No one is focusing on this. The expansion of our economy depended on the consumers willingness to go into debt. As the great boom continued, more of the expansion depended on credit, not on increasing wages and at the end it was almost all credit expansion. Consumers weren't earning more money. They were using credit and believed that their houses would continue to increase in value. Without all of this borrowing the economy would not have grown as much as it did. Now people have stopped borrowing and now consumer credit is shrinking, not growing. People are fed with up consuming and now are spending their disposable income on reducing debt.
So, our government has decided to borrow on our behalf. They borrow $1.7 trillion dollars and then announce, “Ok, the recession over.”
Thursday, September 24, 2009
Market extended, stretched, and overbought
We have had a few real bad scare days. One on Sept 1st, one on August 17th shruged away.
The market is extended, stretched, and overbought, but refuses to give ground. There are a lot of analyst saying this market cannot be for real, it is government injected. Pundits are saying the market cannot hold this move because of the economy is not up to snuff. This is all good news. There is a clear lack of acceptance and that is what makes bull phases continue.
I have no idea how lost this lasts or how far it goes. However, we do know if they can't sell it, they will buy it. This is the nature of the market that many fail to understand. Whatever the market is saying, I really can't call it. It is what it is and there is no use fighting it. I have tried and I've lost. It's been a very painful lesson. Case closed!
The market is extended, stretched, and overbought, but refuses to give ground. There are a lot of analyst saying this market cannot be for real, it is government injected. Pundits are saying the market cannot hold this move because of the economy is not up to snuff. This is all good news. There is a clear lack of acceptance and that is what makes bull phases continue.
I have no idea how lost this lasts or how far it goes. However, we do know if they can't sell it, they will buy it. This is the nature of the market that many fail to understand. Whatever the market is saying, I really can't call it. It is what it is and there is no use fighting it. I have tried and I've lost. It's been a very painful lesson. Case closed!
Wednesday, September 16, 2009
VVUS Letter to SEC
The actions of the CEO of Vivus, Inc are in my opinion criminal. I have sent an email to the SEC regarding this matter. Hopefully, they will look further into this. Actually, they probably won't, but I've done my part.
I wish to ask that an investigation be opened against the CEO of Vivus, Inc. ticker: VVUS.
Two days ago, Mr. Leland F. Wilson sold over 2.2 million dollars worth of stock in this company. Today, after the market closes, he announces a secondary offering of over 9 million shares. There is no doubt that Mr. Wilson knew of the secondary offering when he sold his shares. Mr. Wilson was also well aware of the effect that a secondary offering would have on the share price. It is my belief, he sold his shares intentionally at the higher price with material knowledge that the share price would drop upon the announcement of the secondary offering. This is a blatant case of insider trading and must be investigated.
Why wouldn't Wilson do that most companies do during a secondary? Offer his shares during the secondary?
Polar Opposites
There was an article written 2 days ago. The highlight was how commercial real estate is in big trouble. In fact, a fed head came out to say commercial real estate is the next shoe to drop. The question to answer is: Why are commercial real estate stocks going up?
Kind of like the opposite of what we say in 07. Stocks kept going down while everybody said things were fine, now we have the reverse situation where everything is going up while everyone thinks the end of the world is still at hand. This is a great lesson for all of us. Polar opposites...extremes on both ends. And how do we harness it going forward? It's called watch the tape. Watch the market and try to stay in gear and it still isn't easy. It is work. It is not for the meek and mild, but let's hope it continues. We are all surprised by this movement and the persistence. And since a lot of people are thinking this too, it is good for the markets.
Kind of like the opposite of what we say in 07. Stocks kept going down while everybody said things were fine, now we have the reverse situation where everything is going up while everyone thinks the end of the world is still at hand. This is a great lesson for all of us. Polar opposites...extremes on both ends. And how do we harness it going forward? It's called watch the tape. Watch the market and try to stay in gear and it still isn't easy. It is work. It is not for the meek and mild, but let's hope it continues. We are all surprised by this movement and the persistence. And since a lot of people are thinking this too, it is good for the markets.
Sunday, September 13, 2009
Tea Party ....
Could it be that the Tea Party supporters have finally found a place to express their anger?
When the housing market went bust and the value of their homes dropped significantly and the value of the 401k's dropped considerably, maybe they were mad about it, but didn't know who to blame. Now, with government spending out of control and a new president increasing government spending they finally have a place to vent their anger and place blame on somebody.
It looks like Obama and the 'libs' as they like to call them are firmly in their sights.
When the housing market went bust and the value of their homes dropped significantly and the value of the 401k's dropped considerably, maybe they were mad about it, but didn't know who to blame. Now, with government spending out of control and a new president increasing government spending they finally have a place to vent their anger and place blame on somebody.
It looks like Obama and the 'libs' as they like to call them are firmly in their sights.
Consumer Spending Could Boost Markets?
CNBC reports on Sunday, September 13th, that consumer spending could boost markets. This is hard to understand! Across the nation credit limits on credit cards are getting slashed, interest rates are rising on consumer credit cards, and monthly minimum payments for many are also rising. (And as I write this blog, the S&P futures are falling like a flying monkey).
How can the consumer keep the market going when the consumer is getting the triple squeeze? CNBC reported a few days ago that the savings rate was going up. This doesn't support their own report for consumer spending. In addition to these items, stores such as Dollar General are reporting triple digit growth in sales. There are more higher value cars seen in the parking lots of Wal-Mart, Dollar General, Family Dollar, etc. than seen in the past.
How can the consumer keep the market going when the consumer is getting the triple squeeze? CNBC reported a few days ago that the savings rate was going up. This doesn't support their own report for consumer spending. In addition to these items, stores such as Dollar General are reporting triple digit growth in sales. There are more higher value cars seen in the parking lots of Wal-Mart, Dollar General, Family Dollar, etc. than seen in the past.
Geithner, Gold, and Goldman Sachs
Geithner and the big boys are making a lot of money in this market, with our money, the taxpayers money. When they get ready to roll out and pull the plug on this market, a lot of investors are going to be left holding the bag.
I'm getting conflicting views on the gold thing. We know Goldman Sachs does not want gold at these levels competing with the dollar so it is wise to wonder if Goldman Sachs will pull the rug out from gold anytime soon since they do own the largest commodity trading center in the United States and maybe the world. They can order large trades to get the prices moving in their favor.
On the other hand, gold has been in an 18 month trading range base. It has just broken out which means gold has a ways to go. Last time gold was in a 16 month trading range base, gold broke out for a 50% run up. The real issue is: Will Goldman Sachs let the market do what the market wants to do or will they run in and interfere with the normal patterns of the market .... We shall see!
I'm getting conflicting views on the gold thing. We know Goldman Sachs does not want gold at these levels competing with the dollar so it is wise to wonder if Goldman Sachs will pull the rug out from gold anytime soon since they do own the largest commodity trading center in the United States and maybe the world. They can order large trades to get the prices moving in their favor.
On the other hand, gold has been in an 18 month trading range base. It has just broken out which means gold has a ways to go. Last time gold was in a 16 month trading range base, gold broke out for a 50% run up. The real issue is: Will Goldman Sachs let the market do what the market wants to do or will they run in and interfere with the normal patterns of the market .... We shall see!
Wednesday, September 2, 2009
Don't go near the market! Go for the AU?
On this pullback, they will try to get you in so the big institutional guys can get out. You will hear this is the pullback. Do NOT put any money into this market until the S&P can hold 1035 for at least 2 weeks.
Oddly enough, although the Feds have officially called the end to the recession, there is the opinion that once the stimulus packages have run their course, we could be headed into a double dip recession. This isn't good news to hear.
It may be time to head the GOLD! You can use GLD or IAU. There are also a few Gold ETF/ETN funds out there that can multiply your returns (i.e. DGP). You may also want to consider the GDX. It is the gold miners ETF. Everything related to gold today performed well. Eventually, all of the stimulus this market has been receiving will revive inflation. Going with gold will allow you to hedge against that. I cannot figure out for the life of me why anyone who buy the actual gold bullion. You actually have to find a place to store it and it can also end up stolen.
Seeing massive volume and strong moves on GDX. You must follow the money to make money in stocks.
Oddly enough, although the Feds have officially called the end to the recession, there is the opinion that once the stimulus packages have run their course, we could be headed into a double dip recession. This isn't good news to hear.
It may be time to head the GOLD! You can use GLD or IAU. There are also a few Gold ETF/ETN funds out there that can multiply your returns (i.e. DGP). You may also want to consider the GDX. It is the gold miners ETF. Everything related to gold today performed well. Eventually, all of the stimulus this market has been receiving will revive inflation. Going with gold will allow you to hedge against that. I cannot figure out for the life of me why anyone who buy the actual gold bullion. You actually have to find a place to store it and it can also end up stolen.
Seeing massive volume and strong moves on GDX. You must follow the money to make money in stocks.
Tuesday, September 1, 2009
Market breakdowns on great economic news
The news today was
The Good....
•"Manufacturing Index Expands for First Time in 18 Months"
•Pending home sales rise to 2 year high
•Manufacturing sector shows growth as ISM index at 52.9
•Ford Motor's US Auto sales leaped 21.5% in August
The Not So Good...
•Construction spending down in July
The market opened down this morning which is a bullish sign after a down day, based on past patterns. For the short seller, he wants to see a pop up on the day following a down day. I forgot the psychology behind the pattern, but I know the pattern! The market opened down and immediately turned upward. It was moving pretty strong and had very strong bullish pattern going. After the above news came out at 10am EST, the market make a quick move down, then recovered, and then tanked! The first sector to go red was financial and then the rest of market went with them.
I think today's action is the market fooled everybody. Great numbers, good recovery this morning and more evidence the economy is getting better is the reason a lot of investors bought stocks today. Besides over the past 4 to 6 months, the rule has been buy on the dips. However, it looks like 'the music may have stopped playing'.
The pending home sales number is very suspect considering the government is giving people $8,000 to go buy houses. The number from Ford came out about 2 hours later which coincided with the next big move down. It was a great number. Auto sales up 21.5%! But wait, then again the government has given consumers money to run out and buy cars. This will take away from future growth. After the government stops handing out money to buy houses and cars, what do you think the next numbers will look like. They will go down again.
The Good....
•"Manufacturing Index Expands for First Time in 18 Months"
•Pending home sales rise to 2 year high
•Manufacturing sector shows growth as ISM index at 52.9
•Ford Motor's US Auto sales leaped 21.5% in August
The Not So Good...
•Construction spending down in July
The market opened down this morning which is a bullish sign after a down day, based on past patterns. For the short seller, he wants to see a pop up on the day following a down day. I forgot the psychology behind the pattern, but I know the pattern! The market opened down and immediately turned upward. It was moving pretty strong and had very strong bullish pattern going. After the above news came out at 10am EST, the market make a quick move down, then recovered, and then tanked! The first sector to go red was financial and then the rest of market went with them.
I think today's action is the market fooled everybody. Great numbers, good recovery this morning and more evidence the economy is getting better is the reason a lot of investors bought stocks today. Besides over the past 4 to 6 months, the rule has been buy on the dips. However, it looks like 'the music may have stopped playing'.
The pending home sales number is very suspect considering the government is giving people $8,000 to go buy houses. The number from Ford came out about 2 hours later which coincided with the next big move down. It was a great number. Auto sales up 21.5%! But wait, then again the government has given consumers money to run out and buy cars. This will take away from future growth. After the government stops handing out money to buy houses and cars, what do you think the next numbers will look like. They will go down again.
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