This week Jerry reviews the major events of 2011 and gives his forecast for 2012. This one may surprise you! Find out more Next Week on Wall Street.
Click on this link to listen to this week's market comments: http://yourmoneytalks.podbean.com/2011/12/30/2011-review-%E2%80%93-2012-preview/
This week markets staged a powerful rally from its oversold condition on news that the US Federal Reserve Bank is willing to be the lender of last resort to the European community. All the details are not worked out, but for the time being any default is once again tabled at least until a later date. This opens the door for a yearend rally and many sectors are benefiting from this potential. Find out more Next Week on Wall Street.
Click on this link to listen to this week's market comments: http://yourmoneytalks.podbean.com/2011/12/02/winds-of-change/
The major market indices have broken decisively to the downside and support appears to be lower still. The reasons for the poor market performance are many. Stocks have been down six days in a row and 7 of the last 8 trading days. Is the worst over? Find out more Next Week on Wall Street.
Click on this link to listen to this week's market comments: http://yourmoneytalks.podbean.com/2011/11/23/markets-in-trouble/
This week the markets broke down from some constructive fundamental and technical patterns. The US economy is hanging in quite well but pressure from Europe and China could derail our best laid plans. Thanksgiving week is usually one of the best weeks of the year. After this week’s drop – a rally could be in store. The bigger question is what happens from now to the end of the year. Find out more “Next Week on Wall Street.”
Click on this link to listen to this week's market comments: http://yourmoneytalks.podbean.com/2011/11/18/rally-or-bust/
This week Jerry describes the incredible run the markets have had this month as well as some of the risks that still exist. We are moving in the right direction but have only made a three month full circle turn. Jerry closes with a discussion about risk and how investors should view risk as it relates to their own portfolio. Find out more Next Week on Wall Street.
Click on this link to listen to this week's market comments: http://yourmoneytalks.podbean.com/2011/10/28/moving-away-for-the-abyss/
This week Jerry discusses the results of the third quarter. He analyzes the winners and losers as well as outlines his views looking forward. Find out more “Next Week on Wall Street.”
Click on this link to listen to this week's market comments: http://yourmoneytalks.podbean.com/2011/09/30/tough-quarter/
The economic news is becoming more dismal every day. This morning’s jobs report showed that was no new jobs were created last month. Unemployment remained at 9.1% because they only count the people who are actively looking for work. When jobs are not being created many stop their search. All this just before the Labor Day Holiday – enjoy your weekend!
The overall data suggests that the economy is stalling. News from Europe is actually much worse than it is over here. Germany is slowing and Greece may be done with austerity as their leaders have had enough with their economy contracting over 5% this year.
The bond market is rallying and Pimco’s Bill Gross capitulated early this week stating that he should have owned more US Treasury Bonds. The Fed is doing battle internally as the recently released minutes of the last FOMC meeting demonstrated. Some voting members called for immediate action to restart the bond repurchase program (QE3), while others felt that even the promise to keep interest rates low until mid-2013 was too aggressive.
The fact that the first two rounds of quantitative easing did not help the "real" economy is beside the point. The Fed’s job is to protect the banking system and apparently the stock market. The Fed seems likely to use today’s weak jobs report as a reason to launch another round of easing. At least initially the bullish crowd will be happy.
The Fed appears to be running out of tools to battle today’s issues. Europe is a powder keg with potentially dangerous results coming from the mix of bad economic news and debt problems. Avoiding too much stock exposure, at least temporarily, is most likely a good idea. September and October have a history of being rather cruel to investors.
The prospects for more money printing operations coming from our Fed increases the chance for gold to continue its ascent to new all time highs. Many feel it is too late to join the gold bandwagon, but one look at the current economy and the Fed’s most likely response to it and investors have to ask – what is the Fed going to do? Nothing? Highly unlikely!
Helicopter Ben (as his nickname goes from an article he wrote years ago) has been and will remain true to his moniker. Dollar devaluation in an attempt to create inflation is his goal. Gold will likely continue to rise in such an environment.
The SPDR Gold Trust (GLD) is a good way to invest in today’s volatile environment. Fear begs for safety. Closing at $183.23 today GLD could cross $200 in short order. Use $165.75 as protection should things turn around for the economy.
Click on this link to listen to this week's market comments: http://yourmoneytalks.podbean.com/2011/09/02/no-jobs-for-labor-day/
Click on this link to listen to this week's market comments: http://yourmoneytalks.podbean.com/2011/07/29/rough-week-on-wall-street/
Fed Chair Ben Bernanke is pumping an enormous amount of liquidity into the money supply system. Since the Quantitative Easing Program ended at the end of June, Bernanke has come up with more creative methods of putting money into our economy. He is doing his part to keep the bubble from bursting.
Treasury Secretary Tim Geithner is rumored to want to retire soon. He is furiously making the rounds attempting to push Congress to act urgently before we run short on money in 11 days. This is his one and done moment. He only needs Congress to cooperate.
The markets are not panicked. Stocks are flirting with recovery highs and the bond market is stable. Treasuries are not acting like interest rates are about to go up sharply.
Technically, stocks are at resistance and are poised to break higher should the House, Senate, and the President all agree on a comprise in time. Corporate earnings and even some of the recent economic releases have been quite positive. The trouble is other issues have been dominating center stage.
Europe may finally move out of the forefront with their Greek solution and the tempering of the problems facing other Euro zone nations. If only our leaders could agree that more immediate debt is a good solution, then we too could push our troubles off to sometime in the future.
Markets would most likely go on a tear for the second half of the year. That would coincide with what typically happens during the third year of a Presidents term. If the S&P 500 clears 1370 from it Friday’s close of 1347 – it would target 1483 or even go all the way back to the 2007 all time high of 1576.
NASDAQ is also poised to take off. It closed at 2862. There is major resistance here to 2887. Should it clear that level, the NASDAQ would target 3175 as its next objective. That would get the NASDAQ all the way back to its December 2000 levels.
Like it or not the government will raise the debt limit. If they get it done sooner the markets are poised to go higher. If they wait until after August 2nd, and a downgrade of our credit rating, then this will be a resistance point that forces stock prices lower. We will have a much better picture in a week.
Click on this link to listen to this week's market comments: http://yourmoneytalks.podbean.com/2011/07/22/toying-with-resistance/
Click on this link to listen to this week's market comments: http://yourmoneytalks.podbean.com/2011/07/15/all-eyes-on-washington/
Click on this link to listen to this week's market comments: http://yourmoneytalks.podbean.com/2011/07/08/no-pause/
Click on this link to listen to this week's market comments: http://yourmoneytalks.podbean.com/2011/07/01/the-bulls-are-back/
Americans are about to let out a big cheer because pretty soon gas at the pump should be a lot cheaper. Oil as measured by the S&P GSCI Crude Oil Index is down over 7% today! Since its peak on May 2nd it is 21% lower. Now who says that there wasn’t a risk premium attributable to Osama bin Laden? (I believe it was just a coincidence that oil peaked the same day the Navy Seals took him out).
The amazing thing is that Americans are just satisfied that gasoline prices at the pump are heading lower. No one seems to be questioning the rate of decline. We should be outraged! Since the National average for regular gas hit close to $4 per gallon in early May, it should be around $3.16 today. However it is significantly higher than that.
Don’t give me this mega oil industry jargon about lag time for prices, crack spreads, and summer blending issues, because when the price of oil was rising the gas stations were raising their prices daily just to keep up. The rate of change should follow price in both directions.
So why are prices declining? Aren’t there multiple protests and even war zones in several of the oil producing countries? Apparently that does not outweigh the slowing rate of growth for the global economy.
Domestically all of the economic reports for the last few months point to a slowdown or in some cases a return to negative growth. Clearly the
The fears of inflation due to rising food and energy prices may soon get knocked off by a rising fear of deflation. Governments are continuing their attempt to stave off defaults around the globe due to lack of economic growth. Food prices may remain high as production factors, weather, and a growing global population put a crimp into supplies.
Fear is starting to grip investors and for good cause. Institutions are in sell mode. This is very evident when looking at the trading volume on down days versus the market’s rally day volumes.
Apparently investors like bailouts and other socialistic government interventionist programs that attempt to prop up markets. Collectively investors are hoping for a Greek bailout package to be put together this weekend so we can “kick the can down the road” once again.
Higher taxes and stringent austerity programs are not going to create growth for
Oil prices are falling – fast. Aggressive investors can capitalize by buying into the ProShares UltraShort Crude Oil ETF (SCO). SCO broke above its recent base today when it cleared $49.49. The price target for SCO applying some technical analysis techniques is $63 to a $66 per share.
Fundamentally, if the problems in the oil producing regions do not spread any further oil prices could decline. In addition should our economy continue to slog along with slow or no growth, this trade to make sense for today’s investors.
SCO is a two time leveraged inverse fund, so it is not for the faint of heart. It will move at a rate that is twice as fast in the opposite direction of oil prices as measured by the Dow Jones- UBS Crude Oil Sub-Index. Over time leveraged funds do not track an exact inverse rate – but it will move!
Click on this link to listen to this week's market comments: http://yourmoneytalks.podbean.com/2011/06/17/reasons-to-cheer/
The major market indices are all down around three percent for the month of May which coincides with the amount they are off from their recent recovery highs. As a percentage that really is not a lot to be concerned about.
However a review of the most recent economic data, the picture gets a little fuzzy. A few weeks back was the ISM Services report plunged from 57.3 to 52.8. Anything over 50 demonstrates growth, but the consensus was for an improvement to 57.8 and this obviously indicates we are heading in the opposite direction. It is important to note that 80% of our economy is dependent on the services sector.
On the manufacturing side of the ledger the situation actually looks even worse. The Empire State Manufacturing Index, the Philadelphia Fed Manufacturing, and Durable Goods Orders all came in the last couple weeks at their lowest levels in many months. It clearly indicates that the rate of the economic recovery is shrinking and unless something changes, could fall into negative territory.
The Conference Board’s Index of Leading Economic Indicators reported its first negative reading in nine months falling to a negative 0.3% for April. The much anticipated upward revision for first quarter GDP fizzled as it stayed at an unimpressive 1.8% this week. That is down from the 3.1% GDP growth reported for the fourth quarter of last year.
Meanwhile housing remains at depressed levels as prices continue to fall and sales of both new and existing homes are down in the double digit levels from a year ago. This occurred while the economy was actually getting stronger.
Emerging market and the so called BRIC countries (Brazil, Russia, India, and China) are all down more than our markets which is causing some concerns among investors as many thought that the BRIC’s would lead the global recovery this year. With commodities off as much as they are many of these resource rich nations have fallen hard.
Still encouraging the bulls is the fact that the Fed’s Quantitative Easing Program still has a month to go. It doesn’t hurt stocks that the Fed kicked in an extra $31 Billion in the last five days to the Primary Broker Dealers to do with as they please. Rumors that another round of Quantitative Easing may occur also helped juice the markets in the last couple of days. At the very least the bad economic reports lately are pacifying all concerns about an interest rate hike coming anytime soon.
Markets had also reached oversold levels this week and were due for a bounce. How big that bounce turns out to be remains the big question. On a technical level markets paint two opposing pictures. On one hand a breakdown of the uptrend from the March 16th low has occurred – which is negative.
However another obvious pattern in the charts is that of a flag formation. Flags generally fly at half mast. This means that there is likely a case for the markets to break out of the downward flag slope and most likely rise to even higher highs for the year.
It must be noted that the Dow has been down the last six years in a row in the month of June. However, there is a high propensity for markets to rise going into three day Holiday weekends. Plus the end of the month may give the bulls some strength. So is the current market bullish or bearish? Time will tell.
As infamous trader Jesse Livermore used to say, “Conditions are ripe for a sell off.” The litany of global problems that exist seem to be compounding every day. As if the market doesn’t care, the major indexes have spiked up over the last few weeks. It does seem odd to see such strength under these circumstances.
This week however, trading started off the day quite positive but then gave back much of it by the close. Strength in the morning followed by weakness in the afternoon is usually a bearish sign. While the S&P 500 has been up three of the last four days, we‘ve had only a fractional gain this week.
Usually the start of each month and especially the start of a new quarter is a time for strength as retirement plans of every ilk get funded and new money flows into the market. With April’s monthly strength period now over, hardly a dent has been made towards a market advance.
The strong season for the market is also coming to a close. There is historical statistical evidence that gives credence to the “sell in May and go away” concept for period investing. While markets don’t have a calendar, the November through April timeframe historically has significantly outperformed the May through October period, and May is coming soon.
Investor sentiment is running high. The recent Investors Intelligence Sentiment Survey reveals that less than 16% of professional newsletter writers are bearish and over 57% are bullish. This Bull to Bear ratio of 3.65 displays even more optimism than at the market peak in 2007.
This survey has been widely adopted by the investment community as a contrarian indicator. Since its inception in 1963, the indicator has had a consistent record for predicting the major market turning points.
Another contributing worrisome factor is the coming end of the Fed’s Quantitative Easing Program (QE2). When the Fed stops buying bonds, monetizing our debt, and pumping billions of new dollars into our economy on a daily basis, how will the markets fare? That is a big question. Currently it’s as if the economy is cycling ahead with training wheels on. What happens when they come off?
Should markets correct on anticipation of or at the end of the QE2 money pumping machine, it would mean that a market top was occurring at almost precisely the same time it did last year, which included the Flash Crash.
One of the key factors that markets appear to be ignoring today is the ever rising price of oil. High oil prices have always led to a recession. Oil is a direct reflection of a falling dollar. With the ongoing destruction of the US dollar, caused in a large part by the QE2 program, commodity prices are going through the roof. Now is a time for caution.
