A New Day

Every intervention into our life by this government creates a new and uncharted course.  Big government and an ever increasing debt load on our country.  The absolute arrogance of this government to think that they can tinker with the future of our country in this manner and that everything will be just fine.  In the good old days, you really couldn’t see through the charades.  Politics were played behind closed doors.  Today, they are going to rob you blind right in front of your face.

It is a joke to think that these politicians are going to take the numbers from the Congressional Budget Office as reality.  Once these numbers came out last week declaring that this healthcare reform bill will reduce the deficit, there was a swing in the NO votes to YES.  Something that you need to know is that these estimates are based on fairy tale assumptions and in no way reflect reality.  It is the ultimate insult to intelligence that these politicians will use the CBO numbers as validation for voting on this healthcare reform bill.  One politician referred to being “giddy” in reference to them. 

OK, I will refrain from ranting about this abduction of our future and address the ultimate question.  How will this affect the markets?  It is so tough to say.   We have never lived in a time where there is so much agenda attempting to control.  You really have to look at the price levels of the stock market, separate yourself from the news, and see how investors feel. 

We haven’t talked about price levels in a while.  Price levels are important to watch because they tell you how the market is reacting to risk.  So, the current price level on the S&P 500 to watch is 1150.  This is the line in the sand.  As long as the stock market stays above 1150, then that signifies that the markets are OK with our debt-laden world.  However, the inability for the S&P 500 to stay above that price level indicates problems on the horizon. 

Last week, the S&P 500 confidently climbed over that level.  This week will test that confidence level.  I have learned (the hard way) one simple fact.  You can read the news and look at the world around us and draw conclusions as to what should be happening in the stock market.  You can look at all of the debt accumulating and the debt that we have yet to take on (see healthcare reform) and come to the conclusion that this is not sustainable and not good for the stock market.  However, the market might or might agree with that conclusion today.  Tomorrow might be another story. However, today the markets are focusing on other things.

 So, we have reached the line in the sand, which is 1150 on the S&P 500, and will watch to see how the stock market reacts in this environment.  Today is a new day in America as we continue to go through uncharted waters.  It started a few years ago as the Government hijacked capitalism using the financial crisis as the ultimate excuse.  Today, this agenda filled Government has just taken one more huge step.  This continues to create enormous risk in the markets.  However, it will not matter until the moment that the markets wake up to reality.

Read Full Post »

Financial Crisis Alive and Well

Every Friday, all across the country, bankers hold their breath.  This is the day that the FDIC chooses to show up and take over banks that are on the verge of failure.  This past Friday, FDIC employees were especially busy when they showed up at 9 different banks.   The banks had combined assets of 19.4 billion dollars. 

On Sunday one of the largest bankruptcies in corporate history occurred.  CIT who lends money to hundreds of thousands small to medium business filed for bankruptcy protection.  This could have some pretty large ripple effects.

The problem is the lack of capital to those lenders and banks who focus on the small business owner.  The Obama and Bush Administrations failed miserably in taking care of  the heartbeat of America, the small business owner.   Take that capital they are dealing out like candy and give it to those banks that service the small business owner.  Further, if you want to solve the unemployment problem in this country, help the small and medium sized businesses.  Of course, that would be the promotion of capitalism which is something none of the politicians seem to understand.

The Obama Administration stated that they might infuse money to small banks if they will agree to lend to small businesses.  The Obama Administration needs to get a backbone.  If they are going to give money to the big banks,  put stipulations on the money and stop requesting what they want the banks to do in return of receiving the bail-out money.  They are dealing all of this money out to the big banks and at the same time wanting these big banks to stop abusing credit card customers and start lending it.   Here is an idea – STOP GIVING MONEY WITHOUT STIPULATIONS!!  Go ahead and give money to the small banks without stipulations and they still will not lend it out.  It is all about survival.

You got to love bank nationalization and the march to socialism.

Levels to Watch

Let’s take a look at the price levels on the S&P 500 because some damage was done last week.   We have broken through some pretty significant price levels.  However, the BIG ones are in front of us.  The range to watch on the S&P 500 is 989 to 918.  It will be interesting to see what happens around those levels.  Yes, this is a wide range.  However, it does give you a good range in which to monitor risk if you are heavily invested in stocks.   Remember, the question is always,  “Is the rise in the stock market from March a new bull market or just a bear market rally?”  The answer to that question is crucial to the future of your invested money.

Read Full Post »

Unprecedented Times Create Unprecedented Events

A recent article in the Dallas Morning News states that we just don’t have anything to worry about going forward regarding a “double dip” recession.  A double dip recession is one where you go through one recession, the recession concludes, and then it comes back again.  Of course, that would mean that the stock market would come tumbling down again as well.

September 14, 2009 edition

“I can now report that it’s time to lift up your melancholy spirits and go find something else to worry about.  Double-dip recessions are very rare events.”

“Since WWII, there are really no examples-except 1980-82….”

The writer also points out that, “you would think a 50% upside prance in the stock market would be met with some measure of confidence rather than such an undercurrent of distrust.”

The biggest mistake that the media is making in the reporting of this recession is comparing it to normal recessions and normal cycles.  The writer would need to go back further than 70 years to take a look at the full length of the Great Depression to get a better comparison. No, I don’t think that we are spiraling into a depression.  I do think that in the least a double dip recession is a high probability. 

People are distrustful regardless of the rise in the stock market.  There is rampant unemployment, a foreclosure crisis, and consumers faced with mountains of debt.  That is not even considering a Congress that is trying to ruin this country through socialistic policies. 

To get a good comparison, you can’t look at post WWII recessions.  It would be a lot like comparing apples to oranges.  This is what makes this situation so dangerous.  Yes, people are distrustful.  At the same time, people are also hopeful.  They are hopeful that the worst is behind us.  If that doesn’t turn out to be the case, confidence will be destroyed and that will be the biggest problem the markets and the economy face.  Today, at least confidence is on life support after a grueling 2008. 

Levels in the Market

I haven’t covered significant levels in the stock market in a long time.  (Click here for a description of what I mean by levels.) For the S&P 500, we are starting down a few key levels that are right in front of us.  It is a range of levels between 1042 and 1062.  The ability for the stock market to get above 1062 and stay there would be a very bullish event. 

Isn’t a rise of 55% in the stock market a bullish event in itself?  Only if the bear market is over.  Thus far, the levels necessary to declare the intermediate trend change from a bear to a bull have not occurred.  It would take the S&P 500 getting over and staying over the level of 1119 for that to occur.

Read Full Post »

Summer Time Blues

Well, I took the wrong time to take a vacation. A great deal of very important things occurred last week in the stock market and investors should be extremely cautious.  This morning I will take some time to get you caught up on what is occurring with price levels as well as what I believe to be a fundamental shift in the stock market. The stock market has been in a stock market rally from the middle of March at least until June 11. Since June 11, the S&P 500 has declined -7 %.

One of the themes that I have written about since the low in the stock market in March is the overall future direction of the stock market. If you ask most people on Wall Street, they will say the worst is behind us and we have started a period of recovery. I have argued the opposite. I feel that we are in a long-term bear market that started in 2000 and could last as long as 18 to 20 years (based on history).  Concerning out current situation, my analysis would suggest we have been in a bear market rally. This is a period of time where the stock market stops declining and starts what looks like a period of prosperity and recovery for investors.

These are mean periods of time for investors because they fool the vast majority of people into believing that the worst is behind us. When you look at how far up the stock market went in a small amount of time, it certainly would appear that the worst is behind us. At the same time, it also looks just like a typical bear market rally and not the start of a period of recovery.

Since the March low in the stock market, the question has been how long and how far the stock market will go up. It is a little too early to declare that the stock market rally is over. However, the evidence is building. The problems are becoming much too loud to ignore. So, let’s start with the evidence. We always want to look at price levels of the stock market. Price levels are determined by where the stock market closes at the end of each day. They can tell us a great deal about the level of risk that we are facing.

If we manage to stay above certain price levels, then stock market investors should feel comfortable with taking risk by investing in stocks. However, if the market closes below certain price levels, then the probability increases that stock investors will lose substantial amounts of money. On June 11th, the S&P 500 reached its highest price level since the March low. That closing price level for June 11th was 944 on the S&P 500.

As of last Friday, we were at a price level of 879. The price level of 878 is the first level of risk for the stock market. Last week the S&P 500 fell below that level but has not closed below that level. Remember that the closing level is the most important one to watch. Once that level is broken, the next danger zone lies between 814 and 779. If you are heavily invested in stock, you do not want to see the S&P 500 fall below 779. In that event, I would think that the next price level down could be as low as 719 all the way down to 666.

The price level of 666 is extremely important because that was the March low of the stock market. In the event that would happen, that would be a considerable low and loss to stock market investors. For now, let’s not get ahead of ourselves. Keep in mind that investing in stocks is all about monitoring your risk. One of the best ways to do so is by monitoring price levels.

Read Full Post »

Corporate Insiders Are Very Bearish

Forget about what the Government, Wall Street, or the economists say about the probabilities for the stock market and the economy.  Instead, look at what the people in the day to day trenches are doing with their money.  A key indicator is the actions of the corporate insiders and whether they are buying or selling their company stock.  Think about it for a moment.  If the corporate insiders, the individuals who are seeing the actual numbers and projections for the future, are selling their company stock, then there is obviously something that concerns them. 

According to Wall Street, this is intended to be the buying opportunity of a lifetime.  If so, then why would you sell?  Let’s take a look at the latest statistics that show whether corporate insiders are positive or negative about the future.

In the last few weeks, corporate insiders sold over $335 million in stock versus the buying of only $12 million  (www.financialarmageddon.com).  This begs another question. Is it more concerning that insiders are selling or that insiders are just not buying?

The reality is that the economy is not in good shape and the fundamentals do not suggest that we are remotely close to being out of the woods.  Let’s take a look at a few other variables.

Unemployment

I wrote last Friday about the huge discrepancy in the unemployment report that the Government gives and the unemployment problem that is really facing America.  However, the numbers get even more distorted when you consider other variables.  The temporary workers distort those numbers.  This is the classification of workers who are jumping from temp job to temp job just to make ends meet.  They will count as employed.  The latest shadowstats.com repoprt shows the unemployment number around 20.5%.  That is a far cry from the reported 9.4% unemployment and suggests that a huge headwind faces this economy.

Interest rates

The Government is going to have a tough time getting this economy jump-started if interest rates continue to increase.  This is going to be a key risk factor for the stock market.  This week the Government will be holding another significant bond auction in order to raise money to fund our enormous spending appetite and deficits.  Buyers are demanding higher rates of interest for the bonds thus increasing the interest rates of the government bond markets.  Interest rates were up again last week.  Of course, this affects the interest rates of the consumer markets.  The last thing that a debt crisis needs is rising interest rates.

Price Levels

Let’s not forget the price levels that we watch to determine if the market is making headway and still a good investment or if the risk level has become too high.  The price level of 943 is a huge price level that the S&P 500 has had a tough time getting over.  The longer that the S&P 500 stays below that price level, the larger the chance that the bear market declines will return.  Thus far, this has been a real challenge for the market.

Read Full Post »

A Quick Update and Look at Price Levels

As we have talked many times in the past, one of the most important pieces of evidence that you can look at is price levels.  As a review, price levels act as road markers on the journey of investing.  They tell you if you are on track versus going the wrong way.  The price levels were telling investors back in December 2007 that if they were invested in the stock market they were heading the wrong way.  As a result (admittedly looking back), those road markers were very accurate in giving out a warning.

Price levels are nothing more than the price of the S&P 500 at the end of each market day.  Yesterday, when the stock market closed for trading during the day, the ending price level was 942.  So, if you are following the road markers and on the right track, then your investment accounts should be doing pretty good.  The opposite is true. If followed, these road markers can tell you when it makes sense to get off of the investment road completely.

Well, we have traveled up to a very important road marker. It is a huge direction changer.  If this road marker is successfully passed and if this road marker stays behind us, then being equity invested will still make sense.  In the event that we cannot pass up this road marker for good and stay under it, there is a good chance we would then be going in the wrong direction.  That road marker first starts with the S&P 500 closing and staying above the price level of 943.82. 

What happens here will speak volumes about what we are up against.  I will be posting more this week as this is something that warrants attention.

Read Full Post »

A Few Thoughts on a Monday

Since we changed the daily stock market outlook to a stock market alert format, there really hasn’t been much to “alert” you about concerning the markets.  So, I thought I would just start off this Monday with a quick update.  This should be a relatively quiet week with very little breaking economic reports being released.  Since May 8, the S&P 500 has dropped about 50 points.  From the standpoint of what the S&P 500 has been doing over the past 9 weeks, that really wasn’t that big of a deal.  I want to circle back around to the one question that every investor should have in the forefront of their minds.

Is this the start of a new bull market or just a bear market rally that precedes another bear market route?   The answer to that question would determine every decision you make concerning your investments.  The best way to start answering that question is by looking at price levels.  If you are new to this market commentary, price levels are very easy to understand.  First, I always focus just on the S&P 500 and we always look at what price level the S&P 500 closes at each market day.  The S&P 500 closed on Friday at a price level of 882. 

Price levels are road markers that tell us where we are on the journey of investing.  If we successfully pass the right price levels, then we know we are on our way to our destination.  However, if we start passing road markers or price levels going backwards (losing money), we need to assess if we are lost and off of the correct road.  So, we look at the price levels that represent caution, a positive outlook for our journey, or a negative outlook. If our road markers are showing that we are on a good road, then we stay the course.  If the road markers (price levels) are starting to show yellow signs or caution, then that means we might need to change the course of our journey.  We do that simply by changing our investments.  If the road markers or price levels show we are lost, we want to change directions.

So, the road marker or price level that would warrant caution for investors is anything below 875.  Last week, the decline did not go that far.  A positive for the stock market would be anything over the price level of 950.  So, let’s see where a week of mild economic reports takes us.

Read Full Post »

Still Looks alot Like 1929

First, a little housekeeping is needed.  My ambitious plans yesterday were to invest a lot of time in the educational basis of this blog in order for you to get the full maximum benefit.  I might have spoken too soon.  The good news is that we are launching my first book Deceptive Money next week.  The bad news is that this is going to tie up all of my writing time this week.  So I do solemnly promise to get this done over the next week.  I think that you will like it.  Until then, let’s keep our eyes on what is happening in the markets.

The momentum from the best 4 weeks in the stock market since 1933 seems to be on hold.  Earnings season has started off quite horrific.  Probably a little worse than investors would have thought.

So we are still watching price levels of the S&P 500.  There isn’t much to add to what I have written last week.  Those price levels between 800 and 825 are still extremely important and it seems like the S&P 500 continues to come back down to those levels. 

I did want to share something with you that is quite spooky.  I wrote the other day that after 17 months of this bear market that the overall loss was greater than the loss of the 1929 bear market after 17 months.  Keep in mind that bear market lost -86% before it was all over.  If you place the 2007 bear market on top of the 1929 bear market, you will see they are following the same pattern. 

comparison

The link to the chart was from http://www.dickreuter.com/.  Go check out the site – it is great information.  You can see that this 2007 bear market is following in the steps of the 1929 bear market closely.  If that pattern continues, look out below.  There are still many signs that point to tremendous risk ahead.  Approach cautiously!

Read Full Post »

Brief Post

This is just one of those days that is not allowing me much time to write.  So I will just add a few comments.  The month of March ended on a strong note yesterday. However, the first quarter was not so hot.  The S&P 500 was down -11.7% for the quarter and of course year to date return for 2009.  That was the 6th consecutive negative quarter.  I thought that I read somewhere yesterday that the past 6 months was the worst percentage decline on record. 

I have written about the significance of the 800 price level on the S&P 500.  Yesterday, the market really was having a strong day and reached as high as 810 before finishing the day below 800.  Today, the market started off very negative and is now over 800 again.  I think that the remaining 3 days will say volumes about how April is going to look.  From the bullish (positive) standpoint, the S&P 500 will need to stay above 800 and start a rally up towards and over 825.  However, a show of continued weakness and the inability to stay over 800 could mean a decline back down to that 741 price level. 

Let’s wait and get more data.  Remember, we are looking at all of the clues and trying to determine whether it makes sense to trust the stock market rally that started in March.  If it is the real deal, then there will be some profit to be made by investors.  However, if it is a repeat of the past 18 months, it could get ugly again.  Keep in mind that confidence is still very frail right now.

Read Full Post »

Question about Price Levels

This is not to be taken as advice.  This is a discussion on price levels and for educational purposes only.  There is no sure fire way to manage risk.  It is a process.

Bob,
You’ve given us 3 price levels to watch. What should an investor’s reaction be with their portfolios given this information? Perhaps you can give a few examples?

This is a great question. I appreciate all of the questions that I have received both through e-mail and on the blog.  This is how we can learn this information together as a community. 

I want to add another layer to the discussion of price levels.  Let’s think short-term, medium-term, and long-term.  In other words, what direction is the market going in these three time periods?  Is it going up, down, or is it just moving sideways? 

Always think of the direction of the market as the direction of the value of your account. For the past 17 months, most investors’ accounts have been moving down with the long-term direction of the market.

I am only going to answer this from the standpoint of when you increase stock exposure through a stock index fund or ETF and when you decrease it.   If you are fully invested in the stock market and the stock market continues to stay above the 800 to 825 price levels, then you watch carefully.  Remember, we are looking for the market to go above 825 for things to start looking positive in the short-term. 

If the stock market were to get above the price level of 825 and stay there, then you might start to either increase your exposure (gradually) to the stock market or simply maintain what you have already invested.  As we see this morning, the stock market is already back below the 825 price level on the S&P 500.  Thus, yesterday’s close at the end of the day above 825 was not yet the positive sign that we are looking for.  

If the stock market falls below the price level of 800, that is a warning and, given the nature of the environment, might be a signal to you that it makes sense to reduce the exposure (sell) to your stock investment.  If the stock market continues to fall and goes down to 741 and closes below that level, you are taking extreme risk.  Remember the next price level down is between 575 and 600. 

It is in the short-term that investing is the trickiest.  If the market is really going to go up in value over maybe the next few months, you would want to participate and stay invested.   However, we are still in a dangerous environment, making the risk level even greater.  It truly is high risk for high reward. 

Now, for most investors, you want to look at the medium-term time period.  When the market starts to look positive in the medium-term, the risk level for investing in stocks starts to really diminish.  What would I call the medium-term?  In my opinion, the S&P 500 would have to get all the way back up to between 1200 and 1300 for the medium-term period to look good. 

The ideal time to be fully invested in stocks is when the short-term, medium-term, and the long-term are all positive.  Right now, the short-term is slightly positive, and the medium-term and long-term are both negative.

I know that this gets confusing.  However, you have to remember the objective right now.  As an investor, you always want to know what the risk and reward looks like for stocks.  The overriding principle is that you don’t want to be taking a ton of risk if there is a big possibility of you losing a lot of money.

 

Read Full Post »

Using This Resource

After reading, please offer your comments!

Of everything that I am writing right now, this blog might be the most important.  At the same time, it is the most difficult project that I take on.  The challenge is trying to write this information where it is relevent and understandable.  To further the challenge, I need to spend a lot of time building this site to include side information that you can reference.  The bottom line is that you can be a much more successful investor when you can understand risk and how to invest for it.  My goal is to teach that to you.  So, please stick with this resource as I work to build it.

Let me give you a practical example of what I am talking about when referencing risk.  Traffic signs are placed in the streets to keep us safe.  They tell us what speed we should be driving based on the conditions.  Obviously, we all want to drive as fast as possible to get to our destination quickly.  However, it might not make sense to do so.  There might be an increasing amount of risk involved with higher speeds. 

The goal is to get to our destination without crashing our cars or getting a ticket.

Sometimes the road is clear, we are on the highway, and we can drive the faster speed limits.  Sometime we have to drive much slower on those roads because of the weather.  It is dangerous to even drive the speed limit when the roads are slick. 

While pumping gas one day, I was watching people on the tollroad driving faster than usual in rainy and almost icy conditions.  Next to me was a State Trooper.  I asked him, “Why do people drive so fast when the weather is so bad?”  He said, “People think that they can drive the speed limit regardless of the driving conditions simply because the speed limit is allowable by law.  However, that is the speed limit for normal driving conditions and does not apply when the risk is elevated because of the weather.”

There there are times when we come across road construction.  When faced with road construction, we have a decision.  Do we detour and take another route or do we stay on the road?  Which is going to be faster?  If you take the detour, it might end up being a diseaster.  It might be that what you interpreted as bad road construction and delays was nothing more than a 2 or 3 minute inconvenience.  However, it might be that it wasn’t road construction but a major road construction shutting down the road for hours.

You are always making decisions and there is a risk that you will be wrong with every decision that you make.  The same applies to investing.  For most of us, the goal is to get to our investing destination as fast as possible.  We want to avoid the loss of time.  There is a real balance between risk and how we invest.

Sometimes the road is clear and the weather is fine.  If that is the case, you have smooth sailing ahead and can confidently take stock market risk.  Sometimes the economic weather turns bad and forces you to slow down or reduce the amount of risk that you are taking.  Remember you reduce risk in your investments by reducing the amount that you have invested in stocks.

Sometimes it just pays to be cautious because of the driving conditions.  Sometimes you see road hazards like the building real estate bubble and have to decide whether this is going to be a real problem (get out of the market) or stay on the road (stay invested).

I want to teach you how to read the traffic signs of investing by teaching you how to understand price levels in the stock market.  If you can at least understand price levels, you will be so much further ahead than the majority of investors. 

Let’s talk about yesterday.  The stock market is in the process of trying to figure out which direction it wants to go.  Part of the day the market went up and part of the day it went down.  At the end, the market finished with a nice day.  So the price levels we have talked about still stand.

The price level that the S&P 500 finishes the day at is what we are watching.  Anything about 825 is positive.  Anything below 800 is neutral.  Anything below 741 is very bearish.

Read Full Post »

1929 or a Real Bad Recession?

I was debating current issues with a buddy of mine who manages a hedge fund.  Throughout all of last year, we had been in agreement on what ails this country and the problems that we face. Recently, my friend has taken a more bullish (positive) attitude. 

He pointed out that the latest economic news has been much more positive than expected. He went through some of the metrics he follows on individual companies stating that things aren’t as bad as they seem.  I could disagree with none of those statements.  Economic news will get better at times.  Bear markets or economic growth doesn’t fall in a straight line.  In other words, there are always periods of hope amongst the despair.

I summed up my feelings about it this way.  If we are in a real bad recession and that is the extent of it, then the worst might just be behind us.  We also might have seen the bottom of the bear market a few weeks ago.  However, if this is much worse than a recession and more along the lines of a depression, then gear up because the worst is ahead.

Depressions are highlighted by periods of very high unemployment and economic loss in excess of -10%.  No one can say for sure.  I just cannot see that any of the proposed solutions put in place do anything at all to really solve the unemployment problem as well as increase economic growth on a grand scale.  Then you still have these massive levels of debt to deal with.

So, if this is a real bad recession, then we should go forward without major setbacks.  Any major setbacks would suggest that the worst is still ahead of us.

Yesterday’s stock market saw a modest decline in price levels.  I was telling someone this morning that a few years ago a -2% daily loss in the stock market would have been bad.  Today, it is just another normal market day. 

A decline yesterday made complete sense following such an enormous positive day in the S&P 500 on Monday. Now we are back to watching those price levels again.  Anything above 825 is positive.  Anything below 800 is neutral (neither positive nor negative).  Anything below 741 is very bearish.

Read Full Post »

The Illusion of the Solution

Just like that the market in one single day went right up into the zone of the price levels that we have been talking about over the past few weeks.  The S&P 500 finished yesterday’s market at the price level of 822 (between the 800 and 825 price level).

No doubt about it…yesterday’s rally was extremely strong.  Yes, I will have to admit that yesterday’s enormous rally added more credence that we are in the midst of a significant bear market rally that could be with us for more than just a few days.  At the same time, there are a few caveats.  If that is the case, it is probably more than half of the way completed as far as percentages go.  With the exception of a powerful bear market rally in 1929, most major bear market rallies go up between 25% and 30%.  This bear market rally has gone up roughly 21% thus far.

The market took off on the news that the Obama administration has the solution to the banking crisis.  The problem is that all of the Government-based solutions are more illusions than solutions.  There are so many problems with this solution that will just create unintended consequences.  All of the bad debts that banks hold didn’t just all of the sudden disappear with the announcement of this plan.

In order for this plan to work, the banks will still have to realize these losses, which is something that they have avoided thus far.  The Bush administration tried this approach last fall.  They didn’t go through with it because they couldn’t figure out the details.  It appears that we are not much further down the road from that initial attempt to solve the banking crisis last fall.

The worst part of this program is that taxpayers will ultimately get stuck with the bill once these mortgage backed securities lose their value.  One other item of note is that there are roughly 2 trillion dollars of these bad or toxic investments that the banking system owns.  This program only covers 1 trillion dollars of those bad investments. 

 

It looks like to me that the Obama administration is nationalizing the banking system without calling it nationalization. 

 

So what are the price levels to watch now?  Anything over 840 to 850 is stock market positive, anything below 800 would be a concern, and anything below the S&P 500 price level of 741 would be very bearish. 

 

Read Full Post »

Market Outlook Schedule

I am going to be out of the office Wednesday through Friday with my family for Spring Break.  I will be posting a pretty intense analysis on Monday of next week.  There is a chance I might post more information at some point during the week on some downtime so you might check back.

For the remainder of the week, this should get very interesting.  The S&P 500 is at some pretty signficant price levels right now.  If they can move above these price levels, the S&P 500 should definately be at the 800 to 825 level before you know it.  There is a good chance that could be the top of the bear market rally.   We  are already up 16% from LAST MONDAY.  This market is volatile.

So, you know the price levels.  Anything over the price level of 800 to 825 is positive.  Anything below the price level of 741 is negative.  Said another way, risk starts to reduce as the market closes above the price level of 825.  Risk starts to increase as it falls below 741.

The Federal Reserve Board Meeting is tomorrow.  There will nothing done with interest rates at zero.  However, the Fed statement will be important.    There is also another event taking place on Friday called “options expiration” that typically makes the week very volatile.  I will explain that at a later time.

Read Full Post »

Out of Gas

When the stock market gains as much ground as it did last week, it simply runs out of gas.  Just imagine if you ran a 5 minute mile, you would probably be tired and need to rest for a while.

The S&P 500 did give up 20 points from the high today down to the price level where it finished the day.

Now, as we have been discussing, I believe that we are in a bear market rally.  This is a good period within a bear market where the stock market goes up. With that being our premise, we always have to consider whether or not the rally is over.  At this point, it is too early to say.  However, many of my technical indicators would suggest that today’s high in the stock market may have marked the end of the bear market rally.

Ideally, the S&P 500 would have gone as high as 800.  However, it did stop going up at an interesting price level of 775.  So, there are two price levels on the S&P 500 to keep in mind.  First is the price level of 800.  It would be a big positive if the S&P 500 could manage to rise above that price level.  Second is the price level 0f 741.  Anything below that price level would be a huge negative.  In the event that we fall below that price level, the next big price level down is 666 for the S&P 500.  If we fall below that price level, we might be heading down toward the 575 to 600 level.

I believe that would offer a good buying opportunity for the short-term.

Also tomorrow is the Federal Reserve Board meeting.  This should be interesting since there really is nothing that can be done with interest rates.  The interest will lie in what the Federal Reserve says in their statement that they release to the public.

Read Full Post »