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Archive for December, 2009

I hope that everyone has a wonderful Christmas and Happy New Year – Thank you for reading my writings through the year!!

Next Post January 4, 2010

Bob Brooks

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There is an indicator for everything.  There is a prediction based on who wins the Super Bowl.  There is a prediction based on the length of skirts for a particular year.  The list goes on and on. 

The unusual nature of some of these indicators is their accuracy.  For instance, there is the January Barometer. Every negative January in the S&P 500 since 1950 without exception has preceded a new or extended bear market.  (Stock Market Almanac)

Then there are the first 5 days of January.  The stock market has finished positive 85.7% of the time when the first 5 trading days of January are positive in the S&P 500. (Stock Market Almanac)

Then there is the famed Santa Claus Rally.  The old saying goes, “If Santa Claus Should Fail to Call Bears May Come to Broad and Wall.”  The stock exchange is located on the corner of Broad and Wall Street. 

Failed Santa Claus Rallies have a tendency to precede bear markets.   Ironically, in 2008, the Santa Claus Rally was a positive one.  However, January was a negative month.  I think that both accurately predicted the future.  The year is obviously going to end on a solid note.  However, February and midway through March was horrific.    Thus that ended up being an extension of the bear market. 

I only write this for a little fun.  You don’t make decisions based upon these indicators.  However, you do make your decisions based upon risk factors.  Today, they are high. 

I don’t really want to get into predictions for the New Year.  I learned a long time ago that predicting is a tough game.  However, I will spell out in a few weeks what I see in 2010. 

Well, I am going to take off a few weeks and enjoy my family and some much needed time off.  So, this will be the last market outlook of the year.  I hope that you know how much I appreciate you listening to the radio show and/or reading my writings.  I hope that you and your family have a very Merry Christmas!!!

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Unemployment is mysteriously reporting only a loss of -11,000.  Poof, just like that we transition from 100,000 and 200,000 plus jobs losses each month to just 11,000 without even a transition.  The unemployment rate has come down from 10.2% to 10%.  So what do these numbers really tell us about the economy?

Really nothing…

The unemployment rate has fallen in November two-thirds of the time over the course of the last 15 years.  Most of it has to do with temporary hires for holiday shopping and nothing permanent.  Regarding the job loss reporting, can you really trust government agenda filled accounting?  If you look closer at the numbers you see a different picture.  It is about all of the other people not accounted for in the report. Clusterstock.com had this chart of the day which I think is telling.

The number of those unemployed for at least 27 weeks rose by 463,000 people to 5.9 million.

There were 861,000 in November who were considered discouraged workers.  These are workers who believe that there are no jobs available for them.  This was up over the prior year. 

People working part time for economic reasons stood at 9.2 million. 

If you look past the 10% unemployment number and look at a closer number of those unemployed in this country from the Department of Labor, the number stands at 17.2%.  Finally www.shadowstats.com has the unemployment problem in this country at 21.8%.

Then you have the number of jobs that the Government has estimated to have been created.

Thus far the Government estimates over the past three years that 2.875 million jobs have been created.  Out of that number 31% of those jobs came from the Leisure and Hospitality area – how much leisure and hospitality has been occurring in the last 3 years that requires all of those jobs?  If I were going to make up (did I just write that), I mean, estimate numbers I would add them elsewhere to legitimize the process. 

I was talking with someone last night about the pain this country is going through.  The economic numbers just don’t reflect the reality of what is occurring.  The biggest concern is the result of all of this Government manipulation.  There are dangerous imbalances that exist.  Unfortunately, the band aid approach can only work for so wrong.   Imbalances will work themselves at some point.  For investors, it will be much like being in a capacity packed room and someone yells fire.  You will not be able to get out of the room fast enough.  Thus, if you are invested heavily in the stock market today, I would at least sit closer to the exit door or better yet consider calling it an early evening.

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December 7th Outlook

The stock market outlook for this week will be posted later this evening.  Please check back later.

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