Saturday, October 29, 2011

Occupy Wall Street and other protests: A Thought to help you!

I am heartened by the Occupy Wall Street protesters who have endured terrible conditions to make their voices heard. Those of us couch potatoes in the 99%, who see you on the news or read about your bravery in the face of tear gas, police brutality and just the hardship of doing without the simple comforts of home like a bath or use of a toilet, admire you all and support your voices to be heard. We were called the Silent Majority once.

But as one who cares, I am concerned about the storm coming today and tomorrow and what certainly will be a difficult winter and want you to be safe from harm. I ask you to consider the fact that you could go home at night, if you are fortunate enough to have a home or warm place to sleep, as many don't these days. There is no shame in doing this. Come back fresh and rested each day and use that time to organize into small groups which explore possible demands you might have of the government and the 1%. Use the time to think about solutions that can right this wrong. But it does no good to get worn down and possibly sick where your voice can't be heard.

If you have some messages, I am willing to happily post them for you on my Blog. But take good care of yourselves. People in the helping profession know that they are unable to help others if they can't help themselves. So please consider going home in the evenings and take good care of yourselves. We are behind you in spirit and voice.

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Thursday, October 27, 2011

Markets rally strongly. What's next?

Markets rallied strongly on the Euro zone deal to solve the debt crisis in Greece. It's just a fact. The Dow surged to close at 12,208, the S&P rallied to close at 1284, the Nasdaq to 2738 and finally the Russell rallied to 765. All of these Indexes, except the Russell, surged above their 200 day Moving Averages. They all made a significant breakout, which can't be denied. And they did it on stronger volume, always a good sign for Bulls. This surge makes it possible for the averages to go back to the previous recent highs. For the Dow, that would be about 12,800. For the S&P 500 that would be 1360. For the Nasdaq that would be 2870. And for the Russell it would be first getting over the 200 day MA at 790, but then going on to 860. All this now becomes possible again. As I said, it's just the facts.

We had good economic news coincidently with this market move. GDP for Q3 came in at 2.5%, healthier than some low predictions of 1.5%, but not as strong as the highest ones which were at 3.5%. Initial Jobless claims were still over 400K this week coming in at

Can the markets reverse where they are now and go down? Yes, but if they do one might consider buying on the dips. Remember when we did that long ago? I do.

I have said to watch Europe and the DAX for clues about this market as we have been following Europe. Well the DAX and France's CAC as well as other european markets also surged today.

I have placed 1 year charts of all the Indexes below.

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Wednesday, October 26, 2011

Market comments for Oct. 26th, 2011

The stock market Futures point to a positive open, as the world waits in anticipation of meeting in Europe over the debt crisis. Germany's Lower House of Parliament voted that they would support an increase to the European Stability Fund and supported Merkel to help to bail out Greece, as they will be contributing a significant share of the overall bailout from their funds. That created the bump in the Futures this morning.

Back here in the US, the data this morning on Durable Goods orders for September was not good, coming in at -0.8%, but the spin by the media focused not on this number, but rather Durable Goods-ex Transportation, which came in at 1.7%. Isn't spin wonderful.

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Tuesday, October 25, 2011

Market comments for Oct. 25th, 2011

The big news this morning really came within the US, as the Consumer Confidence number was released for October. It came in at a 39.6 reading compared to September's reading of a 45.4 reading. This is the lowest reading in a while as the chart below indicates and if it continues this low for the next few months, Christmas season for Retailers is going to be very poor.

Nothing yet settled in Europe on the Greece debt issue and bailout attempts. There is a meeting tomorrow of the group and Germany will be voting at the same time as to whether they support it or not.

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Sunday, October 23, 2011

Where's the S&P 500 headed?

I thought I would reward those frequent visitors with a second post this weekend. Today's chart is of the S&P 500 and I have drawn some lines on this 1 year chart, as to where I believe the S&P has resistance and will be difficult to overcome. First the chart and then the commentary.

I have drawn 2 red lines and 1 blue line. As you can see with the red line labeled 1, that we have broken above this level this past week. The next challenge for the Bulls is to cross over the red line 2 which crosses the axis at 1240. If it crosses above 1240, then the obvious next resistance level is at 1265. The S&P 500 closed Friday at 1238. I can't guarantee that we won't go up to test the 1265 level, so you might want to entertain the possibility, depending on the news coming out of Europe, we could surge up this week and test it. If the news is mixed from Europe, we may stay between that narrow wedge between both red lines, between 1220 and 1240. But there will be a breakout soon in one direction or the other.

I do not see a rosy outlook in the markets unless the government would rather continue to prop them up. The day of reckoning will eventually come, both here and in Europe and when it does, it will infect the rest of the world. Much of the media's attention has been on China lately as well. This economic crisis and debt crisis, which has caused a slowdown in Europe and the US, is already affecting China. I am watching India, as I see India as the canary in the coal mine. Here are some headlines from India as of this morning to emphasize my point about India:

- States must reduce fiscal deficit since debt position has become difficult in many states: Montek
- PM wonders if 9% growth feasible. The government now expects growth of close to 8 percent this fiscal year.
- India can achieve 8-8.5 pc growth despite global crisis: PM Manmohan Singh says India can 'swim against the wind blowing from abroad'.
- Food inflation back in double digits. Inflation rises sharply to 10.6 pct for week ended Oct 8 from 9.32 pct.
- Mineral output down 5.99% in Aug. India's production of minerals was valued at Rs 13,378 crore, the government said today.
- Consumer Price Index jumps 1.2% in Sep. Expensive food, clothing and fuel pushed up the CPI by 1.25 per cent in September.

So keep your eyes and ears tuned into what is happening in India. Here's the latest piece of news about the Stock market:

Mumbai: Taking positive cues from the US markets, Indian bourses may open with gains but the mood is likely to stay cautious as the RBI meets on Tuesday to take stock of inflation and European leaders moot a solution to the eurozone debt crisis, say analysts.
The BSE benchmark Sensex last week shed 1.73 per cent on high inflation and mixed global cues with downward bias.

"Stock market will trade taking cues from day-to-day basis as this week is going to be an eventful one.

If you too would like to follow the news in India click here to India's Financial Express.

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Saturday, October 22, 2011

Stock market analysis and commentary Oct. 22, 2011

The stock market had a surge yesterday on high volume and the Dow closed at a 11,808, bringing it near a 3 month high. Of course this was done on Options Expiration day. That explains the high volume, but not the surge up on the Dow. Yesterday also had one of the lower Put to Call ratio readings as seen in the chart below. Be sure to read my last post where I said to watch this ratio to go below 1.0 and head to a 0.7 reading.

What has dominated our stock market action has been Europe and the Greek debt crisis and impending crisis in Italy and Spain. there were some hopeful comments made that the meeting this weekend of the G-20 would yield some good results. Greece's Parliament did pass more austerity measures in the face of Union strikes and violence, all giving many hope that Eurozone countries will get past this problem and on solid footing. But Germany's Merkel has said to the effect, not to count much getting done at this meeting this weekend as it will take many more meetings and months or longer to solve these crisis. It didn't matter to the market traders as they jumped on the bandwagon of "hope" and drove stocks higher as the Shorts took it in their shorts with big hits in their portfolios.

The Dow trend has clearly broken above a tight range and it could have legs to go higher. I can envision a move to 12,000 is possible, but the risks to go back below 11,000 is also as strong. The 200 day moving average is at a few points below 12,000 but the line is sloping down so I don't see us going up above this level. See the 6 month chart of the Dow with the 200 day MA below:

Much will be dependent on the news from Europe. Many think that our earnings announcements will drive the market higher, but the fact is that many companies are missing their targets like Apple, The Blackstone Group, Schlumberger, Travelers Ins., Morgan Stanley ( missed w/o accounting move) and a number of other prominent companies. Remember most targets had been lowered because of the economy so even beating them is nothing really impressive with this very slow growth economy.

The best moves have been to play the wide swings in the markets due to high volatility. But this is not for amateurs. And I consider myself a amateur, as most are because we don't have the ability to execute High Frequency trade in nanoseconds like the big boys do, so we are always too early or too late for a trade to make comparable profits.

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Friday, October 14, 2011

Market comments for Oct. 14th, 2011

Today's focus is on the Put to Call ratio for all Equities and Indexes. The chart below shows this ratio for all of 2010 and Year to date for 2011. You can see from the chart that this ratio has been greater than 1.0 for all but 3 days since July 29th, the area under the red line. This while the stock market has rallied this past week. Many are wondering whether they should jump on this rally so they don't miss it. Some wonder whether there will be a sharp reversal and that this is a Bear trap. To answer this question, the Put to call ratio should help you decided. People believe there is a Bull market when the ratio is much lower than it is now. So one thing to watch is whether the Put to Call ratio daily readings start to consistently stay below 1.0 and start heading down to 0.7 or 0.6 or lower, but that's not where we are now. Paying attention of this data can help take out some of the anguish of trying to decide what to do.

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Wednesday, October 12, 2011

Market comments for Oct. 12th, 2011, Columbus day

Say what you like about this rally, it has surprised everyone, including me. I had to look at the chart this morning to see just how high it has climbed back up from the bottom and to see whether I think it will hold. The chart below shows it was a rise of about 8% in 7 trading days. However, when I look at the very low and dropping volume, I am very suspicious of this rally and it appears to me to be a another bear trap. Here's the chart. You decide!

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Saturday, October 08, 2011

Should we link a Job's Plan with Taxing Millionaires?

What's wrong with a quid pro quo when it comes to a Millionaires Tax to pay for a Job's Plan? I'll tell you what's wrong with it. And I do support a Job's Plan and I support a tax on Millionaires. What I don't support is a link of a tax increase specifically implied to pay for it, rather than paying for the general expenses of the government. You see it sets a precedent. We know our taxes go to pay a piece of every government program and expense. But if we start down this path think about how many will say they don't want to pay the part of their taxes that pays for our Military or they don't want to pay for their part of the IRS or the Energy Dept., or the EPA.

I think we should get more taxes to help offset the expenses and debts we have incurred at this time in our economy. And I think those increased taxes would be best obtained from those who have had the most tax breaks and can best afford it. That means taxing the Millionaires and Billionaires a little more. And we should couch those increases as needed to help us fund the government, not just a Job's program. Fairness in taxation is a must.

What do you think? Leave a comment.

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Friday, October 07, 2011

Market comments for Oct. 7th, 2011

The Unemployment Rate stayed steady at 9.1% for September, as reported this morning. Non-Farm payrolls came in better than expected with a gain of 103,000 new jobs created. And on Thursday morning, Initial Jobless Claims came in at 401K for the week of 10/1.

This morning I have included several charts showing that while there is much volatility, there also is a pattern to the moves. AS you can see from the charts below, we are forming lower highs and new lower lows in this market. Will this continue? It's anybody's guess. I guess it will and while todays market looks tired with the recent gains, we may have put in the highs and are headed lower.

Also today I am posting from the Chart of the Day, which shows how slow this recovery has been compared to other recoveries.

"Today's chart puts the latest data into perspective by comparing nonfarm payrolls following the end of the latest economic recession (i.e. the Great Recession -- solid red line) to that of the prior recession (i.e. 2001 recession -- dashed gold line) to that of the average post-recession from 1954-2000 (dashed blue line). As today's chart illustrates, the current jobs recovery is much weaker than the average jobs recovery that follows the end of a recession. Today's chart also illustrates that the current jobs recovery has been slightly stronger than what occurred following the recession of 2001. However, the already modest upward trend has slowed significantly over the past five months."

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Thursday, October 06, 2011

R.I.P. Steve Jobs and thanks for all of it!

I remember my first encounter with an Apple Mac. I had just left IBM in May of 1986 after 18 years of service and deciding it was time to leave Vermont and come to the Bay area and be part of the excitement and improved weather from the harshness of Vermont winters. The last thing I bought as an employee was the IBM Personal Computer XT, as I got it with the employee discount. To my surprise, in only a few months in San Francisco, the damn thing started falling apart. Eventually everything but the metal frame didn't work. I had to replace the computer and decided to go with my first Apple Mac. Since that moment I have never been dissatisfied with my Apple products, as you see I was converted into an Apple zealot. I have never looked back at any other equipment other than a Mac since.

As one of my early consultant gigs, I was fortunate to get Apple as a client in 1987 and I remember the excitement I felt walking into Apple and seeing groups of people working with chart paper and easels and colored markers contributing to a brainstorming exercise of new product ideas. The place vibrated and I felt privileged just to see it first hand and be a small part of it. I did a number of sessions for Apple management into 1989 and I met there what was to be one of my best clients ever. He was an IT mid level Director who was smart, cared about his people a lot, had the highest integrity and was the kind of person I was proud to know. I knew he had something special going for him and I just enjoyed his way of working with people. No, it wasn't Steve, but he was the kind of person at Apple that made it be one of the best companies in America.

It was a privilege to go into a company where you felt that excitement and knew something special was happening there. I had had that feeling only once before and that was when I worked on the development of the Heat Shield for the Apollo program, but I have never had that feeling again since Apple. Steve Jobs helped change the world and the way we look at and use technology in it. He changed my world too.

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Monday, October 03, 2011

Market commentary for Oct. 4th, 2011

Tuesday's charts are of a longer period than previous charts for a while. I have put together charts of the Dow, S&P and Russell 2000 each for 3 year periods. I have drawn a number of red lines showing where support is and where you can see we may be headed. First the charts and then some commentary:

The Dow broke below recent previous lows and while it barely is below those lows, the trend looks like we are going lower. The bottom of the Dow's range is 10,000, which is 655 points lower from where it closed today. We could just as easily climb above today's lows, but we should be going lower, as the news in Europe has not solved the Greek Debt crisis and Greece today said they did not reach their goals around there promised austerity targets they had committed to the EU. That was a major reason the markets ignored good news today regarding the ISM number which came in at a 51.6 reading against an expectation of only 50.0.

The S&P500 shows a larger drop against the previous lows and the Russell 2000 shows an even greater drop. By the way, Germany's DAX Index is also going lower as is the CAC40 and FTSE, but I didn't put up those charts today. News isn't mattering these days. Lowering ones risk is what is driving the world markets now!

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Sunday, October 02, 2011

Summary of Blog statistics for the past 6 years

I have been writing a Blog now since May of 2005. In that time, I have written over 1650 Blog posts and had a total of 80,000 Visitors to my site who read 125,000 pages in total. I'm someone who never wrote anything other than an occasional letter to the editor, because I considered myself not to be a writer. So much for limiting self perceptions.

I wrote about politics for the first several years years exclusively, then a mix of financial posts and finally some stock market analysis these recent years.

Thanks all of you for visiting this site. I hope you got what you came for. I got what I wanted out of doing this, the joy of self expression and the uncensored views I hold about the subject matters i have chosen to write about.

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Saturday, October 01, 2011

Stock market direction? Nothing has really changed!

Since the beginning of August, when the stock market had its big drop based upon the announcement of the Fed that they were going to keep Interest rates low until 2013, nothing much has really changed. We have been in a tight range that does't feel so tight because of the high volatility. One week we are just below 11,000, wondering if we are going to hold support here or go lower and the next we are back up to 11,500 wondering if we can break much above this apparent resistance level. It has been worrisome for most investors but not for day traders. The best day traders are making some money, but the rest of us watch in disbelief.

I have compiled some 1 year charts below to reiterate and reenforce previous posts where I said we are in a tight range but now we are closer to a breakout, one direction or another. I have stated many times I believe this direction is lower, so no sense repeating much more than that.

This week Germany's Lower House of Parliament approved increasing the proposed EFSF (European Financial Stability Facility) expanding the euro-area rescue fund's fire power to stem the region's debt crisis. To read more about this Fund and the politics in Germany over this issue, click here. This seemed to move their stock market higher but as the week progressed you can see in the charts below, it pulled back.

You can see I have drawn red lines showing support levels and Blue lines showing resistance levels. You will also note that since the drop in August we have stayed below the 50 day moving average consistently. This line might be a good indicator to track market direction so that you are not fooled as we many during the Bear Trap so noted on a number of charts by the blue circle covering their mistaken purchases. Use these charts as a reminder of where we are and above all remember the Fed doesn't think we are going to get better until at least 2013!

This coming week on Friday, we will get the Unemployment rate for September. This could move markets. Also on Monday be watching for the ISM Index at 10:am EST or 7:00am PST. Expectations are for a reading of 50.5 and the previous month the number was 50.6. I expect the number to come in at 50.0 or less, given the lack of business activity there was in September. Earnings also will be front and center now for the next 4 weeks. You will be hearing about "beating expectations" by companies. Remember, these predictions were lowered last time so that beating these expectations should not be difficult.

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