Market comments for March 31st, 2011

I was listening to Art Cashin, of UBS Financial Services, on CNBC this morning, and he said that if we just had a few of the recent upheavals of Governments in the Middle East or concerns over a default of governments like Greece or Portugal, or an Earthquake of magnitude 9.0 in Japan followed by a tsunami and then a Nuclear Power Plant meltdown, any one of these normally would have caused the stock market to have tanked with at least a 10% correction. That is an interesting thought to ponder as it has been Fed Chairman Ben Bernanke who has single handedly kept the stock market artificially up at these lofty levels. Listen to Art Cashin below.

It is extremely difficult to time the market normally but with Bernanke using the printing presses of the Federal government, it is nearly impossible to predict the stock market moves. This is not good for the long run because when there is a disconnect from reality, there will be an unforeseen negative impact to our country, which will be much larger than any stock market drop would cause, That is where we're headed and there appears no way to prevent it. As a close friend of mine has stated to me many times, "We are all finished!" I would add that we are not now built on the Free Enterprise System, but rather a manipulated, controlled government which protects the wealthiest of us and doesn't care at all about the Middle Class or worse, the Poor and no better than that.

It's the end of the 1st quarter at the close of the market today. But tomorrow we will hear the Unemployment Rate numbers which doesn't count all of our unemployed. Most expect the number will "look" better. It's April Fool's Day too and if you believe the numbers the government discloses, then you too are a fool! We seem to be a gullible populace, aren't we. Just look at all the Birther's in the Republican Party. :))

Market outlook for October 29, 2009: Up

Ok, here's the big news of the week out fresh this morning. First there's the GDP number. GDP was up 3.5% for 3Q. Then there was the weekly Jobless Claims. Weekly Jobless Claims came in at a loss of 530,000, which was better than expected also. Continuing Claims came in down 147,000 jobs to 5.79 Million jobs. Overall the Dow Futures surged up on the news from being up 23 to 70 in pre-market.

This seems to suggest a bounce back up today in our markets. After the surge in pre-market, the Dow has backed off a bit to now being up 58. However, European markets, which were all down before our GDP numbers were announced, are now all in the positive, which confirms to me today will be up.

When looking at the Dow chart, as you can see above, we have been here before over the past 6 months.. The market rises, then pulls back a little when we expect a correction only to reverse again and go back up. We are at another of those inflection points now. We may go back up again.

While the market may close up for the day, it will be important to watch Volume. Yesterday's Volume was stronger than Monday and so the drop was even more emphatic yesterday. If today the market is up but on lighter volume, then the move up will be less believable and I would use the day to buy some ETF Shorts. If the Volume is stronger today, I would Sell some of my ETF shares in my shorts positions.

On a final not this morning, the well respected Art Cashin this morning on CNBC said that the markets came within a hair to a complete meltdown yesterday because of the U.S. dollar rising yesterday. He believes if the U.S. Dollar can stay calm, we could be OK, but if it starts to rally up like it did yesterday, the entire house of cards can collapse and investors will be selling all asset classes, including equities, in total abandonment.

Oct. 20 Market outlook: Skeptical!

A moment ago CNBC interviewed Art Cashin of UBS Warburg. When Mark Haines asked Art where he was in his market outlook, Art replied "skeptical". Well I am too as we have not had the breakout above the downtrend line and the wedge gets narrower and narrower. We can continue in this tight range for at least a week or two but a breakout is inevitable to either the upside or the downside. I am with Art here. I believe if it looks to good to be true to move more to the upside, it probably is.

Market outlook and commentary July 8th and beyond

Today's close marked the lowest closing price for the Dow and S%P 500 for 2 months and it is clear that the Indexes are going lower, as today's volume spiked for the previous day. The drop continues to hug the downtrend line of the 2 year chart of the Dow which I posted back on June 25th. The Dow closed down 160 points today to 8,163 while the S&P 500 closed at 881.The Put to Call ratio closed today at 1.01 after hitting an intraday spike to 1.14 at the first half hour of trading. This represents 3 of the past 6 days where this Index was over 1.00 and it has happened every other day. If it continues in this short pattern, tomorrow would see it back off to about 0.81-0.88. The market could still drop some but I believe this continual decline will happen slowly, rather than precipitously. The Dow is now at the 8100 level and the S&P 500 has gone as low as 878 today. Remember Art Cashin said on CNBC earlier that 877 is a key support level and if we go below it we are headed down to 840 or 800 on the S&P.

My ETF Ultra Short, symbol TZA has now risen to $25.63/share and continues to rise slowly. Those who bought this as low as $20/share are now up 25%. Tomorrow these ETF's will all have a reverse split which should not affect the total value you have invested but the share price will be significantly higher with a 10 to 1 reverse split on some and 20 to 1 on others.

Not much talk of Green Shoots lately and rather, the conversation has now moved to focus on not just earnings reports but more exactly future estimates by these companies. If they set the bars lower, it will confirm that recovery does not look like it will happen as thought just a few months ago. This can and should cast a more negative tone to the market for the next few months. Adding to the conversation and discussion is the fact that VP Biden and Laura Tyson have independently said they might consider a second stimulus. That too will add to the negative tone.. Again, I remind you to preserve capital so that a few months from now all the gains you made the past 3 months aren't all wiped out. If your portfolio has gained back 25-40%, as some have, it is not a sin to take the profit and sit on cash, waiting again to buy back near the lows in the 7,000's on the Dow or lower.

Market outlook for June 25, 2009

Well, the markets are headed lower again today. Several news items contributing to this. First Weekly Jobless Claims were up 15,000 to 627,000. The significance of this was that most expected a decrease in the number of claims and for the overall number to dip below 600,000. Secondly, Continuing Claims also rose an unexpected 29,000 to a total of 6.74 Million jobs.

El Erian, Co CEO of Pimco said this morning that he agreed with Warren Buffet, he was not seeing Green Shoots. He also said "it is too early to relax and it is pretty tricky out there right now."

Art Cashin on CNBC said this morning it looked like we are almost confirming a Dow Theory Sell signal and he expected several corrections each going lower over the next few months.

It looks like finally many are coming around to what I have been saying for over 2 months now. After the close yesterday on CNBC, a man from Lowry Research said we have had two Mondays where 90% of the trade for the day were all on the sell side. He said he expected us to return to the lows of 6,440 and may go below it. He based his reasoning on the fact that Volume has ben light on the rally up compared to the volume coming down to the lows in March and that not many bought into the rally as there is much cash on the sidelines. Most of these viewpoints I have posted here and is why I told many to stay with their ETF Ultra shorts, TZA and SDS and others they had and to buy more and average down the purchase price. It is why I said to sell Apple a week ago when it was near $140 and take the profits. We are headed lower and lower for a while now. Don't get sucked back in on a correction because while the market will go up some days, we are headed for a staircase pattern down for while to come.

Time to sit back and wait now to see when we go significantly lower and how much. But the signs are clearly negative now for the markets. It is not too late to buy some of these ETF Ultra shorts like DXD, SDS, TZA and others as the prices have been low for a while. TZA, for example is now about $25-$26/share but was $20/share recently.

Don't forget if you have not voted this month on my Mini poll to do so. It is on the right margin. Thanks!

UPDATE 9:10am PST

Well the market has thrown the analysts a curve ball, as the market now is up with the Dow up 150 points. Will it hold today? I have no clue!

Pre market outlook for May 19, 2009: Cautious

The big news this morning was Housing Starts for April coming in at record lows and new Building Permits as well. The Futures were all showing today was going to be an up day until this news came out. Also, Home Depot beat analysts expectations on their earnings reported for the quarter, but they got there by closing stores, laying off people and cutting other costs. You can't cut your way to growth. You either have it or you don't. Revenues for Home Depot were down 10% and that is the real story in my view.

I was asked by a friend where the market was going as it has been still pointing to a continued uptrend as yesterday's market action was green in all Indexes. I said to my friend this was true but Volume was pathetic. Art Cashin on CNBC this morning also commented on this. He said that people he talks to are very divided on the direction of the market. He said about half believe this is going to continue while the other half believe not only are we going lower but they believe we will test the previous lows of 6,400 but may go lower.

I continue to use the 200 Day Moving Average as my major indicator right now as we are still below it on the Dow and S&P 500, but not on the Nasdaq. The Dow 200 day Moving average line crosses the axis now at 8,900. On the S&P 500, it crosses the axis at 942. The Nasdaq is slightly above its 200 day Moving average which crosses the axis at 1,725. We had closed yesterday at 1732. Watch this index pull back today or the next day or so and will be the clue that we will not go above the 200 day Moving Averages any time soon and it means we are closer to a pullback and correction!

One last thing Art Cashin said this morning and has been going on in my thoughts as well but hadn't heard it put that way of clarity until now. He said, There are a lot of cross currents going on right now and something, in essence, seems fishy. I have felt this too.

The market feels like it is being heavily manipulated to show an uptrend, as Volume is low. The only reason I can think of why this is going on is to try to build confidence by the public in the markets again. If this is what is going on, they should stop it as no one believes this stuff and it feels like a setup to get others to invest their remaining cash so someone can take it away again. Many of us don't believe this market rally is nothing more than a Bear market rally. There really isn't any good news out there yet.

The Put to Call ratio stays in a tight low range and closed yesterday at 0.78 while the VIX Index at 30.24 by days end. And not unrelated, Tim Geithner warned us yesterday of higher unemployment to come and more bad days ahead. As long as people are fearful of losing their jobs there will not be a recovery.

Market Update: ETF Ultra Pro shares SSO and TNA

I wanted to update my readers on my two recommended ETF Ultra Pro shares, SSO and TNA. Both are now up and profitable at this moment. SSO in pre-market is up to $23.93 and that would be 11% gain since I purchased the shares on January 21st. TNA in pre-market is up to $26.67 for a 14% gain since my purchase. I do not plan to sell at this times as it appears the markets are preparing for a rise.

At the end of last week I thought we were heading lower and said so in my post. It appears, even with the really bad news of layoffs on Monday, that the market was able to hold here. When I look at the charts for the Dow, S&P500 and the Nasdaq, these indexes held a very tight range and weathered the bad news better than certainly I had expected. This has set up a possible significant rally which many, including Art Cashin of UBS, have said on CNBC is possible from here. By holding both TNA and SSO you should benefit a more significant gain that what already has materialized.

A quick, cheap investment right now could be Ford Motor company, symbol F. The current price of Ford is $2.03/share. This stock could easily gain 10-15% and more on any significant market move. There has been 12 consecutive days of Distribution of Ford shares and we are due for a change.

Also, Apple, Inc., symbol AAPL, is up to $92.70 in pre-market and as you know I recommended these shares back on January 7th at $86.50/share and again after the Steve Jobs health scare at $78/share. If you bought the shares when I first did at $86.50, you have made a paper gain of 7% and if you purchased shares at $78/share you are almost 19% on paper. I will stay with this stock and will not sell these shares.

UPDATE: 7:30am PST

It looks as though there is a reason for the market's optimism. It is because there are stories out that the Obama Administration is considering taking the troubled assets off the books of the Banks and have "Good banks" and "Bad banks". This rumor has spurred the market rise and indicates Wall Streets approval of the idea. Additionally today it is expected that President Obama's much heralded Stimulus package will win House approval today. This all making for 4 days in a row of an up market.

The most dangerous times for our fragile economy: The next 60 days!

This has been the most vulnerable period of this market crash and financial institution conundrum these past 2 months, but we are about to enter its most critical and dangerous period. That time is bounded by Congress going home on recess and doesn't reconvene until the next Congress reconvenes and the January 20th Inauguration of President Obama. The country has lost total confidence in Bush and Cheney and now Hank Paulson, just as we did with Katrina's "Brownie". This is the time of year we are to give thanks for our blessings and the only thing I can think we collectively are thankful for is that Bush et al will be finally gone!

God help this country in the interim. The Congress needs to make their recess short and get back to work soon after, as it is all about confidence right now and we are facing a collapse of GM and possibly their suppliers. This could precipitate the other 2 U.S. Auto makers having exaggerated problems and more layoffs. The unemployment figures today didn't help pushing the unemployed now to over 4 Million people, not including their families.

Art Cashin of USB Warburg was on CNBC this morning and said we need to hold the intraday low of 7,882 today with a meaningful bounce up off it. That is still over 100 points from the close yesterday. As I have said since September, the low for this market is around 7,200-7,300 on the Dow. There is a 20-year uptrend line that crosses at about the 7,200 level that if broken we all should pray, as we then would be headed down into the abyss. Let's hope this does not happen. Sorry for the gloom but that's where things really are. Cash is King!

Art Cashin called yesterday Capitulation! But is it?

Art Cashin of UBS and a guest on CNBC said that yesterday's action was as close to Capitulation as it gets and he thought the bottom has been put in. Share volume was about 2 Billion shares yesterday which gave Cashin his confidence level. I am not as sure, as he is, that the bottom has been put in. I still believe we are headed to a Dow of 7,300. Even with yesterday's huge rally, we closed below the 20 day Moving Average on the Dow.

If Art is correct that the bottom is in, I think we are staying in this range between 7,990 and 9,700. That's a nice range to make some money if you are willing to get in. Play this range as it should last for a long time. Remember the wise investor is Buying when others are Selling, and Selling when others are Buying. If the market does go to the level of 7,300, I am confident it will hold and rally up a lot so be willing to buy anywhere near those levels.

UPDATE:6:15am PST
Art Hogan a frequent guest on CNBC also said we have retested the lows and we will be in a range of 8,000 to about 9500 for a while. He was the first to call the bottom back in October. So there you have it from 2 real good pros.