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Showing posts from June, 2013

Is this a Summer Sale or a Sinking Whale?

June 20 2013 -- Well I have been saying for some weeks, raise cash and get ready for a summer pull back. Well you got one starting now, but we don’t catch falling knives so let see where this goes, wait to buy -- but not today. Today the S&P 500 index dropped below the 50-day moving average. However, I am more concerned that the market rose up on low volume and now volume is picking up going down, that’s a bad sign. I had mentioned a few weeks ago that the world has “caught a cold” and that global markets are sinking. The US does get a large part of its GDP from exports, so that figures in to the mix. I mentioned that the current highs in the stock market are not rational based on only 2% US growth, so the US markets must be raising out of fear of investing in anything else. The Markets have been hitting new highs from “hits” of economic heroin from the federal reserve, in the form of 85 billion a month in bond buying. I also warned the fed would taper that bond buying and that w…

June 16 2013 Weekend Market Comment

June 16 2013 – In the past the saying “Sell in May and go away” did not mean there would be a sharp sell off like there was the prior three years. It just said that summer markets a slow and often end up flat overall. Many of the major players on Wall Street are at the summer cottage or pool side parties and the trading thins out. Markets on low volume often have a notable pull back followed by a summer rally then they enter the dangerous period from mid Sept to Mid October as big money mangers return. These fall months every few years are often where major sell offs happen. The effect is so pronounced that there are those who only play the markets from Halloween until May 1. We had a tiny pull back at the end of April, this year and we have the same pattern again. 
Lets look at our signs, first off the VIX is up as more uncertainty returns. VXX is an ETF that goes up as the VIX does.  I sold my VXX at a nice 20% profit this week as we passed 18 on the VIX. - Always by overconfidence…

June 8 2013 Weekend Market Comment

June 8 2013 – There was a small bounce back this week as the Non-Farm Payroll number shows better growth than expected. It is almost as if the market is beginning to accept that it will soon be facing a world without economic stimulus. The numbers were precisely what the market wanted; some improvement but not so much that taper talk would again dominate the discussion. Shares shot up.
This graph shows the daily price action on the equal weight S&P 500, and the blue line is the 50-day moving average, as you can see it bounced right off it. The only thing you might worry about now is that at 64 (about 1675 on the S&P500) you can see we will hit the dreaded double top, and a bigger summer sell off might yet be with us. (?)
Even former Federal Reserve Chairman Alan Greenspan chimed in, saying that the central bank should taper now, even if the economy isn't ready. He should know, his long running, late 1990's cheap money policies, helped fuel the 2008 crash. 
"Bond …

June 1 2013 Weekend Market Comment

June 1 2013 -- WOOSH Big Sell Off -- Well if you had a three-martini lunch on Friday and went home early, you got a rude surprise this weekend when you reviewed your portfolio. Unless of course you have been listening to me about not opening new positions, raising cash and playing safe. The Dow plunged over 200 points mostly in the final hours of trading. Even more bizarre is that the Toronto exchange should have been right there with it – it was only about half as bad.

It all began when the Wall Street Journal declared that the dreaded Hindenburg Omen had arrived. You can read about the indicator in the Wikipedia. In fact they had to stretch the numbers even to make that work.  I have seen these things before and all it really says is “hey we are overbought -- so volatility is up”, well duh, we know that. You can read in the second paragraph of "Buy Now?" where I had laid out lots of concerning overbought indicators before this blimp showed up. But the “now what” is the qu…

Golden Fleece

June 1 2013 -- A friend asking what I thought, sent me this graph showing a coming turnaround in gold. My answer was, “not much”. Anyone who reads my writings should know I see no future for Gold. 
Predicting future movement with charts is called technical analysis. I am schooled in it, and I learned chart interpretation from John Murphy and Art Hill -- the best in the business. I even display charts all the time in my blog. That said, any honest technician would tell you that charts are always “trumped” by fundamentals. For example the night before Sept 11 2001 you could draw all the charts you want, of course the next day once those plane hit, the stock market behaves completely differently - immediately.
The lines drawn on this chart above are called a fib retracements, and it is true that some magic number like “half way back” also called a 50% retracement, can create attractive buying opportunities. A nice line at the 38.2% magic number is coming up. It is logical that anything t…