Tuesday, May 31, 2011

Market commentary for May 31st

Well the Dow is up to +123 points on the Dow this morning within the first 15 minutes. You might be saying to yourself, "Wow, I wonder what great news came out this morning?" Well I don't know about good news, but the Case Shiller Housing 20 city Index number came in at -3.61, which was down from April's number of -3.41 for example. And the Chicago PMI came in at an incredibly low number of 56.6 for May. Expectations were for 63.0 and last month it came in at 67.6, so you can see how bad that is.

We are awaiting the Consumer Confidence number in a few minutes which I will update here, but the news this morning is anything but good and yet the market soars, as usual completely ignoring the facts with the remaining QE2 funds being applied to the continued manipulation of market data. This is so much worse than any odds favoring the house in Vegas. Will we ever learn this will have a bad ending? I doubt it until it actually happens! Shame on us.

Update: 7:00am PST

Consumer Confidence was down remarkably to 60.8, while last month the number came in at 65.4 and expectations for 67.5, so this too is just awful for the economy outlook as well as the above data.

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Saturday, May 28, 2011

Market comments and a little of politics for Memorial Day weekend.

OK, the stock market month of May ends after the close of trading on Tuesday. Yesterday the Put to Call ratio closed at the lowest level since January 13th, Friday closing at a 0.70 reading. Also the Intraday low of that day, hit 0.56 at 10:00am EST. This might be another signal that next week expect a selloff to a lower low of at or below 12,200 on the Dow, at or below 1300 on the SP 500, at or below 2700 on the Nasdaq and 800 or below for the Russell 2000. If this happens, you can count on a continued decline with lower highs and lower lows occurring as we approach the critical legislation required to increase the debt limit ceiling for our Government. This legislation must be approved no later than the first week of August.

On a side note, it is ridiculous that this debt ceiling legislation is being held hostage by Republicans because even if Democrats folded and agreed to every single debt reduction the Republicans want to make, including destroying Medicare, the debt ceiling would have to be raised.

I want to salute all those who have served in the service of our country and especially the Armed Forces and various branches of our Military. We have paid a dear price in blood and treasure for our freedoms, even while several freedoms have been restricted for the sake of fighting the "War on Terror". Even this week an extension of the Patriot Act was enacted by Congress and signed by the President. You would think with the ability to Wiretap and listen into conversations both domestic and foreign, we would have built some strong cases against those on Wall Street who have scammed the government and the American people of Trillions in tax dollars. Most in the Middle Class are struggling to survive because of the financial crisis, caused by these so called professionals. The only person in jail is Bernie Madoff. It makes me sick. But for now, enough of politics for the moment. :)

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Thursday, May 26, 2011

Market comments for May 26th

Initial Jobless Claims for the week of May 21st unexpectedly rose to 424K, while expectations were for only 400K, and the previous week's data was revised higher from 409K to 414K. This recent rend over 400K is going in the wrong direction for a sustained recovery, but the Futures market seems to be shrugging off the news. Dow Futures are up in premarket +21 points for the Dow.

Next Thursday we will see what these 4 weeks of numbers back above 400K Initial Jobless Claims ha done for the May Unemployment rate, but I suspect it is going to tick up to 9.1%.

The 3 Month chart of the Dow below, shows that, while the market gained yesterday, we are still below the 50 day Moving average. Notice yesterday's volume was lower than Tuesday's volume. On a rising day, if you are a Bull, you want the volume to exceed the previous down days.

GDP for the 1st Quarter came in again at only 1.8%, which is far below what is needed for a sustained recovery. I think the facts are starting to emerge that the Fed's QE2 has not done much more than to keep us from sliding back into a recession, but just barely this past year.

European markets are mixed this morning, so that it seems their debt issues don't appear to be taking down their markets today, so we may follow suit. There is less than 0.5% movement in any of the European exchanges at this time.

Monday the markets here are closed, as it is the Memorial day weekend. And remember this about the debt level, it has not been resolved. Politicians on both sides seem to be locked in their positions, with Republicans saying they will not accept any tax increases as part of debt reduction and the Democrats saying they will not accept any reductions in the debt regarding entitlements without some tax increases. All this while the clock is ticking for our government to face default by August. What madness!

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Wednesday, May 25, 2011

Market comments for May 25th

This morning data was released regarding Durable Goods Orders. The data came in at -3.6% for April. March data was revised upwards from +4.1% to +4.4%. Expectations for April were for a -2.0%. The data shows the economy is definitely slowing.

The downtrend continued yesterday with the Indexes down for the day. Today, the Indexes seem to have started down but all have turned up. A small rally is in order given the number of down days we have had recently, but we are still not recovering to new highs but rather lower highs.

Yesterday the EU authorized the use of Gold as collateral. This is an important change and worth reading this article by Zero Hedge today titled, "The European Gold Confiscation Scheme Unfolds: European Parliament Approves Use Of Gold As Collateral".

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Tuesday, May 24, 2011

Market comments for May 24th

Today I have added a little something different to the mix. I have found an interesting piece of news about the economy and where we are right now that I thought I should repost here. It is from Haver Analytics and includes a chart. Here it is and the title:

Chicago Fed Index Provides Further Evidence of Momentum Lost

The list of indicators suggesting that the economy's forward momentum has waned continues to lengthen. The Chicago Fed reported that its National Activity Index (CFNAI) retraced its earlier improvement and fell to -0.45 in April from a little-revised 0.32 in March. The three-month moving average of the index, which smoothes out some of the series' volatility, slipped to -0.12, the first negative reading since December. During the last ten years there has been an 81% correlation between the index and the Q/Q change in real GDP.

To read the entire article on Haver Analytics click here.

While yesterday's market was down and broke below the previous support line, as seen in yesterday's post on the Dow, the final Volume for the day was not that strong and indeed was less than the previous day's volume. Given this fact, today's market may bounce up somewhat, as Futures indicate. Watch today's volume for clues as to future direction.

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Monday, May 23, 2011

Market comments for May 23rd

This morning the market broke again below the recent uptrend line as is shown in the chart below. I had said in my post yesterday that we shall see if you should "Sell in May" and it is clearly showing that others think so.

In the chart above I have drawn 2 lines numbered "1" and "2" to show that we have gone lower and broken the previous support line "1" this morning. In the chart below you can see how the pattern is very different than the March 16th chart pattern shown in the previous post.

You can see we have broken below the previous low of May 17th in this drop this morning. The market is now in a downtrend.

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Sunday, May 22, 2011

Put to Call ratio for 2011 in focus

I thought today I would show a chart of the Put to Call ratio for all of 2011 with special focus on last week's movement. The chart below indicates this past week's movement in blue. The put to call ratio is an important indicator for me as it often indicates the best time to buy and sell stocks.

The reading on this past Tuesday of 1.15 had not been hit since March 16th, when the ratio hit a high of 1.18. You can see from the Dow chart of March 2011 below, that on March 16th the market hit a low and then then within 2 days started a rally. The data point was actually a Buy signal, if you were paying attention that day. From that point, the market rallied a minimum 7 % to this past Tuesday or if you sold a little earlier with a gain of 1000 on the Dow, you would have made a profit of 8.6%, which is very good in only a few months.

Now looking at where we are on the Dow chart below for the month of May, you will see the Dow's action for this past Tuesday the 16th, when the Put to Call reached a high of 1.15, that the chart pattern for the last 3 days May 18th-20th is different than that of March 16th in the chart above. I would look for another drop in the market this week going below the May 17th low. We shall see if the phrase "Sell in May" comes true!

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Friday, May 20, 2011

Israeli Prime Minister Benjamin Netanyahu and President Obama. A picture is worth a thousand words!

Take a look at this picture of the 2 of them meeting today. Notice the body language of both. The Prime Minister is leaning very much forward as he "discuses his views" on President Obama's comments and speech yesterday. It looked very tense and seemed to me that he was "lecturing" President Obama. Putting aside the actual issues and positions of both of these leaders for a moment, what do think the body language is saying? It speaks volumes to me!

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Market and World affairs comments for May 20th

First of all, yesterday there was more data reported that wasn't very good for the economy. The Leading Indicators for April came in at a -0.3% reading for April. This compares to a +0.4% reading for March. March's number was revised upward yesterday as well, from a +0.4% to +0.7% reading.

I have included today a chart of the Dow for the past 3 months as a follow-up to yesterday's chart of the Dow for a year. It gives you a better refinement of just where you are and where either support or resistance will be broken. The triangle of the convergence of these lines are getting closer. Here is the chart below.

Yesterday in politics here, President Obama gave his highly anticipated speech on the Middle East peace process and North Africa's Arab Spring uprising. The President spelled out in clear terms what had been said in private regarding the Israel/Palestinian peace process over the past 20 years. One memorable line from the President's speech was this one, "At a time when the people of the Middle East and North Africa are casting off the burdens of the past, the drive for a lasting peace that ends the conflict and resolves all claims is more urgent than ever." President Obama pushed both sides to accept his starting point — borders for Palestine, security for Israel — and get back to solving a stalemate "that has grinded on and on and on." It was a good start effort by this President to state the realities we all know to be true.

I for one like President Obama's straight talk as it has been lacking by many of our previous Presidents who have strived for peace in the MIddle East.

President Obama, in his address Thursday on the Arab world uprising, said that Syria's Assad should lead his country to democracy or "get out of the way."

Again President Obama's straight talk was a welcome change form the previous lack of a stand with respect to these uprisings for democracy in Tunisia, Egypt, and the other countries of the region. You may not agree with his policy now, but at least it is clearer.

I think there was too much information contained in his speech and to get an accurate picture of what President Obama actually said, it is best to read the transcript or listen to his speech titled, "Moment of Opportunity" in its entirety.

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Thursday, May 19, 2011

Market comments for May 19th

Initial Jobless Claims were reported this morning and Futures rose on the news, signaling a good day in the stock market. Here's the news. You tell me if it is good news.

Initial Jobless Claims came in at 409K, as reported this morning. That was down from last week's reported number of 434K. However last week's number was revised upward from 434K to 438K. Expectations (and hope) were for 400K or under because it was below 400K for a number of weeks.

So this was the good news on which the Futures rose this morning.

In other news this morning, the IMF chief, Dominique Strauss-Kahn, resigned his job to focus on the rape charges he is facing. President Obama will deliver a Middle East speech today dispelling any doubts that the U.S. supports the call for change.

I have added a chart of the Dow for the past year as it is instructive. Notice the Red uptrend line connecting all the low points. As long as the Dow stays above this line, the uptrend continues. You will also notice that there is a short Blue, which shows the most recent decline. Both this line and the Red line point to the axis at 12,450. This is the equilibrium point between the downward forces and upward forces. The upward forces have had and still have the upper hand until we break below the Red line. The longer Blue line connects all the tops of the move up this past year. You will also notice that since April, the Volume has picked up and this coincides with the recent decline phase we have been in.

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Tuesday, May 17, 2011

Market comments for May 17th.

The markets were disappointed again today with Industrial Production for April coming in at 0%, that's right "zero" percent! Expectations were for 0.5% and last month's numbers were revised downward from 0.8% to 0.7%. The index of Industrial Production is a fixed-weight measure of the physical output of the nation's factories, mines, and utilities. Manufacturing production, the largest component of the total, can be accurately predicted using total manufacturing hours worked from the employment report.

In addition to Industrial Production, Capacity Utilization figures dropped for the month from an expectation of 77.5% down to 76.9% for April. Though the rate of capacity utilization is seen as a critical gauge of the slack available in the economy, the market does not completely trust this measure. According to Briefing.com, Capacity is very difficult to measure, and the Fed essentially assumes that growth in capacity in any given year follows a straight line. One can therefore predict the capacity utilization rate quite accurately based on the assumption for production growth. The 85% mark is seen as a key barrier over which inflationary pressures are generated. You can see we are going lower, not higher with a drop today in commodities in general.

This may be a boring topic, but the essence is factories are underutilized as are workers. With a lower number there is less of a need to hire workers. That is one of the reasons why the stock market is down this morning.

I'll try to spice up my next post. :)

Housing Starts were also lower than expectations and Building Permits were also down for April.

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Sunday, May 15, 2011

6th Anniversary for my Blog

May is a special month for me for a number of reasons. It is my anniversary month for starting many things. However today I celebrate the fact that it is also the anniversary of this Blog which I started on May 11th, 2005. My first post was titled, "Judicial Nominations: Do common people really care? " (You can click on the name at it will take you to my first Blog post) At that time I was getting upset and wanted my voice to be added to the debate of the day about the Supreme Court and other stately topics of concern about our country, like having John Bolton as U.S Ambassador, which I did not believe was in the best interests of our country after such great men as Henry Cabot Lodge. So I voiced my concerns back then. And here I am today, having completed 6 years of writing.

The site has morphed into something on politics and the stock market, but that is where my interests lie these days. This week I mark the milestone of over 69,000 visitors to my site over these 6 years and they have read over 110,000 of my Blog pages. If you have been one of those who have glanced at my writings, either by mistake or by deliberate intentions, thank you.

When I started writing my Blog, my purpose was to get as many to read and hear my words as possible. From those beginning posts my purpose for writing has changed. I now write to document my points of views as a historical legacy of my time here on earth and where was my brain activity focusing on. I am not sure it was the wisest use of my time, but it is what it is. I wonder if I am addicted to writing my Blog and can't stop, but clearly I can as I took off about 10 days to go back east and felt no compulsion to write here at all. :)

I realize there are many who visit here from doing a search of key words and because I have written for such a long time I must have covered what you are looking for at least once, with those key words I entered in my tags.

Well, whatever the reason you ventured here, I hope it wasn't a total waste of your time. I know we are all connected here on mother earth and throughout the Universe. We are connected to everything and everyone we like and dislike, but through this technology, these connections are made more aware to us. We are connected to athletes around the world, to uprisings throughout the world, dictators and common people throughout the world, and to those in the world who call themselves "Anonymous." Thanks to you all. Now go do something more important! :)

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Saturday, May 14, 2011

Where is the economy headed? Guess!

This week we had Retail Sales reported as I mentioned in the previous post, but I didn't spend much time discussing it and looking at the recent trend. Before I get into the data, I thought I would comment on why Retail Sales are an important metric to determine where the economy is headed.

The reason is because the Consumer represents 70% of our economy and when they are spending the economy is growing and when they slow the pace of spending, the economy can grind to a halt. It has been said many, many times, the economy has been sustaining "moderate" growth. Several posts ago I said when you see the word "moderate", substitute "slow" growth. So looking at Retail Sales trends give us a sense of the Consumer and the economy. Let's look at the recent trend.

Retail Sales for February was 1.3%
Retail Sales for March was 0.9%
Retail Sales for April (reported yesterday) was 0.5%

Do you spot a trend?

One other piece of data, which I like to look at is Consumer Debt and specifically Revolving Credit from Credit cards. Here is the data starting in 2010.
Q1 2010 840.1
Q2 2010 826.2
Q3 2010 806.9
Q4 2010 800.7
Q1 2010 796.1

Do you spot a trend?

The Consumer is trying to pay down debt it seems and is spending less on Retail Sales. And while prices of Gasoline have increased significantly, the Consumer continues to feel the pain.

So when Fed. Chairman Bernanke says we are in a "moderate recovery", you may be hearing soon that the economy has "stalled", which is another word for going nowhere!

Three days this past week the Dow was up and only 2 days down, but the Dow finished the week down for the entire week.

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Thursday, May 12, 2011

Market comments for May 12th

Economic news was disappointing for the Bulls today. Initial Jobless Claims came in still over 400K at 434K. Expectations were for 400K. Retail Sales were up 0.5% compared to 0.9% last month, so that wasn't that good. Continuing Jobless Claims 4 week average climbed slightly. The PPI was also higher than expected, which is not good for taming inflation concerns. The PPI came in at +0.8% while expectations were for only a gain of +0.5% so this definitely is a concern. That is almost a 10% yearly gain in inflation. Core PPI came in also higher than expected. Core PPI for April was +0.3% while expectations were for a +0.1% gain.

Tomorrow CPI numbers will be released as will Michigan Sentiment numbers.

Silver declined 8% yesterday but those who own the ETF ZSL, which is an Ultra Short of Silver, gained 16%.

Wednesday, May 11, 2011

I'm back!

Hi everyone. I am sorry I haven't posted anything this past 10 days as I was back east and was busy with family. I will resume my posting on a more regular basis. Thanks for your visit.

This morning CNBC had the head of VISA on their show talking about their new Digital Wallet which will make charging easier and the use of the actual Credit Card to fade over time in favor of the digital phone embedded chips or software. However, that was not what caught the most of my attention. When Mark Haines asked him his view on the Consumer and the economy he said, we are still in a slow recovery, with the emphasis on the word "slow". Then he elaborated on what he meant. He said that while the economy has not lost ground but it is barely advancing. So when you hear from Bernanke say we have "moderate" growth, substitute the words, "slow to non existent!" That was the most accurate pronouncement I have heard to date in describing this stagnation.

You can try and blame the President but if you miss blaming the Republicans, you have your head in the sand. They have tried to stop this President at every turn. They want to cut spending drastically, but not invest in anything that would create real stimulus and jobs. That's the jam we are currently in. Heck, many didn't even give any praise to our President for getting Bin Laden. But enough on that for now. It's good to be back!

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Monday, May 02, 2011

President Obama does what President Bush couldn't do, find and kill Osama Bin Laden!

What a terrific day it is with Osama Bin Laden getting his due justice for our 9/11 attack of the World Trade Towers. I must make a political statement about this today. So here it is:

From Sept. 11th 2001 until the election of President Obama, 8 years went by. The news reports that it was 5 years ago that the compound was built in Pakistan, which was where Bin Laden was hiding. Then President Obama was elected with the worse financial fiasco since the Great Depression and not only has President Obama saved us from a Depression, but under his leadership and direction, our forces were able to kill Bin Laden too. God Bless President Obama, the soldiers who went on the mission to kill Bin Laden, but also all the men and women serving our military and their families. I also want to song the praises of Leon Panetta, as head of the CIA for the fine work and of all our intelligent services

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