Saturday, September 03, 2011

Market comments for the week ahead: Germany in focus

The market ended the week down. Many did not want to go into the weekend holding stocks, because any news in Europe can quickly devastate stocks here. So caution is the rule, especially in September and October, the 2 most volatile months for the stock market. This morning's charts have a new discovery for me. I have the usual 200 day Moving Average lines drawn on the chart but also have included a 400 day Moving Average line, as well. As you can see from the 4 major Indexes below, it looks like the 400 day MA is the resistance line for the market and can give someone a better gauge as to whether to believe market moves or not. The last move up proves now to be a false Bear trap as anyone now knows after buying stocks when they appeared to be breaking above the downtrend line drawn in previous posts of a week ago. Here are today's charts.

This last chart below clearly shows that the last move up was a Bear trap for those unsuspecting traders. They would be wise to stay on the sidelines and watch rather than lose their money. This zig zag pattern downtrend will continue as there is no good news coming in the world as it pertains to their economies and this coming Wednesday all eyes will be not on the Republican debate but on Germany's vote as to whether they will be bailing out other countries. Watch this news as it will move our markets more than any other news.

Germany's Merkel is vulnerable to losing control. This analysis from Berlin:
"Merkel's coalition has a comfortable 20-seat majority in the lower house of parliament. But if she is hit with dissent in her own ranks, and is forced to rely on opposition parties to pass legislation to expand the single currency bloc's rescue mechanism -- the European Financial Stability Facility (EFSF) -- then her coalition could collapse, sparking early elections.

'The euro crisis entered a new phase over the past week,' influential German weekly Der Spiegel said on Sunday.

'Before the main question had been how the common currency could be saved. Now it is also about saving Merkel's chancellorship. If her coalition does not deliver a majority for the enhanced euro rescue mechanism in the autumn, people close to the chancellor say, the coalition is all but finished."

So this is what to watch on Wednesday. Good luck in the market next week and don't forget to watch President Obama's speech to Congress on Thursday evening on his Jobs program proposal.

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Blogger Minneloushe said...

Hi, Charles. None of us really know where the market will go. If many companies buy back their own stock (with all that 'job-creating' cash they have), the market may sustain an upward move. I'm still in 100% cash in my 401k (fixed income... about $28/day LOL). I'm still holding Beacon, like a jerk I guess. If my TZA ever rises to where it is in the profit-zone, I may sell it and average down (way down) on BCON, because I still love the company. Should have just bought AAPL way back then, when it was well below $200/share.

2:13 PM  
Blogger Charles Amico said...

Hi JW. Nice to hear from you again.

Be careful about BCON still. They don't have enough cash and while their company has a great product, they are undercapitalized and they might not make it. We had a Solar company in Fremont, CA go belly up on Thursday. They employed over 1,000 and while a good company and good technology, they were in the same financial straits as BCON. They too had received a government grant and loans, and even Barack Obama visited them to promote them on his trip here once, they still went bankrupt.

In my opinion, TZA does have a chance to get to $75-85/share in a major drop from here. If we take another step down watch this one really move. Hope so anyway. :)

6:36 AM  
Blogger Minneloushe said...

Charles, unfortunately, my TZA purchase price is about $235/share at this point. Hopeless.

10:20 AM  
Anonymous learn german said...

In spite of the euro crisis the euro is at least as good and stable compared to the US dollar as the debt crisis in the states is even worse.

1:10 AM  

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