 25K higher than expected. The prior week's data was also revised up from 450K to 453K. Dow Futures dropped immediately from being down about -60 points to now being down -80 points.

Continuing Claims came in at 4.489 Million versus an expectation of 4.450 Million. This too was more than expected. The prior week's data was revised upward from 4.485 Million to 4.589 Million Continuing Claims.

Many of the Indexes have a Sell Confirmed reading from American Bulls from yesterday's close, such as the Nasdaq Composite, SP500, NYSE, Russell 2000, and others. The Dow Industrials had a Sell-If signal posted.

Gold is up 17.8% YTD and that is higher than most investments this year.

AT 7:00AM PST, Existing Home sales will be announced and updated here, as well as Leading Indicators. And tomorrow Durable Goods Orders will be released and New Home Sales.

Existing Home Sales for August came in at 4.13 Million Homes. Expectations were for 3.80 Million Homes sold. The prior month of July's data was revised up from 3.83 Million to 3.84 Million.

Leading Indicators for August data was also released. It came in at +0.3% versus an expectation of +0.1%. The prior month of July, the data was +0.1%.

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Tuesday, September 21, 2010

Market comments for Sept.21st.

The big economic news today is Housing starts, Building Permits and The Fed FOMC meeting. The first data released this morning was Housing Starts for August. Expectations were for 540K and the number came in at 598K. For the prior month of July, the number was 546K so we are 10.5% higher than we were expecting. Futures reacted positively to the news.

Building Permits came in at 569K. Expectations were for 550K. The prior month was 559K. So this number along with Housing starts were better than expected and up from the previous month.

Later today the Fed will be meeting and announce whether interest rates will stay the same. The statement they make will be watched carefully.

This market, with a little good news could go to 11,200 on the Dow again. This is another 500 points. But it should not go higher. as it appears a Head-and-Shoulders pattern developed between May and mid-August of last year. So the shorts are going to have still yet a bit longer pain from this rally which will have moved 12% since it was 10,000 in August and 15% since it was 9700 in July. That is what has caused some pain for people like myself who are short right now. This too will pass and those short purchases now will provide the biggest gains when the market does turn. For me it is no time to be weak kneed. As this market rises to 11,200, I will add to my shorts and keep my fingers crossed. But I wouldn't make a move like "All In!" on this expected market rally.

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Sunday, September 19, 2010

Weekly Economic indicators for the week of Sept. 20th

Here below is a table of the economic data which will be released this coming week. The most important pieces of data released this week will be from the Federal Reserve FOMC meeting on Tuesday, Initial Jobless Claims on Thursday and Durable Goods orders on Friday. I will post the actual data as it is released this week and will comment on the stock charts as the week unfolds. Here's the Table of the economic data. Also, don't forget to read my last 2 posts if you haven't yet. One shows historical data on the University of Michigan Sentiment Index over a long period of time.

To view the data more clearly in a larger format, click on it.

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Saturday, September 18, 2010

It's time for a reality check. Are you holding your own or going backwards? Surprising data

So you think you have made money in the market from July 6th when the Dow was only 9,743 points to now? Think again! Here's why you haven't made what you think you have. Oh, sure the Dow closed Friday at 10,607 and shares you owned have similarly gone up the 864 points or +8.88%, but have your asset really gained this amount when you consider the following. If you used the same amount of real money to buy Gold instead, Gold was $1195/ounce on July 6th and yesterday it closed at $1274/ounce for a net gain of 6.61%.

The first chart below shows the Dow from July 6th to yesterday's close.

I have labeled this the Illusion Factor because it is all an illusion.

Now the chart below shows the variation of the Dow/Gold ratio from July 6th to the close of the market yesterday. Notice that the ratio on July 6th was 8.2 and the ratio at the close of business yesterday was 8.3, so the real gain did not happen. It is an illusion aimed at having investors believe their net worth rose almost 9% over the period when their actual purchasing power remained the same, but you feel better now, don't you?

You see the reason one can make this comparison is that both stock and Gold values are in U.S. Dollar Currency. So the fact is, the currency devalued assuming Gold is the defacto World standard. In order for the Dow/Gold ratio to impact the psychology of the American people to wake up, the Dow should have dropped or stayed exactly where it was back on July 6th, at 9743 give or take a few points. So if the market drops and Gold stays about where it is, you will get a better sense of really where we are, not in a good place.

By the way, Oil was selling for $71/barrel back on July 6th and yesterday it closed at $74.70/barrel, for a gain of 5.2%. Still think you made 8.9% gain? And think about this, on Jan. 4th, the Dow closed at 10,583 and Gold was at $1121.50/ounce. The Dow Gold ratio then was 9.4, so we have been dropping consistently in net asset value for the whole year.

Now comes the real eye opener. Below is a chart I have put together of the Dow/Gold ratio from 1980 to now. You will notice that we have been in a steady decline of that ratio since the Dot.Com bubble burst. If you have been feeling poorer, you are, and so am I. Today's Dow to Gold ratio is equivalent to the 1991 to 1992 time period. If you live in a home that you owned back then ask yourself the question, how much did you pay for your house then and what do you think it is worth now? The difference is an illusion. In real value it is worth the same purchasing power. Scary isn't it to feel like you are going backwards. Now you know why I am writing this. We have been going backwards since about 2000 to 2001. That's all of President Bush's years as President and one and a half year of President Obama's. The only good thing I can get from this chart is that it looks like we are flattening out on the curve. But it still may drop down from here. One other possibility is that the Dow could have the major correction many of us have expected and get Gold to track and come down as well.

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Friday, September 17, 2010

Market comments for Sept. 17th (UPDATE)

Today is Options Expiration for September. The first economic data released this morning was the CPI for August. It came in at +0.3%. Expectations were for an increase of +0.1%, while for July the CPI came in at +0.3%.

Core CPI for August came in at +0.0%, while expectations were for +0.1%.

The third piece of data is that of University of Michigan Sentiment Index for September. Expectations are for 70, while last month a reading of 68.9 had been announced for August. This is the only number released this week, which is not subject to manipulation by neither the Fed nor the government. I will Update this post after the data is released.

UPDATE: 7:00am PST
Michigan Sentiment Index came in at 66.6 vs expectation of 70.0 and last month of a 68.9 reading. This is not good news for those hoping Consumers will be buying anytime soon. As soon as the number was released Volume jumped on the Dow to 161 Million shares and the market went form almost being up 40 points to dropping down 20 points so far! Remember 666 is the mark of the beast according to Christians, so beware! :) Here's a chart of the Index back in time. We have been going straight down in the past few months.

Yesterday’s data showed the Dow eking out a small gain of +22 points to 10,594. This resulted in a White Spinning Top candlestick pattern. For most of the day a Hammer pattern was in affect, but in the last 45 minutes manipulators came in to get the Dow into the positive. What was amazing was that many other indexes had candlestick patterns which were a Hammer and thus a Sell Confirmed signal was issued for these indexes. Those indexes are the following:

Dow Jones Composite Index
S&P Mid Cap
Dow Jones Banks
Dow Jones Air Freight
Dow Jones Broad Market
Dow Jones Cyclical
Dow Jones Durable
Dow Jones Industrials
Dow Jones Transport
Dow Jones Mid Cap
Dow Jones Oil Drillers
Dow Jones Container and Packaging

There were many more I did not choose to list. I think you get the idea. If you want a more complete list, click here.

I have done an analysis on Initial Jobless Claims, for comparative analysis purposes, from December 2004 through November 2007, as well as data from April 15th to yesterday's released data. It surprised me. During the 2nd half of the Bush term, from 2004 to 2007 you will notices that generally the data was in the range of between 290,000 and 350,000 Initial Jobless Claims per week.

The Unemployment rate during that same period was ranged by 4.6% to 5.5%. Here’s the Yearly data.
2004 5.5%
2005 5.1%
2006 4.6%
2007 4.6%
2008 5.8%

As you can see from the chart above, of the Weekly Jobless Claims, from April 15th, 2010 to Sept. 17, 2010, we have been range bound and there has been no appreciable difference in the data over the entire period. The solid straight horizontal dotted red lines show the range of the data from 2004 through 2007. We have a long way to go to get down to those levels. And looking at the chart below, an even more interesting the numbers go from 1967 to 2010. It is clear we are in a high range and are bound to stay that high until the economy improves. Government can't do the majority of the heavy lifting, but the Private sector can and will when Consumers are feeling better about their future.

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Thursday, September 16, 2010

Market comments for Sept.16th (UPDATE)

Initial Jobless Claims came in at 450K and expectations were for 440K. That was a little more than expected. The prior week number was 451K but here again, it was revised up to 453K. The number is still basically the same, week after week, so the jobless picture is not getting better, but also at this period of time isn't getting worse either. That is good news for those employed, but bad news for the long term unemployed, as it is still very difficult to get a job.

Continuing Claims came in at 4.485 Million. Expectations were for 4.450 Million. The prior week's number was 4.478 Million but was revised upward today to 4.569 Million. Again a more negative number than previously reported. You would think with all these revisions over the past months that sometime they would revise them downward, but they don't. That is part of the reason why I believe the numbers are being deliberately manipulated.

PPI numbers released for August were +0.4%. The prior month of July it came in at +0.2%. Expectations were for +0.1%. Core PPI came in at +0.1% compared to prior month's data of 0.3%.

The Futures market is still negative with Dow Futures down about 42 and the S&P 500 down about 6 points.

FedEx sees 1Q profit double, and you would think that is good news. However, they said that the Global recovery isn't as strong as was previously reported by them. Also, in the announcement, they said they are going to layoff 1700 jobs. Read the entire story here.

Other news, which caught my eye this morning was that foreclosures are up 25% on the year. The increase in foreclosures came even as the number of properties entering the foreclosure process slowed. To read the complete article click here.

I know what you are thinking right now. Where is the market going? If it were based on the data, it should be down much lower than where we are now. But it doesn't seem to be following that course of late. It doesn't make sense to me that the market has been rising this past 2 weeks, but it has. So your guess is as good as anyone's right now. You decide!

The next data out will be at 7:00am PST and it will be the Philly Fed data. Last month the number came in at -7.7, which surprised many. Initially expectations were that the number would come in today at +2.0, but since the expectation was lowered to 0.0, so we will see what actually it come sin at. Come back and I will post it below, just after 7:00am PST, with the word UPDATE, added in the title of this post.


The Philly Fed data came in lower than expected at -0.2, which drove the market lower. The day is setting up as a Hammer Candlestick pattern, which usually means that the trend has been broken and it shall now drive lower in coming days of trading. Trading volume is still very low, relatively speaking.

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Wednesday, September 15, 2010

Market comments for Sept. 15th (UPDATE)

Data released this morning shows the following. The Empire Manufacturing Index for Sept. came in lower than expected at 4.1 compared to an expectation of 5.0, which was lowered from an earlier expectation of 6.0 and last months reading of 7.1 disappointing the market. Last month this was a surprise to the upside because other Fed areas reported sluggish data and this one was a standout because it looked pretty good. Well that myth has been exposed. And yesterday's release of the Business Inventories number of an increase to +1.0% also disappointed the market because of building inventories instead of sales. It was interesting to watch the progression of the changes in the number. Last month the number was announced at +0.3% while today the number was adjusted upward to +0.5%, and the number expected today was initially at +0.7% and then adjusted upward again to +0.8% so you see a number of +1.0% is indeed disappointing for the market.

Import Prices for August were up +0.6%, while Export Prices were up +0.8%. Last month both numbers were negative at -0.2 and -0.3 respectively.

Industrial Production for August as well as Capacity Utilization will be out later at 6:15am PST.

Dow Futures went negative on the data to -40 points. S&P 500 Futures are down about 5 points.

Yesterday started off negative but then managed to end positive on a few Indexes, but not the Dow. The Candlestick pattern was the Black Spinning Top but the last 2 candlesticks did form a Bearish Harami pattern, as I had predicted in my previous post. Consequently a Sell-If signal was issued by Any downward gap at the open validates the Sell signal.

UPDATE 11:15am PST

Industrial Production came in at +0.2% while expectations were for +0.3%. Interestingly, July's data was revised down from +1.0% to + 0.6%, which is a bigger decline.

Capacity Utilization came in at 74.7% for Aug., while the expectations were for 75.0%. July's data was revised down from 74.8% to 74.6%, again another revision of a number downward. Are you spotting a trend yet? :)

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Tuesday, September 14, 2010

Market comments for Sept. 14th

The big news of the day and possibly the week is the Retail Sales numbers for Aug. For the prior month of July the data was +0.4%. Aug. data was expected to come in at +0.2% and they surprised by coming in at +0.4%. Ex Auto's the number came in at a strong +0.6% but again, the July data was revised down to +0.3%. What shenanigans!. Dow Futures which were down earlier responded positively on the news and the Futures are now up +6.

The next piece of data to be released after the market opens will be Business Inventories for July. Expectations are for them to rise to +0.8%. June's data came in at +0.3%.

This may be good for the Democrats going into the mid term election, but bad for Republicans. That discussion is now being conducted on CNBC, by Andrew Sorkin of the NY Times. His view is, if that is true, then it could be bad for the stock market. It is an interesting point of view. After the market has had a chance to digest the news, the Dow Futures are now down -11 points, as I sit here typing at 6:00am PST.

There was a poll released by CNBC titled, Investors wary of stock trading. The article is worth reading and can be found here. In summary it said that 61 percent said the market's recent volatility has made them less confident about buying and selling individual stocks. And the majority of those surveyed — 55 percent — said the market is fair only to some investors. You can't blame investors. It is a result of all the manipulation by the Fed., Treasury and other Gov't agencies, which are trying to slap lipstick on this pig called Consumer Confidence. Their ultimate goal is to have a positive effect on our psychology so we start buying more stuff. But it isn't working, is it? It is having the opposite effect.

I am curious what effect it is having on your psychology. Leave a comment by clicking on "Comments" below. There is a delay in posting as I review all comments before they are posted to insure there is no foul language contained.

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Sunday, September 12, 2010

Economic data for the week ahead, Sept. 13th

This will be a full week of important economic data being released. I will list them below but here are some of the more important ones that will move the stock markets.

Tuesday is Retail Sales and the NY Fed Empire Mfg Index.
Wednesday is Industrial Production and Import/Export prices
Thursday is the usual Initial Jobless Claims and Continuing Claims but also PPI
Friday will be CPI and Michigan Sentiment

And Friday is also Sept. Options Expiration. So this indeed will be a volatile week. So come here often and see the data as it gets released and any commentary I may make.

Monday, Sept. 13th 11:00am PST
Treasury Budget for Aug. Expectations are for -$104.0 Billion. Last month it was -$103.6 Billion.

Tuesday, Sept 14th 5:30am PST
Retail Sales for Aug. Expectations are for +0.2% and prior month was +0.4%
Retail Sales ex auto for Aug. Expectations are for +0.2% and prior month was +0.2%

Tuesday, Sept 14th 7:00am PST
Business Inventories for July. Expectations are for +0.8% and prior month was +0.3%

Wednesday, Sept. 15th 5:30am PST
NY Fed Empire Mfg Survey for Sept. Expectations are for 5.0 and prior month was 7.1
Export Prices for Aug. Prior month was -0.2%
Import Prices ex-oil. Prior month was -0.3%

Wednesday, Sept. 15th 6:15am PST
Industrial Production for Aug. Expectations are for +0.3% and prior month was +1.0%
Capacity Utilization for Aug. Expectations are for 75.0 and prior month was 74.8

Thursday, Sept. 16th 5:30am PST
Initial Jobless Claims for wk ending 9/11. Expectations are for 440K and prior week was 451K
Continuing Claims. Expectations are for 4.450 Million and prior week was 4.478 Million.
PPI for Aug. Expectations are for +0.3% and prior month was +0.2%
Core PPI for Aug. Expectations are for +0.1% and prior month was +0.3%
Current Account for Q2. Expectations are for -$125 Billion and prior Q1 was -$109.0 Billion

Thursday, Sept. 16th 7:00am PST
Philadelphia Fed for Sept. Expectations are for 0.0 and prior month was -7.7

Friday, Sept. 17th 5:30am PST
CPI for Aug. Expectations are for +0.3% and prior month was +0.3%
Core CPI for Aug. Expectations are for +0.1% and prior month was +0.1%

Friday, Sept. 17th 6:55am PST
Michigan Sentiment Index for Sept. Expectations are for 70.0 and prior month was 68.9

The most important data of the week is Retail Sales on Tuesday. Believe it or not, CPI and PPI are even more important than Initial Jobless Claims. And while normally I would say the Fed data on the NY Mfg Index is also important, I don't trust the Fed in reporting the data accurately as they are into manipulating psychology of Consumers and have been for a while. Much of the data released comes either from the Federal Reserve, the Treasury Dept. the Commerce Dept, or the Labor Dept. The only data released I trust as unvarnished and not manipulated is the Univ. of Michigan data on Sentiment on Friday. There you have it!

You will notice that all the expectations are lower than the previous period. That way they can say, "Better than expected". What BS!

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Saturday, September 11, 2010

Where did the vitriol start and who started it? UPDATE

On this day of remembrance of all those who lost their lives unnecessarily in the attack on our nation at the World Trade Center, I gave thought to that time and how we were as a people. After the attack we came together as a nation, even though before 9/11 we were divided politically by the election of George W. Bush by the Supreme Court decision over Al Gore. It was a bitter pill for Democrats and some Independents to swallow and it lasted right up to 9/11. But then everything changed. We were all saddened by the loss of life and angry that we were attacked by terrorists. But there was now our President on the pile of debris from the fallen Towers telling the world we are going to get through this because we are Americans and we are a strong people and that we would find the people who did this and bring them to justice. It was a solemn moment in our history and we were all united as Americans right after that, maybe for the first time for many Americans, but I had seen it before. When President John Kennedy was assassinated in Dallas, TX, we were together then too. The best of the American spirit was shown then too and the outpouring of sadness we all felt and a tribute to the loss of our President and the fact we all knew then the world had changed for us. There were no Republicans and Democrats then. We were all Americans and we were a strong people and that we would find the people who did this and bring them to justice.

Here we are on the Anniversary of 9/11, a very solemn day, and what's on many American's hearts today. I'll tell you, it's idiocy about whether a pastor in Florida will burn the Holy Book of Muslims or not. And, whether the Imam in NY will move his plans for building a Community center, which will contain a mosque, 2 blocks away from the site of the Twin Towers. The Republicans have been connecting the two separate issues even though the Pastor in Fl had not. But then, he finally got there message that there is a connection as Palin, Boehner, and Gingrich have been trying to connect those dots for the weak minded among us for the past week. It's a disgrace. First there is no comparison. Burning anyone's Holy Book is weak minded and not something a so called minister of God would do. But again, he had not connected these dots until these Republican leaders pointed it out to him.

Where do these nut jobs come from? They come from the shadows, where evil lurks all the time but is usually in check when there is balance of spirit and mind between people. But that spirit has been missing for a while now. I was trying to think when did it all change recently? I figured it out. It was when John McCain picked Sarah Palin, as his Vice Presidential candidate. She was not ready for prime time, or any time in my view, but here we are with her leading the whack jobs of the fringe of the Republican party and getting support from the other whack jobs of Rush Limbaugh and Glenn Beck and driving our country into madness. And the fools who listen to them get hyped up and do their bidding and think in the shadows about "coming out". And every once in a while one comes out ie. the Pastor in Florida.

But this vitriol started during the campaign for President and by the selection of Sarah Palin, by John McCain. John McCain, the same leader who said "Country first!" and has abandoned about everything he has stood for over his career as a Senator. The same John McCain who said he was a maverick and now said he wasn't a maverick. Make up your mind please, John. Now it was the perfect storm because opposing John McCain was Barack Obama. That helped bring out the racists among us. But you see Barack Obama, in my humble opinion, has done nothing to fuel this divisiveness. He was born from a white mother and a black father. So what? What's the big deal. Get over it and join the 21st Century. Most kids have. Many don't see color distinction, as their older parents do.

I am afraid we have lost that special moment when we were all together as Americans. But when I think about the meaning to me of 9/11, I wish we could go back to that moment in our hearts and stop this divisiveness. It is killing our country now. How you can help? Change your mindset. If you are still embracing the notion that our country is special and what it means to be an American. then you should think that if someone owns a piece of property and wants to develop it and build anything they want they should be allowed to as long as it follows local ordinances and laws. They have a right to build the Community Center and include a mosque in it if they so choose. We should be pleased we live in a country where we can express our religious freedoms in whatever way we want to as long as it doesn't do physical harm to others. By the way, people have been praying in the existing mosque there since 2009, just to set the record straight.

As for the whack job Pastor in Fl., it is a very difficult situation for sure. In this 24/7 news cycle with Social Networks bringing pictures and videos all around the world. One could make the case that he is endangering others and it is illegal, just like yelling Fire in a crowded theater. The world won't end if he does this and some may die too as General Petraeus has warned. But that will be on the Pastors head before God as well as those Republicans who have not condemned the possible act, Palin, Boehner and Gingrich. May God have mercy on their souls.

UPDATE: 10:20am PST

I don't know what has happened by the Florida Pastor has decided that God has spoken to him and that he will not burn any Holy Books now or ever. Hallelujah! He has seen the light. One must be grateful for little steps of progress when they come. Amen! Now if the political leaders of Palin, Boehner and Gingrich can see the light, maybe this will be a memorable 9/11 where something good comes out of it.

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Friday, September 10, 2010

Market comments for Sept. 10th and comments about both 9/11 anniversary and Emergency Preparedness.

A friend of mine this morning provides me with an excerpt from the WSJ showing something relevant about the Initial Jobless Claims numbers released yesterday. Here's his note to me:

9.9.10/WSJ's MarketWatch: "Weekly jobless claims decline by 27,000 to 451,000; Labor Day holiday may have distorted data"


Excerpt: One potentially big caveat about the latest data is distortion caused by the Labor Day holiday. Two large states, California and Virginia, supplied estimates instead of actual data, while the federal government estimated the claims of seven other states.
"Given the weakness in the labor market, we welcome any sign of improvement in the pace of layoffs, but this figure should be taken with a grain of salt," economist Omair Sharif wrote in a report.
A more accurate gauge of employment trends is the four-week average of initial claims, which is less volatile than the weekly number. The four-week average fell a more modest 9,250 to 477,750.
"This is a level consistent with a stagnant labor market and very subdued private sector job creation," economist Neil Dutta of Bank of America/Merrill Lynch said in an email.

Thanks Dennis!

And I thought another piece of information was relevant to what I am experiencing about the stock market. This is an article from Seeking Alpha titled, "What MasterCard and Visa Show About Market Disconnects" by Karl Denninger. Here's one excerpt from his article:

Simply put, either the market is "wrong" (and both of these stocks are screaming buys) or the market is right and the economy is literally falling apart.

If the latter, then all this "levitation" and "great time to buy" nonsense in the broader market is about to undergo a "reality adjustment" that just might reach 40% down - from here.

Pick a view, then place your bets.

The only economic data to be released today at 7:00am PST is the Wholesale Inventories number. This is a release of July data, hence backward looking. Expectations are for the number to come in at +0.4%, nut I don't see much of a reaction from this data. The big news will be more on what the Pastor from Florida plans to do tomorrow, go to visit NY and speak to the Imam, or stay home out of anger and do something stupid out of anger on the anniversary of 9/11. European markets are down currently while Dow Futures are up modestly +25 points.

The charts below show the Dow and S&P 500 for a 2 month period. You will notice that there is a light yellow line on both and they are the 200 day Moving Average. Both Indexes have remained below this line the past 2 months, with only brief moves above it. However, the S&P has gained closer than it was to the 200 day MA when I posted the same charts a few weeks ago. I do not believe we will go above this Resistance level and stay there so we are now at the top of the range. It is a good time to buy Short indexes again if you don't own some. I use ETF's as you know and while I haven't sold any, there has been a number of opportunities these past few months to make some nice gains on short term picks. Have a nice weekend.

On a side note, there was a massive gas explosion in the South San Francisco community of San Bruno last night about 6:00pm. I'm sure you have seen it on the news. Many victims are severely burned and many homes were destroyed. This should be a reminder to prepare yourself and your family for an emergency. In California, we have programs called Get Ready which are 2 hours in duration but will provide you with an awareness of what to do in an Emergency. More advanced programs such as CERT (Community Emergency Response Training) gives people all the knowledge they will need to survive 7 days without help from local Fire and Police Dept. assistance in your community. Give your family a gift and look into your own local program before you face what the people in San Bruno, CA or other people in Tornado affected communities in the midwest face every year, or what the people in Colorado are facing with the fires there. Check with your local Fire Dept. for programs near you.

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Thursday, September 09, 2010

Market comments for Sept. 9th

Data released on Initial Jobless Claims improved as the numbers came in at 451K Initial Jobless Claims. Expectations were for 475K, so clearly an improvement over expectations. Last week the number came in at 472K. Continuing Claims fell to 4.478 Million compared to last week's data of 4.480, which was revised up from 4.456. All in all the numbers for Continuing Claims were about what was expected with al the adjustments.

The Trade Deficit Balance came in better than expected at -$42.8 Billion vs expectation of -$46.5 Billion and prior month of June's data at -$49.8 Billion.

Futures rallied on the news.

It is most difficult to predict what wil happen today on the news in terms of how high the markets will go. The reason is that while the news is better than expected it is still not what we need to happen as far as jobs is concerned. It is just less bad.

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Wednesday, September 08, 2010

Crackpot, so called, Minister

That's right, this crackpot Florida pastor is nothing but a fraud, I'll say this once and only once, just because we have free speech doesn't mean that it is legal for this person to burn a Holy Book. Yes, we have free speech, but you can't cry fire in a crowded theater, if there is no fire. This guy should be arrested and thrown in jail with other criminals, except even they won't want to associate with him. There should be a law against burning any Holy Book, like there was regarding Flag burning.

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Market comments for Sept. 8th

The Dow fell about 107 points yesterday, but the more important piece of data was that the Put to Call ratio closed at 1.33. a level not seen since May 20 and 21st when the stock market lost over 400 points. Back then the struggle was for the Dow to stay over 10,000 in the short term. It failed and began the Dow's drop to 9800 at that time. Now we are at a similar place with the Dow closing yesterday at 10340, while starting the day at 10,446. Back on May 20th, the Dow was at 10,440 and closed at 10,068 and was the start of the decent to 9686 on July 2nd.

In pre-market today the market is pointed up as the Dow Futures are up 26 points and the S&P is up about 3 points. The Nikkei reacted to our market from yesterday and was down about 200 points in overnight trading. European markets are up about 20 points at this hour. It isn't a strong upward signal as they await our markets to open. 10 days before Options Expire for September.

Not much important forward looking data will be released today but there is some data. At 7:30am PST Crude Inventories will be released. Then at 11:00am PST notes from the last Fed meeting will be announced called the Beige Book. And at Noon, Consumer Credit will be reported. This will tell us if the Consumer is paying down debt or has stopped and started to spend. This is looking backwards as the data is for July and it is expected to come in at -5.5 Billion. To put this in perspective June came in at -1.3 Billion. So this indeed expects the Consumer to be paying off more debt and therefore taking more money out of play in stimulating our economy. Markets rarely move on this data but in this volatile market it is difficult to predict the direction of the reaction.

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Tuesday, September 07, 2010

Market comments for Sept. 7th

It's a quiet day today, with low volume, but the VIX is up almost 10% in early trading. No news on economic data is to be released today but the main 2 pieces of data to pay attention to this week is the Initial Jobless Claims on Thursday as well as the Trade Balance and on Friday the release of Wholesale Inventories for July. The Trade Balance and Wholesale Inventories data are both backward looking data and therefore not as relevant in our concerns. But the Initial Jobless Claims is relevant as it is current data.

There are only 11 days remaining before Options Expiration for Sept. on Sept. 17th.

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Saturday, September 04, 2010

Overview of the next few months in the economy, politics and the stock market

I believe in the coming few weeks there will be a great battle in the stock market for the very soul of the market. One group of players will be those Bears, who like me, believe we have been lied to and the markets manipulated to keep us happy. The other players are the Bulls, who believe the lies of the Government and the Fed and think things have been getting slowly better.

I do believe the stock markets will drop significantly in Sept and Oct., set up a angry Consumer and Electorate, who will then go to the polls in November and vote to "throw all the bums out". This will be followed by a Republican victory in the House of Representatives, which will mean a return to endless investigations using the new subpoena powers they will have in the Congress and they will continue to stop all legislation on Energy, Healthcare and of course any Social agenda to help the Unemployed.

A stock market rally will follow the election in support for the change and a Republican victory and election to a majority in the Congress. They will continue the Bush the tax, which are scheduled to expire in January 2011. They won't allow it to end as it has been big business for them to stop it, so the most affluent can keep their money, which, in part, pays for the politicians to vote their way. The consequence of which will be that deficits will be out of control going forward as will the interest payments we will need to pay each year to pay for all our debt. It will be an irresponsible policy move. Of course these newly elected members of Congress will get us into a catastrophe much quicker with reactionary new policies, and this will drive us faster to the Great Depression, Version 2.0.

I think the Fed has done an amazing job managing our psychology these past 18 months along with the Government. I haven't liked it, as I keep seeing the man behind the curtain pulling the strings, as you do. But the facts of what we see everyday is hard to change by hype and manipulation alone. We need to see positive change in our community with better Home prices and Sales, less For Lease signs from Commercial Real Estate problems, less unemployed and more hiring and the business community taking a bit more of the risk and investing in new capital equipment. That is why the stock market has been in a tight range between 11,600 and 9800 during this period, with no significant breakout in either direction. It has been a tradable range of -15.5% to as high as 18.4%, but the timing has not been very easy to trade as most of those moves happen within a few days in each direction and by the time one reacts 50-75% of the move is over. That works fine for Wall Street with their program trading, but isn't so good for the average individual investor.

The battles in the future are going to be between the have's and the have nots. It has already begun if you haven't noticed these past few years. The Middle Class is being slowly extinguished. Eventually Unions will become stronger again but if we aren't careful as a country, we are going to resemble a country in Central or South America, where workers fight to try and live and governments eventually turn like Venezuela. The wealthy in this country are playing a very dangerous game that is going to come back and bite them badly.

One must ask them the most difficult question, which some amongst them have finally asked themselves. When is enough, really enough! How much wealth must one have and when is it counterproductive to the society one lives in to garner more just for the sake of having it. Bill Gates asked himself that question, as did Warren Buffet. I salute them both. But how many more, which I will not name, come to the same realization. You made as much as you have because of the America of the past, which had a vibrant Middle Class. It is equally important for them to have a strong Middle Class as well. It keeps peace in the streets and hope in people's hearts. We need more of that now.

The anger of those politicians who are riling up voters and has spawned the Tea party, is a prime example of what I mean. Being a politician and saying "No" all the time, does not create great solutions to problems, where all can live with a truly compromised solution. They are one sided solutions and half the population is going to be unhappy with the change. We need genuine compromises by elder Statesmen (and Stateswomen) if we are ever going to attack the deficit, Social Security, Medicare, the Military Industrial complex and ensure our national and individual security.

So that's what I see ahead of us. You can make a difference by not letting your anger get the best of your choices. Think rationally, not emotionally, what is truly best for the majority of people and choose accordingly. As to the stock market, don't let the swings between the ranges drive you crazy. Pick a strategy and stick with it until it is proven correct or false. As the charts of the Dow 6 month, 3 year and 30 year show below, there is a great battle brewing both short term and long term. This too will be the effect and affect on the economy and the stock market as it is impossible to discern which leads which and which follows.

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Friday, September 03, 2010

One month chart and comments on the Dow

As you can see from the chart below, the Dow reached 10,451 today as a high, which coincidentally is just under the 200 day Moving Average. This has proven to be a significant resistance level for the Dow.

Below, the one month chart, of the S&P 500, shows that the S&P has lagged the Dow in approaching its 200 day Moving Average. So while today is a feel good day for the Bulls, they have yet to go over this important Resistance level. Overall, we remain in a tight range but the swings cause emotional trading, rather than measured trading.

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Market comments for Sept. 3rd (Update)

The big number is out this morning in pre-market on the Unemployment rate. It was expected to rise and the number didn't disappoint. The August Unemployment rate came in at 9.6%, a rise from 9.5% in July. Expectations were for the Unemployment rate to come in at 9.6%. Also out this morning was data on Non-Farm Payrolls. Expectations were for the number to come in at -106K and it came in at -54K, better than expected. Non-Farm Payrolls from the Private sector came in at +67K while expectations were for the number to come in at +10K.

Hourly Earnings came in as expected at +0.3% verses last month at +0.2%, which was better than expected and the Average workweek came in at 34.2 hours, unchanged. At 7:00am PST the ISM numbers for the Service sector will be released. Expectations are for the number to come in at 51.0, as the prior month came in at 54.3, so this won't be moving in a good direction for the Bulls, since much of the economy now is in the Service Sector. This could pull the market back from the surge at the open.

In pre-market, the Dow was down before the data to -7 points. After the release of all the data it settled in at +125 on the Dow. That would say we will have another day up on the Dow and other market indicators.

The Volume has been declining each of the past few days and we are going into a long weekend so my expectation is that the market will not surge up today as it looks right now, but rather have a modest pullback before the close. BUt heck, I'm only speculating here and have no clue because of all the manipulation of markets by the Fed. Have a nice Labor day weekend and watch the surf on the East Coast with Hurricane Earl off shore. Stay safe.

UPDATE: 7:05am PST

The ISM Service sector number came in at 51.5 versus 54.3 from the prior month. You must remember that the service economy represents 80% of all jobs in the US. Now here's the spin. First, expectations were for the number to come in at 51.0, so it's not as low as expected but in fact it is a very low number and one of the lowest we have had.

P{resident's remarks, which were expected at 7:00am PST, have been postponed indefinitely! There goes the Christmas surprise form the President. Dow now at +78, so it looks like it is backing off the higher levels of the day.

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Thursday, September 02, 2010

Market comments for Sept. 2nd

The stock market yesterday had a big rally and then just stopped, as we hadn't gone over the 50 day Moving average, as I said in yesterday's post. The Dow is up about 23 right now but there isn't sufficient volume coming into this market as you can see to make any significant difference. The real question is why? If people believe things have turned now and we are getting better from a recovery point of view, then why aren't many starting to buy stocks and driving it upward to 11,000 and beyond? I'll tell you why, the masses don't believe it! We are all waiting for a sizable correction, and only after that has happened will people be fooled into buying into the market. None want to be burned again. So this market could be best described as, the Little Engine that Couldn't!

Initial Jobless Claims came in at 472K compared to an expectation of 475K, not much difference there. And I noticed again that the prior period was adjusted from being down 475K to being down 478K. This is the second time that has happened. So we are to feel good about this week being down 3K less than expected but not notice that last week was adjusted down 3K which is worse. Nice try at manipulation folks but it doesn't work on the savvy investor, who is just watching by the sidelines.

Continuing Claims had the same nonsense going on. Reported today was that they were at 4.456 Million vs expectation of 4.460 Million a difference of only 0.004 fewer Continuing Claims. But let's look at the previous period. It was adjusted from a prior reading of 4.456 Million to an increase to 4.479 Million, an increase of 0.023 Million. See what I'm saying here. What has truly happened. You get it, I know you do.

See you here tomorrow as we see data of the Unemployment rate for August.

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Wednesday, September 01, 2010

Market comments for Sept. 1st

I am sorry I didn't get to this earlier today. I have much going on the next 2 days. The data released today that affected the markets the most was an unexpected increase in the ISM data. It came in at 56.5 while the prior reading was 55.5 and expectations were for the number to come in at 53.0 for August. The stock market soared on the news and the Dow is now up over 215 points. The fact the market moved up so much was a big relief to the Bulls as they have been discouraged over the month of August that they haven't been able to make any money. Now it's the Bears turn to be discouraged as expectations were of a bad Sept. in the market as is usual for September's past.

I wouldn't count on this rally if I were you. Obviously you can count me in with the Bear crowd. I see this as a tidbit of news to hang a trade on but the overwhelming news is negative out there. To prove my point, the ADP report said that jobs unexpectedly dropped -10K in August and the prior month was revised downward from creating 42K jobs to a revised 37K. Expectations were for no jobs to be created for August, not to lose 10K. But the Bulls want to focus on something positive as we start this volatile month. Bears, take a break and go fishing today. Your day will come very soon. Patience!

Latter today Auto and Truck Sales will be reported and while it is not going to move the market much, it is an indicator of the economy and how Consumers are spending their cash. The number is expected to be released at 11:00am PST. I won't be here so check other sources for this news. I will post it late afternoon as an Update. Dow up now 223 points, the Nasdaq is up 55 and the S&P is up 26 points, a heck of a start for September.

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