I'm just saying.......

I heard the President's speech to America tonight and I was wondering, or should I say, I'm just saying, If the 2 journalists were shot instead of being beheaded would we as a Country do what President Obama has committed us to do? I think not! Dead is dead and while it is a horrific way to end ones life, is it necessary to commit the United States to an unending continuing conflict in the Middle East again? You tell me!

Russia amasses troops on the border with Ukraine. What's Nato's response?

Much is being reported in the news about Russia amassing 20,000 troops on its border with Ukraine and Nato is speculating that Russia is preparing for an invasion of Ukraine.  Who knows the truth? I surely don't. But wouldn't it be great if Nato telegraphed what it was prepared to do to help Ukraine so that Russia and Putin would think twice about whether it was worth an invasion. I think so!

Helping those in Carlton County, WA affected by fires!

Over 100 homes lost. Raising money to go directly to the people of the Methow Valley currently experiencing devastating losses due to an extreme forest fire called the Carlton Complex, nearly 73 square miles.

This post is to help those affected by devastating fires in Washington State and Oregon. Many, many homes have been lost in both States. Many not directly affected want to help those in the areas. Here's a list of what things people need in a disaster using FEMA Guidelines, which was compiled by a group of Homeowners in a community of 70 homes in Marin County, CA. If you can get people these things right after a disaster they can survive for about 10 days on their own. Also you may help financially by going to this Link.

 IN THE EVENT OF A DISASTER 

You may learn of a disaster from a neighbor, a phone call, the news, or your local emergency alarm system. 

1. Stay calm and don’t panic. 

a) If an earthquake is in progress immediately move to a safe place in your home – in a hallway or doorway and away from windows and tell others in your home to do the same. 

b) After the earthquake turn off your gas on the outdoor meter ONLY IF YOU SMELL GAS. 

c) During an actual large-scale disaster, 911 will most likely not work. Use phones only if you have a life-threatening injury – keep lines and circuits open for emergency personnel. 

2. Get dressed and gather your family together. 

3. Turn on the news (if you do not have power use a battery operated or hand-crank radio

4. Gather your car keys, cell phone, cash and important documents. 

5. Move your emergency supplies to an easily accessible location in case of evacuation orders. 

6. If time allows, check on disabled neighbors or neighbors that live alone. 

7. Keep streets clear for emergency vehicles. 

8. Stay off the land-line telephones to leave phone circuits open for actual emergencies and local emergency personnel. Use cell phones only in an emergency. 

After Immediate Danger 

• Use flashlights. Do not light matches or turn on electrical switches in case of gas leak. 

• Sniff for gas leaks, starting at the water heater. If you smell gas or suspect a leak, turn off the main gas valve, open windows, and get everyone outside quickly. 

• Shut off water at main if any water leaks are visible or suspected – you will be able to turn your water back on without assistance, so it’s safe to do this as a precaution. 

• Clean up spilled medicines, bleaches, gasoline, and other flammable liquids immediately. 

• If you do not have any water leaks, fill up any bathtubs in your house in case of water shortage later. 

 If you have a vehicle and can leave the area by car, load all emergency supplies that will fit after ensuring your family has room in the vehicle. 

EVACUATION 

If notified by emergency personnel to evacuate, do so immediately! 

(If your neighborhood has not already been ordered to evacuate and you are not at home but your family is, try to get home to your family if it is possible and safe to do so.) 

1. Implement your Family Emergency Plan: 

2. Gather your household members. 

3. Get containers of emergency supplies and rations. 

5. Leave the area affected by the disaster. 

Returning Home After an Evacuation 

After a required evacuation, when you are permitted by authorities to return home, do the following: 

• Use flashlights. Do not light matches or turn on electrical switches in case of gas leak. 

• Sniff for gas leaks, starting at the water heater. If you smell gas or suspect a leak, turn off the main gas valve, open windows, and get everyone outside quickly. 

• Shut off water at main if any water leaks are visible or suspected – you will be able to turn your water back on without assistance, so it’s safe to do this as a precaution. 

• If you do not have any water leaks, fill up any bathtubs in your house in case of water shortage later. 

• Clean up spilled medicines, bleaches, gasoline, and other flammable liquids immediately. 

Emergency Supplies and Rations Suggestion List 

    Replace water every 6 months. 

   FOOD DRINKS (liquid or powdered) 

   Dried Fruit Canned protein drinks 

   Peanut Butter Survival drink mixes 

   Trail Mixes (raisins, nuts, seeds, dried fruit, chocolate chips) Gatorade 

   Dried meat (jerky) Water (1 gallon, per day, per person) 

   Granola Dried Milk 

   Freeze-Dried Foods 

   Canned foods (meat, vegetable, beans) 

   Instant Soups (Cup of Noodles, Cup of Soup, and instant mashed potatoes) 

   Nuts 

   Energy Bars 

   MRE’s (“Meals, Ready to Eat”) shelf life of up to 10 years if stored below 70°. No cooking or water required 

   EQUIPMENT 

   Tent (large enough for all members of your household) First-aid Kit ** (see box) 

   Stove and gas tanks Candles 

   Screwdriver, hammer, pliers and wrench Flares 

   Small shovel and broom Whistle 

   Work Gloves Gas Lantern 

   Large plastic tarp Duct tape 

   Hand-crank Portable Radio or Portable radio and batteries Matches 

   Hand-crank Flashlight or Flashlight and batteries Fire Extinguisher 

   UTENSILS & COOKING SUPPLIES 

   Large trash bags Large cooking pots (1 for boiling 1 for frying) 

   Metal cups with handles Reusable spoons, forks, knives 

   (1 for each household member) (plastic or metal) 

   Paper towels Metal camping plate 

   Dish soap (bio-degradable) (1 for each household member) 

   Oven mitt Towels 

   Plastic tub for washing dishes Manual can opener 

   (also use to store supplies) Chlorine bleach 

   Large knife and Heavy Duty Scissors Water purification tablets 

   Large Zip-lock bags 

   BEDDING, CLOTHING, TOILETRIES MISC. 

   Prescription Medications Important Papers** (see box below) 

   Sleeping Bag (for each family member) Cash 

   1 Set of Clothing (for each family member) Extra set of house and car keys 

   Hat (for each family member) Large black permanent markers 

   1 pair of boots or sturdy shoes for each family member Pens & Paper 

   Towels Playing cards 

   Liquid Soap (for body and hair) Travel size board games 

   Toothpaste & toothbrush List of relocation places & phone numbers 

   Feminine products 

   Toilet paper 

   PET SUPPLIES (if applicable) 

   Dry Food 

   Bowl 

   Leash 

   Medications (if used regularly) 

   Infant Supplies (if applicable) 

   Bottles Diapers 

   Formula Baby Food 

   Blanket Extra clothes 

**First aid kit: 

ace bandage, band aids, Neosporin, pain relievers, scissors, first aid tape and cotton, alcohol pads, large roll of wide gauze tape 

**Important Papers: 

Make copies of the following and put in a waterproof container: 

Birth certificate 

Passport 

Drivers License 

Social Security Card 

Will 

Deeds 

Insurance Information 

Banking Information 

Computer disks of important computer files 

Mini First-Aid Kit for Car and/or Office 

In a duffle bag or back pack, keep a kit with the following items in your car and office (if applicable) at all times: 

o Extra pair of boots or tennis shoes 

o Blanket 

o Hand-crank flash light OR flash light and batteries 

o Hand-crank portable radio OR portable radio and batteries 

o Flares 

o Rope 

o Duct Tape 

o Gloves 

o Goggles 

o Black permanent marker 

o Small pad of paper 

o Heavy duty scissors and/or swiss army type knife 

o Bottle of water 

o 9 high-calorie energy/granola bars 

o First Aid kit: 

Ace bandage 

Band aids 

Alcohol pads 

Sterile gauze 

First aid tape 

Alcohol pads 

Neosporin 

Pain relievers 

Facial expressions and the meeting called by Pope Francis with Peres and Abbas

There's a great photo posted on Yahoo about the meeting called by Pope Francis to Israel and the Palestinian leaders to pray for peace. I was just looking at each person's mouth and on the right you see President Peres with the corners of his mouth pointing up. Next the Pope and his mouth is exactly neutral. And finally President Abbas with his frown and corners of his mouth pointing down. What do you make of these facial features at this point in time in the struggle for peace?

A new adventure: The Institute of the Southwest

I have been busy far too long and needed to write something about a new adventure I have thrown myself into. For the past year I have been involved with an emerging organization, The Institute of the Southwest. This has been an exciting adventure for me as I see infinite possibilities to help leaders discover more about their leadership strengths and weaknesses through horse informed experiences. But rather attempting to describe what it's all about, I am posting a Link to its web site here. I strongly recommend you visit and learn about an ancient way of learning. I will get back at posting here soon, but trust me that you won't be disappointed visiting the Institute of the West site. Ciao for now!

What our enemies and friends are learning from the Gov't Shutdown

It's sad to see but this shutdown is going to show countries like Iran and North Korea how they will need to deal with our Country in a crisis. This Shutdown and Debt Ceiling crisis is not good for our President and the Congress as our enemies are going to learn a free lesson in dealing with us when our Countries have a major crisis like Iran acquiring a Nuclear Bomb. They get this knowledge without having to pay anything for the lesson. It's a damn shame and a sad day for America. Someone is going to need to be the adult in the room and it isn't going to be Speaker John Boehner. He is forcing the President's hand as the crisis of Syria did when he drew a red line regarding the use of Chemical Weapons and couldn't get the Congress to support him. What idiots the Tea Party Representatives are. They don't really care about our Country and they should fold their hands in this crisis. The Country needs to get rid of all these Tea party nuts and some consequences should also take effect with the dumb people who voted them in!

What is Iran's end game in negotiations with the US over its Nuclear program?

I have been reading and listening to media reports on the reasoning the Iranian government chose now to negotiate and change its stance on its Nuclear program. Many are suggesting that sanctions have worked and finally got Iran's attention. Some suggest it was President Obama's stance on Syrian Chemical weapons that did the trick. It sounds like they did it because we are strong. I totally disagree with that assessment. I think it is because we showed weakness in negotiating with Syria and with Congress. We were going to lose the vote in the Congress for approval for an attack on Syria. So what's up?

It is my view that in this perceived weakness of our President in his making a severe misstep with the Congress, it created an opening for Iran to rethink how to take advantage of this moment. You see it was Vladimir Putin who helped Obama save face. It wasn't because he likes President Obama, but rather because it was in his strategic interest to not allow these chemical weapons to be disbursed to enemies of Russia in Georgia and other Caucasus nations around Russia.

So what is the end game of Iran? The key to that answer is reviewing the exact language of the Iranian President, Hassan Rouhani's speech in his address to the UN this week. Here is a key excerpt from that speech:

"Iran's nuclear program - and for that matter, that of all other countries - must pursue exclusively peaceful purposes. I declare here, openly and unambiguously, that, notwithstanding the positions of others, this has been, and will always be, the objective of the Islamic Republic of Iran. Nuclear weapon and other weapons of mass destruction have no place in Iran's security and defense doctrine, and contradict our fundamental religious and ethical convictions. Our national interests make it imperative that we remove any and all reasonable concerns about Iran's peaceful nuclear program."

The key phrase for me in this speech was the underlined portion above. I believe that Iran's position will be to insure that they can show they will have no nuclear weapons, but will have nuclear energy for their energy needs. I believe in this negotiating process with the West they will want Israel to also disarm their Nuclear weapons and this will cause the West and the US huge problems as all arguments as to why Iran should not have Nuclear weapons are similar for Israel not to have them as well. A Nuclear weapon free Middle East is in all Countries interest. But I will tell you here that Israel will not even admit they have the weapons nor will they be willing to get rid of them! You can put that in the Bank!

The Iranians are a very smart, well educated people. Many here in the US are naive to believe that the Iranians are coming to the negotiating table out of weakness. Believe me, they believe they have an opening and an edge or they wouldn't be contemplating this move at this time! Buyer beware!

Republican women and your power to change America.

Today, July 1st, a lot of bad stuff happened in Ohio, Texas and North Carolina. The Republican controlled legislature decided to pass a number of anti abortion measures without discussion by the Democrats. The Republican State Legislatures have declared war on women. There is a solution to this problem I haven't seen published anywhere. Here it is! Women of Republican representatives of State legislatures need to deny sex to their husbands because the consequences of pregnancies is traumatic. Stand up and deny your husbands sex. You will feel very powerful!

Now I've gone and said it: It's NOT time for Gun Control, it's time for Gun elimination!!!

Yes, most everyone has a view on either stricter Gun Control laws or leaving Gun Control laws just as they are. It's that same fight over the 2nd Amendment to the US Constitution, "the right to bear arms". So it's time for me to venture in a comment on the matter but with a new twist.

I never owned a gun in my life. I did own a BB rifle, but almost never used it. I never missed having a gun, quite honestly because I don't believe in owning them. In all the talk about this issue in the wake of the tragic deaths of those 20 children in Connecticut yesterday, why aren't we seeing more people with the courage to say that we shouldn't be allowed to even own a Gun! Let's face the truth here, if people couldn't own guns or have access to guns, there wouldn't be these mass murders. Using a gun to kill someone is much easier than facing a person with a knife to kill them. So don't let me here the arguments that the mentally ill would use a knife instead. Sure they would use a knife, but would they be able to kill 20 kids before they were stopped. Let's get real about this issue. It's time for a US Supreme Court ruling as to whether the second amendment has applicability today.

In the days when it was passed, we had a militia. I'm fine to having the National Guard and other Military organizations having them for their job. But I do like Japan's views on Gun ownership. They believe no one should own a "gun or guns or a sword or swords" and then they make exceptions from that position. They have a very peaceful society and by God, I would like one here too. People are afraid of standing up to others in disputes because they are always afraid the person might have a Gun. Standing up for yourself doesn't mean using violence but having a discussion of your objections. But the NRA wants you to believe you must have a gun or allow anyone to have any kind no matter what.

We're not good at Conflict resolution skills as a society. We need to teach our children in school about Conflict Resolution, as a required course, and not just taught in one grade. What's a lesson for a 7 or 10 year old would be different for what you might teach a 15 or 16 year old. It's time for a new approach about this issue. It's time we don't assume the 2nd amendment has application to the 21st Century. We don't really need to hunt for game. Supermarkets provide all the food we need and they are abundant. Just look at how large our children and people have become over the past 2 centuries! Would our country be that much worse off if all guns were confiscated, just like Gold was for a while in this country? I don't think so. I know, we would never get every gun. I agree. But we might really reduce these mass murders! To me that would be worth the inconvenience! If those men and women out there have a real need to have a gun, then maybe we need to institute forced Military service for everyone. Then you can play with your guns where we may need them. And after you've not only had the chance to use a gun and maybe even killed someone, you might actually decide you don't really need one after all.

 Please leave a comment as I am interested in your viewpoint on this. Let's start the dialogue now!

Who will become President?

Seems like the big question will be answered very soon. The polls say it is a statistical dead heat. I hope not. We are so divided as a country right now that it seems incomprehensible that we could continue this way. Not since the North and South played out this madness, in the late 1800's, in what has been referred to as our Civil War, have we been so divided. And if you look at the divisions on a map of the U.S. between Mitt Romney and President Obama, you can see this data suggests we are fighting this war all over again. The fact that President Obama is said to have only 39% of the White vote, plays into this argument. One thing I will say in closing about this election. Whether we as the voters get the president we want or the President we don't want, we will get the President we deserve! We have a population where over 40% believe our President was not born in America, even though the evidence contradicts that reasoning. That same % believes the President to be a Muslim, while the clear evidence is that he is a Christian. This same group of people do not believe in the science of Evolution nor do they believe in Global Warming/Climate Change. We sure do need a better Educational system, as this is proof of it! God help us all or at least let's hope that survival of the fittest prevails!

Pre Presidential Election wisdom

I know I have been taking a sabbatical from posting on my Blog, but I found myself compelled to break my silence regarding the 2012 elections. With all the PAC money being poured into both Republican and Democratic efforts to gain your vote, you need to make their attempts a waste of their money. I can't think of anything better to show the voice of the American people than not only to be silent from now on until the November election, but to also turn a deaf ear to listening to and watching all those biased commercials. Take a stand for America and when an election commercial airs, change the channel, shut off the TV or go get some popcorn while muting your TV. I have my preference for President and my local officials running for office, so I don't need the time nor do I need to listen to any biased ads compelling me to change my mind. They all lie. Do yourself a big favor and tune out the blabber this coming election period. Stay focus on who you believe has the most interest in your issues and then vote accordingly in November. Let those flush with no other way to spend their cash than to try and buy your vote, through PAC commercials, throw their money down the drain. Go fishing, enjoy the summer and the wonderful outdoors, go to the Library for a nice book to read on a rainy day. Do anything but listen to the garbage they will try to influence you with. I'll be back again when the moment moves me. Enjoy SUMMER.

Taking a long needed break

I have been absent from Blogging the past month or two and have decided I need a break, since I have been at this for over 6 years. I am not going to be posting on a regular basis, but will post when something gets my attention and/or bothers me. For now let me say that I very much appreciate your visiting my site over all these years. This week I attained a milestone of 80,000 visitors since I started. Those visitors read some 130,000 page views. So again thanks. Don't forget to vote in the min-poll to the right as we are all concerned about the countries solution for its debt problem.

Political campaign for President and lack of "civility." UPDATE Feb. 18

Many in the media have said that the 2012 Presidential election campaign was shaping up to be a clash between the 99% and the 1% or Class warfare. While that surely seems to resonate with many of us who write Blogs, I would offer a more sinister look into the 2012 campaign. It looks to me like it is a reenactment of the Civil War. I would suggest to you that the plain hatred for this President and the insistence that he be a "one term President" is racially motivated and the reason why Newt Gingrich won South Carolina and why Mitt Romney won New Hampshire. To me if you peel back this onion, the presidential race seems to be about reliving the "Civil War" in the political arena. Look at the arguments on both sides of the issues. If you frame them through the prism of "Civil Rights", you can easily make the leap to that argument. That is why the "Birther" conspiracy took hold for so long. Being "civil" means being courteous or polite. And the sad truth is that there is nothing "Civil" about this election campaign season.

It is going to get much worse I fear, before this election campaign is over. Notice the language of Newt when he talks about President Obama being the "Food Stamp" president. Yes, there are many on Food Stamps today, but not just minorities are getting them. Mostly white Americans receive them today. But the racial undertones are there and the dog whistle call to the far Right gets the applause lines from the far Right. For one brief moment yesterday the Congress was able to put this war behind them and join in a tribute to Rep. Gabby Giffords of Arizona in her struggle to survive a gunshot wound to the head last year. She has given up her Congressional seat so she can focus on her rehabilitation. That's smart. A small glimpse of sanity in an otherwise anger filled political season.

UPDATE Feb. 18th
Last night on the show Real Time with Bill Maher, Bill closed his New Rules segment commenting on the disrespect of President Obama, in an affront to the first Black President that seems to be based on racism. I totally agree with his views and want to say here I really valued his persistent reference to how this President has been disrespected from the very beginning of his Presidency, unlike the treatment of any other President in history. Thanks Bill!

January 17, 2012 Dow analysis

I have been asked where do I stand since my last post, since I hadn't written anything for 10 days here. Well, the reason I haven't posted was because nothing has really changed for me to comment on. So what I have done is to put a 1 year chart up of the Dow and you can see we still have not broken above this line to have a breakout. We get closer but no real conviction. Here's the chart below:

If and when we do have a clearer picture of where we might be headed I will post something to that effect. But we could be in this never land for a while as Europe tries to straighten itself out from their Sovereign debt crisis. Greece is on the brink of succumbing to default any time now.

Where is the Dow heading?

Today we look at the Dow over a period of 2 to 5 years to get a sense where we are and what we must consider as we try and manage our investments. We are at a critical point where we are either going to have a breakout to the upside or we will have a breakdown to the down side as illustrated in the charts below. First let's look at the 2 year chart for looking at the current top of resistance. It is that highest blue horizontal line.
In the chart above, the bottom red line marks a short term support line. Breaking below this line doesn't mean we have a significant breakdown, but it does mean we need to be careful. In the 5 year chart below, you will see where the next real support line is and this one we must stay above or we may go down and retest the lows again.

Much going on this week in Europe and while we begin Earnings season with Alcoa reporting its earnings, Europe may take center stage over any news here.

Job creation ain't what it used to be!

With today's employment data release, I thought a trip down memory lane might be informative. My focus today is NAFTA, the North America Free Trade Act, and the Presidential run of Ross Perot in 1996. First, below is a chart posted by Chart of the Day which shows Non Farm Payroll job gains, by decade, from the 1940's. Here's the chart below:

What is significant from this chart is what has happened the past decade of the 2000's. Basically, no jobs were created. In fact jobs were lost during the Bush Presidency. Jobs have been created the past several years, but no where need the number required to sustain a good economy with low unemployment.



Now we bring in Ross Perot. If you remember when Ross Perot ran for President, he warned us all about NAFTA not being good for America. In fact, his famous quote from the Presidential campaign became, "If NAFTA passes you will hear a giant sucking sound of jobs leaving America. In 1994, NAFTA became law. I think Ross Perot has been proven to be correct after all!

2011 market investments and learnings from ETF instruments

2011 was the first year I was really invested in ETF's. I learned a lot about them but the lessons took too long to get. But there were major learnings. It is a well known fact that they were designed to be used for short periods of time and not to just buy and hold like traditional stocks. However that is easier said than acted upon, especially if you bought some and the market moved in the opposite direction you had expected.

Let me give you an example using the Russell 2000 index, symbol RUT, and comparing it versus the ETF's which represent the Index, TNA, the 3x Ultra Pro ETF and TZA, the -3x Short ETF. This means that on a given day where the Russell moves up 1%, TNA should move up about 3% while TZA should be down 3% on the same day. This is all well and good in practice of a given day, but if you do not sell on that given day and lock in your profit while looking for more the next day and possibly the next day after that, then you will be surprised at the cumulative effect that will have on your portfolio.

For 2011, the Russell 2000 has lost 5%. One would expect the following. TNA should be then down 15% and TZA should be up 15%, but that's not what really happens. Let's see what you would guess the numbers should be before I reveal them? Take a guess! Well the chart below is a chart of the Russell and TZA, which one would have thought would be up 15% for the year. Here's the chart:

Now let's look at what you would have expected for TNA versus what actually occurs. In the chart below I have the Russell plotted against TNA.

The 3rd chart is a plot of only TNA versus TZA for the 1 year period.

It took me a while to realize I needed to trade these ETF;s when I made any good profits and get over trying to get back to my average purchase price, but when I did I actually made some good moves thanks to the volatility of the market during the year. My best advice is don't buy and hold these or other ETF's for long periods of time or you will eventually lose your money. I suspect many others don't understand these ETF's and it has been a painful lesson to learn. I hope these charts make it very clear and that the smae mistake is not repeated in 2012.

So what time duration seems to correlate closely or to say it another way, how long should you keep these ETF's. Here is a chart below of only 3 months comparing the Russell, symbol RUT, to TNA. During the last 3 months, RUT gained 16% and one would expect that TNA should be up 3x that amount or 48%. Well in fact, TNA gained only 39% as is seen in this chart below. So you will lose even in short a time as 3 months. Here's the chart:

The next chart is of the RUT versus TZA for the same past 3 month time period. As you might expect with a 16% gain of RUT that it would create a loss of 48% of TZA. Well as you can see the loss was greater than 48%. The loss was in fact 52%.

In summary, even a 3 month time period will cost you bigger losses or less gains than you might have come to expect. The shorter the timeframe the better the correlation.

Kim Jong Il funeral celebration

North Korea to Celebrate Kim Jong Il at Funeral. The ceremony will likely mobilize hundreds of thousands of weeping participants in a display of national mourning that’s designed to portray broad public support for the regime, according to analysts.

Year End summary of German DAX Index

To complement the charts I posted yesterday, I thought I would add the German DAX index over a longer history than I had before. As you can see from the chart below, this Index also has a Head and Shoulder Pattern which dominates its 40 year history.

Now Head and Shoulder patterns do not mean that this market will necessarily drop from here, but here is the definition for that pattern from Investopedia:

"The head-and-shoulders pattern is one of the most popular and reliable chart patterns in technical analysis. And as one might imagine from the name, the pattern looks like a head with two shoulders.

Head and shoulders is a reversal pattern that, when formed, signals the security is likely to move against the previous trend. There are two versions of the head-and-shoulders pattern. The head-and-shoulders top is a signal that a security's price is set to fall, once the pattern is complete, and is usually formed at the peak of an upward trend. The second version, the head-and-shoulders bottom (also known as inverse head and shoulders), signals that a security's price is set to rise and usually forms during a downward trend.

Both of these head and shoulders have a similar construction in that there are four main parts to the head-and-shoulder chart pattern: two shoulders, a head and a neckline. The patterns are confirmed when the neckline is broken, after the formation of the second shoulder.

The head and shoulders are sets of peaks and troughs. The neckline is a level of support or resistance. The head and shoulders pattern is based on Dow Theory's peak-and-trough analysis. An upward trend, for example, is seen as a period of successive rising peaks and rising troughs. A downward trend, on the other hand, is a period of falling peaks and troughs. The head-and-shoulders pattern illustrates a weakening in a trend where there is deterioration in the peaks and troughs.

Head and Shoulders Top

Again, the head-and-shoulders top signals to chart users that a security's price is likely to make a downward move, especially after it breaks below the neckline of the pattern. Due to this pattern forming mostly at the peaks of upward trends, it is considered to be a trend-reversal pattern, as the security heads down after the pattern's completion.

This pattern has four main steps for it to complete itself and signal the reversal. The first step is the formation of the left shoulder, which is formed when the security reaches a new high and retraces to a new low. The second step is the formation of the head, which occurs when the security reaches a higher high, then retraces back near the low formed in the left shoulder. The third step is the formation of the right shoulder, which is formed with a high that is lower than the high formed in the head but is again followed by a retracement back to the low of the left shoulder. The pattern is complete once the price falls below the neckline, which is a support line formed at the level of the lows reached at each of the three retracements mentioned above."

I hope this lengthly definition helps you analyze the charts yourself. For additional information on chart patterns, I find the book "Technical Analysis Explained" quite useful

Year end summary of the Dow and stock market trends

This is my year end summary of the stock markets for the year and where I think what might occur in 2012. My first chart below is of thew Dow for the past 10 years on a monthly basis. As you can see below, for 2011 the Dow managed to stay between 11,000 and 12,800. Looking at the big drop in 2009, where we went all the way down to 7,000 on a monthly basis and 6440 as a low daily close.

It is interesting to notice the Volume chart for the Dow. We averaged about 600 Billion shares a month from 2002 to mid 2009. Since then we have had a significant drop to 380 Billion shares. So the rise from 7,000 was built on significantly less volume than the rise from 2002 to 2009, which was a Bull market rally. It looks to me that since 2009 we have been in a Bear Market rally, as the volume has been too low for a true Bull rally.

The key to watch on this Dow chart are the 2 red lines. We will need a breakout either to the upside or to the downside to determine longer term trends from this chart alone. However, looking at the Dow 25 year monthly chart, we get more clarity, as seen below.

I do still expect a drop below current levels during 2012. The Head and Shoulder patters or "W" pattern as I call it does point to lower lows going forward and limited upside potential.

Given the chart readings, the next thing to do is see if world events suggest a more optimistic or pessimistic view for 2012. We have a Presidential year election in November 2012 and we have had gridlock in the Congress in 2011. I don't see the gridlock easing and many issues including our own debt which must be dealt with as well as continually funding the government. The Unemployment scene isn't going to get much better because we have structural unemployment which will be around for a long time unless somehow we retrain workers in new skills to meet a more technological demand than typical blue collar workers have brought to the work environment. We also have the Supreme Court making a decision on President Obama's Health care bill legislation as to whether it is Constitutional or not.

Then we have the Sovereign Debt issues in Europe, the Arab Spring and new leadership in North Korea, a test of the government of Iraq to function without our military presence and then there is Iran's pursuit of Nuclear weapons. The Euro is in crisis and Russians are challenging Putin's grasp of the presidency there. And last but not least, we have all those who believe the world will end on Dec 21st 2012 because of the Mayan predictions.

Let's conclude with the fact that 2012 will have many volatility swings ands most likely testing the previous extremes of those swings. It is a year to be cautious with your financial assets. My belief is that we humans will do almost anything to avoid pain rather than to risk succeeding. Therefore, I believe it is wiser to be on that side of the investment strategy by being short from time to time. It is also wise to take profits sooner rather than being greedy and waiting for more profit before selling.

Good luck this coming year. Thanks for taking the time to visit my Blog. This new year marks 7 years of my blogging. I have had 79,000 visitors to my site in that period. Happy New Year!

Ever wonder why we promote the weirdest, zaniest candidates for President? The answer!

As we end 2011 and begin 2012, an election year for our President, have you ever wondered how this country ever elected someone like President George W. Bush or looked to Michelle Bachman, Herman Cain, Rick Perry or Newt Gingrich to be President. Have you ever wondered what's wrong with voters that they could be that stupid, or "tupid" as one of my best friends jokingly says? Well I found the answer to those questions right here. Play this video and you'll never wonder again why we pick who we pick for President and answer a whole bunch of questions about who we are as a people. Besides you will laugh too!


Now you know! Merry Christmas and Happy New Year to you and yours and let's all pray for a smarter electorate as well. For those who don't know what the word "electorate" means, you might consider staying home this Presidential election. Only kidding! :)