Friday, December 31, 2010

Summarizing my Mini Poll results for 4th Qtr 2010.

I have had a Mini Poll on this blog for the past 3 months. I am summarizing the results here today. First the question I asked: How do you feel about the next few years with respect to your job and financial security?

Choices and % feeling that way:

1. I'm Optimistic and think things will get better. 13%

2. I'm Pessimistic and think things will get worse. 63%

3. I'm neutral and think things will stay about the same. 25%

This is much more pessimistic than it was for the summer months. I can't say this is statistically significant, but it sure interesting. I have reset the data to zero so let's see what people feel going forward.

In spite of the gloom and pessimism, I want to wish all my faithful readers a very Happy New Year. Be safe out there and don't drink and drive. Get a driver and you can have plenty of fun without getting hurt or hurting someone else.

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Thursday, December 30, 2010

Market commentary for Dec. 30th, 2010

The Initial Jobless Claims number, released this morning, came in below 400K for the first time in several years at 388K. Expectations were for it to come in at 415K. But the previous week's data was revised upward as usual from 420K to 422K. It is not surprising to me that the number came in this week at 388K because last week was Christmas week. The real test of the numbers will come in 2 weeks. Many in Main St. media are saying that the big corporations are adding jobs, but they are hiring abroad, not here in the U.S.. But if you think about it, we only had a 4 day work week at best last week, so 400K jobless claims divided by 5 days would equal 80K a day. With only 4 days you would think it should have been less than the 380K. It should have been 320K.

Continuing Claims increased this week oddly enough from the last reading of 4.064 Million jobs to this week's reading of 4.128 Million jobs. Expectations were that the number would come in at 4.000 Million. That number is going in the wrong direction if one is looking for a lower Unemployment rate number next week.

The Futures market is down slightly on the Dow. European markets are all down currently and the Nikkei closed down last night. Today may signal the beginning of the market drop we have been expecting, although Volume will be light this week. Yesterday's Dow hit 11,621 for a new intraday high, but it closed down below 11,600 to 11,585. A down day today might accelerate the drop going into next week. We may still see a day or two to close at 11,620 but then a selloff will begin.

January should be choppy and a down month from current levels and that should set the expectations for the year, as the month of January is often cited as a determinant of how the Dow will end the year. If January is negative they say the year will have a loss. Key short term levels to watch is going below 11,460 on the Dow. We have completed the top of the right Shoulder of the Head and Shoulder pattern now, as seen on the chart below. As you can see from the sloping line under the head and Shoulder pattern where we are headed from here. It isn't pretty. So be cautious in your purchasing of stocks. Consider hedging with some short positions or ETF Shorts to protect your profits. Taking profits here aren't that bad an option either.

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Tuesday, December 28, 2010

Disappointing economic data today on Housing and Consumer Confidence.

This morning the Case-Shiller report came out on housing this morning and it was not good news. The 20-City Index for October came in at -0.8%. Expectations were of +0.1%. September data came in at +0.59%, but was revised today to +0.44%. Also today Consumer Confidence for December data was reported. Expectations were for 56.1 for the month but the number came in at a disappointing 52.5. The month of November came in at 54.3 so this was a big drop. Below is a chart from on Consumer Confidence over the past 2 years.

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Sunday, December 26, 2010

Stock market prediction going into January

I have been looking at the chart of the Dow and decided to look at a 6 month timeframe as it seems the market has been going straight up, although lately seems to be still strong. I wanted to determine whether the Bulls case is warranted and whether there are any signs visible to the average investor with limited knowledge that all might not be as good as all the talking heads are saying. You can't find anyone Bearish right now, except Robert Prechter and his Elliott Wave Theory. Well while I do like the Theory I also use other methods, as long term readers know. Besides the Put to Call ratio, which I like a lot as an indicator of a pending reversal in the market, I also like to use Price/Volume with the emphasis on Volume movement. Today's chart below shows the Dow 6 month Price and Volume movement over the period.

What you will notice from the above chart is that the Volume has been steadily declining over the period. That's the first note worthy piece of data. In fact in the month of December we are at the low on the chart. Even July had much more volume than did December and most are on vacation then.

The other noteworthy consideration is that the price has all but gone steady up on this lower Volume. First rule to observe in trading is that if you have price rising, volume needs to also rise if you want to have a Bullish condition. But if the price is going up and the Volume keeps dropping, as it has especially lately, it is a very bearish sign. Also note the number of recent days which have been distribution days, in red, versus accumulating days, noted in Black on the Volume chart.

To me the signal couldn't be more emphatic. This indicator is flashing RED in Neon lights. Does this mean that next week the market will tank? No, but it should make you wary as to how much you are invested in the market rising right now. There is better than a 50% probability that the market will be turning down soon. It is way overbought by any measure you use. Buyer be Ware! Don't say you didn't know. And ask yourself how can all the prognosticators except one, be on the side of the Bull at this time. And don't tell me it's the Fed. They only have so much they can do.

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Friday, December 24, 2010

What will be the first sign of an impending market correction?

I think the question is on many minds these days, but most likely not on Christmas Eve. So this is for the wandering Internet travelers who say, Bah humbug over Christmas and are looking for some predictions or interesting tidbits of information about the stock market. In the chart below I have shown the current trends in the Put to Call ratio and what data point should signal the impending market correction.

I most likely won't be posting any more today or tomorrow but will be back here on Monday when the market is open. In the meantime, wishing you a very Merry Christmas. Drink some Eggnog and just chill.

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Monday, December 20, 2010

Dow Gold ratio for all of 2010

I decided to put up this morning a chart of the Daily Dow Gold ratio for al of 2010 to the close on Friday, Dec. 17th. As you can see from the chart below, this ratio hit a new 2 month high of 8.5, which was last reached on Oct. 27th. This may be approaching a breakout to the upside. What this means is that precious metals are in for more of a correction and this could mark the beginning of the drop in the Dow as well.

Merry Christmas to everyone visiting my site. I hope to make some changes in 2011 and possibly add video clips of my comments about the market and political commentary as well. Stay well.

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Friday, December 17, 2010

Market and Political commentary for Dec. 17th.

Today is quadruple witching day for the stock market. There should be very high volume near the close and significantly higher volume for the day. To me what is very interesting this day is that wouldn't you expect the market to be roaring this morning since the Bush Tax cuts extension for 2 more years got passed and is on the way to President Obama for signing into law? Hmmm, why do you suppose that it isn't roaring?

Seems to me that yesterday we had the tax cuts in place and on January 1st and for the next 2 years they will remain in place, and the economy will not have any more dollars really added to spur the economy along. You see nothing much has changed except one thing, we now have a $900 Billion debt added to what we had as debt yesterday. That's a lot of money to pay off with increasing interest rates.

Oh, I'm sorry, didn't you know that interest rates have been rising rapidly in spite of Ben Bernanke's Quantitative easing, which was supposed to LOWER interest rates? Can you see the scam yet? The American worker and tax payer must now pay off an even larger debt than they had on their plate before the Bush Tax cut extension Bill was passed. The 10 year Treasury yield was down as low as 2.45% within 30 days ago, but now it is over 3.5%. How's that working for ya?! That's your best bought Congress at work for you. Where were all the loud Tea Party Republicans clamoring for us not to pass this Bill? They were bought off and silenced just like all politicians are. As I have said before, we have the best Congress money can buy, and this one cost more money than past ones. Now go out there and shop and stop complaining. Long term Slavery isn't that bad! Our ancestors managed it well but it only included the "colored's" back then. This new slavery is for "whites" too, as you, your children and your grandchildren will all be working to pay off this debt for their Master.

As you can tell, I am just sick of it. Why do you think many want to kill funding for public education and continue to make our education system inferior? Whose interest does that serve? How will these less educated vote when they are of age? Just like this generation of less educated. And that's how the game is perpetuated! It's the only way people will not vote their interests, now that Corporations are seen with equal rights as individuals in where they spend their money in elections. We are killing the American Dream for a generation at a minimum. What a sad day. Oh well, I've got to get ready for the day. Have a nice weekend, in spite of the news.

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Tuesday, December 14, 2010

Put to Call ratio hits new low (UPDATE)

The Put to Call ratio this morning within the first half hour hit a new low of 0.47. This is after closing last night at 0.65. This new low is to me a definitive sell signal and is the lowest I have seen in the past 3 years or longer. Traders beware. There is too much optimism out there and when everyone is going in the same direction, there is bound to be a major reversal as there most likely are no more buyers other than Ben.

UPDATE: 8:20am PST
Traders, noticing the same thing started buying Puts because at 7:30am PST the Put to Call ratio climbed to 1.09 and at 8:00am was at 1.06 and it is obvious others are looking to go short on this market too.

UPDATE: 11:45am PST
The Put to Call ratio has continued to stay above 1.00 since my earlier update. Currently at 1.00 after spiking to 1.13 earlier. The Dow hit a new 52 week high today as well.

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Saturday, December 11, 2010

Year end stock market comment and prediction

OK, many are bullish and wondering when the big next leg up is in the market to 12,000 to 14,000 on the Dow. I know many still believe in Santa Claus and I would hate to disappoint you, so let's just say this. It isn't going to happen anytime soon. It is more likely we will go down to 6,000 than 12,000-14,000 over the next year or two. Below are some charts which to me say we are now very close to completing the right shoulder of a Head and Shoulder pattern, or "W" pattern, which I like to call it. Below are 2 charts of the Dow and S&P updated as of the close on Friday. With all the "movement" in stock prices and averages many have seen of late, when you put that movement in the context of very long term trends, the indexes have barely moved these past few months. But we are completing this pattern and as the arrow shows from the tilt of the "W" pattern it is pointed down. Is this a certainty? No, but I would say better than 75% chance it will. If I must stay on one side of a bet or the other, and let's not be mistaken here, buying stocks is professional gambling, I would say the odds are against any Bulls minimally for the next 3 months. First, here are the charts and then some additional comments.

One of the reasons I know the market is about to drop is that everyone who followed me to the short side of this market, which has been very painful the last 6 months, is planning to, or has abandoned their short positions. We are in the last throws of this rally. There are a lower number of new highs daily and the volume is drying up.

Watching Bernanke sweat on 60 minutes last week was also a sign. I have never seen him that nervous and worried and his concern was deflation he said, not inflation. His efforts to lower yields on the 10 year Treasuries has failed so far. 10 Year Treasuries closed well up over 3% on Friday, while the Fed would like to see those rates go to 2.25% or at least stay below 2.50%, where it was before Quantitative Easing 2 was implemented.

The third reason I believe we are close to a market reversal is that the Put to Call ratio has had a total of 7 consecutive days at 0.79 or lower. Going back over the daily data from Oct. 17th 2003 to the close of trading yesterday, this has never occurred. We are extremely overbought condition in the markets and in all Indexes.

Everyone is responsible for their own decisions when it comes to buying and selling stocks. All I do here is tell you what I am doing and what I am seeing. So from where I sit being long right now is fool hardy except in some rare exceptions and specific stocks. I recently purchased FXF, which is the symbol for the Swiss Franc currency. I bought it in the $90's and it is now $101.19 as of the close yesterday. I am expecting more an more pressure on the Euro currency. The video clip I have posted a number of days ago was a clue of how bad it is getting there with Sovereign debt issues. So I believe the Swiss Franc will rise on any pullback on the Euro. I also see Financials pulling back as well as many banks are in real trouble and with continued foreclosures, I see more banks holding the bags and getting into more trouble.

It is hard to give the positive financial message that everyone wants for the Christmas holidays. But there are positive things this holiday that should be the focus, instead of the markets. It's with your family and the blessings you have for having them in your lives. Friends too. I have several very close friends and I consider it a significant blessing in my life to enjoy sharing small talk and sometimes big talk with them. There are people doing good deeds every day that we don't hear about. We only see the negativity by watching the news. Doing that constantly can make you depressed. It doesn't mean the world is bad, it just means that the focus of the news. Occasionally, someone like Brian Williams of NBC shows people doing good deeds on his shows. It's the best part of the broadcast. The real world is full of people being blessed by other human beings. Look for that and you will have a better Christmas holiday.

Merry Christmas and a Happy New Year for all. Yeh, I know I'm early, but so what!

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Thursday, December 09, 2010

Market comments for Dec. 9th

As you can see I haven't posted many comments on the market these past few days. There really hasn't been a reason to as nothing has really changed. On thing I wanted to add though was to watch the stock price of CAT, because it has led thus year's rally. But the last couple of days it looked like it topped and today it is forming a Hammer Candlestick pattern, which often is a sign of a reversal in trend. I have a 2 month chart on CAT below so you can see what I am referring to.

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Monday, December 06, 2010

Asia's reaction to extending the Bush tax cuts

Well the initial reaction is in as far as the Asian stock markets are concerned. So far most are negative at the open. It's obvious why they would be down. It's because many think they won't get paid for the debt they own of the US. Let's see our market's reaction tomorrow. I have a hunch it will be party time!

Also, I want to thank each of you for visiting my site. Tonight I reached a new record level of 63,000 visitors and those visitors read over 100,000 pages of my Blog. Again, many thanks.

UPDATE: 5:45am PST

It looks like the market will surge today as Europe is up over 1% during pre-market today. So let the party begin. My goodness, even Steve Forbes is talking about how great this is going to be, just like the Reagan years when he reduced taxes and spurred the economy, which gave us the Bull market. Doesn't it feel like the roaring 20's to you right now?

The problem is that with extending the Bush Tax cuts for everyone, we have put ourselves in a deeper hole. Besides, there is no new money, we already have had the Bush tax cuts now for 10 years and there wasn't hardly any jobs created. God help us, because we can't seem to help ourselves any more!

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Bernanke says he is not printing more money.

Fed Chairman Ben Bernanke said on 60 Minutes last night that this money for QE2 (Quantitative Easing) is not money that has been printed. He also said he could possibly have QE3 if it is needed, with the implication that QE4 could also be used. But he insisted that this money is not just being printed. Technically he is correct. But let's take a look at just how he is doing it. This Video clip from You Tube explains quite clearly how he is able to do this.

Wish I could do that with my Bank accounts, don't you?

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Sunday, December 05, 2010

Video clip of David Stockman on CNBC

CNBC video clip on Unemployment rate and also David Stockman. Good charts presented by Stockman.

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Healthcare costs: This should get your attention!

These charts on Healthcare costs will just stun you, as they did to me. I would love to know how each of you interpret what you are seeing on these charts as much is in how one interprets them. Let me hear some comments on this one and let's start a dialogue. When you first post your comment I must look at it before it is posted to ensure that there is no bad language in what you write. So please have patience and I will post every comment as long as it is respectful. The first chart is titled, "Health Care Costs as percent of GDP vs Year".

These charts are from jameyer's photostream at Flicker at this web site
This next chart below is titled, "Health Care Costs as a percent of GDP vs Year with US Presidential Terms"

This third chart is titled, "Health Care Costs: 1950-2010"

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Friday, December 03, 2010

Market comments for Dec. 3rd.

Today's jobs numbers surprised many, but not my readers. The Unemployment rate jumped to 9.8% today and is showing we are not out of the woods yet. But the Fed is in charge of keeping the stock market inflated, so the reaction is very muted with the Dow now only 18 points.

The run up the past 2 days is being called spectacular. I wouldn't think so if you consider the fact that they are printing money out of thin air, using that paper to buy stocks, which are another form of paper, just to get people feeling good and going out shopping to buy "paper". It is a well controlled game and anyone playing it, including me, is being played as a sucker. There is no real capitalism any more. We have decoupled from the reality of the real economy.

You going shopping today? Enjoy that Christmas party, as that Party will come to an end too, just like our economy. And when that happens, God help us all, because the world is destroying the credibility
of paper currency. I wonder if we will be going back to the age where people used either precious metal coins, like Silver and Gold, to buy things we need or will we barter for services. Hmmm, I need that Hen and that garden plot to grow my vegetables. Need some business analysis or some coaching?

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Thursday, December 02, 2010

Market comments for Dec. 2nd.

My goodness, yesterday's market move of 250 points on the Dow based upon the following news:
1. Ireland still afloat, but concerns over Portugal and Spain's debt lingers.
2. The Chicago PMI came in at 62.5 versus and expectation of 59.6
3. Consumer Confidence for Nov. came in at 54.1 versus an expectation of 52.0
4. Challenger job cuts down -3.3% y/y
5. Construction spending was 0.7% for October versus expectations of -0.5%, but was exactly the same as last month.
6. Unit Labor Costs were down -0.1% versus an expectation of -0.4%, even though last reading was -0.1%
7. The ISM index came in for Nov. at 56.6 versus an expectation of 56.5 and a prior reading of 56.9
8. Crude Inventories came in at 1.07 M versus a prior reading of 1.03

Now I ask you, does this news warrant that much of a market movement? I am waiting to see Initial jobless Claims numbers in a few minutes. Last week the number was 407K. The expectation is for the number to be 422K. So think about this for a moment, if last week was 407K and the trend has been coming down, why would the "expectations" be for 422K? I'll tell you, so that the market can have beat the expectation and the jobless number will come in under 422K. You just watch. So any number between 407 and 422 will be cheered and the market shall rise as "things are improving out there". Please shop!! I will add the actual data in 10 minutes but wanted to post this first.

UPDATE: 5:35am PST

Well it's going to be interesting to see the spin today because the actual Initial Jobless Claims came in at 437K, higher than the estimate. That's an increase of 26K they are saying over last reading. Continuing Claims are at 4.27 Million jobs, not counting all those not included of course, which comes to about another 13 Million people. Have a great day because you should know that they are not going to extend Unemployment benefits for the people who have been out of work for several years. I call it the Bah Humbug Christmas spirit this season.

And here is the headline after the data came out, fresh of the wires, so to speak:

Futures Up Despite Jobless Claims Rise
By Melinda Peer 12/02/10 - 08:48 AM EST

NEW YORK (TheStreet) -- Stock futures were looking to extend the previous session's rally on Thursday even as initial jobless claims climbed to 436,000 as markets anticipated the European Central Bank would enact measures to contain eurozone weakness.

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