Friday, June 29, 2012

Yes darling. Yes!


I couldn't resist.
gh

Thursday, June 28, 2012

Tea leaves continued.

Nice rally at the end of the day.

Here is a stock I watch. Banco Santander. Spain.
As far as indications of price and volume go there is a possible bottom forming. (an upside down head and shoulders) Time will tell.
And steel and the truckers and housing has been doing well. Check out AKS, STLD, JBH, PHM, DHI.
SAN and AKS:

gh

Tea leaves, cont.

Markets in general in deflationary trends. Todays ruling by the Supremes is a victory for the Dems and a loss for the Anarchists. So todays move down in the stock markets is being blamed on the ruling. I doubt the connection, but politics is rampant.

If there is a connections between the general deflationary bias to the markets and the ruling on Obamacare it must be the realization that somehow as a nation we will have to take care of our aging citizens. The fact is that the demographic trend is for an aging population. And the debate over how to pay for, or not pay for, healthcare is the result of that demographic trend.

To my eyes the debate is about taking care of our parents, grandparents, and ultimately OURSELVES as we get older. Or leaving their care and wellbeing to "the markets", and shareholders preferences. And of course we know where the desires of shareholders lie!

But I would point out the difference between a shareholder and a stakeholder. While many of us are shareholders in the stock or bond markets, all of us are stakeholders in the outcome of the provision of healthcare in this country. If you are young you may not feel like you get anything out of a provision that requires you to buy insurance. But with a little luck you will get old. And as the young turn old the moneys that were "saved" by insurance premiums are returned. This may be a hard concept to grasp. But the money that pays for the bills today, in lieu of debt, is a credit to the future. If we had payed our bills in the past the country would not be in the precarious position it is today. The booms would have been attenuated or would not have happened, so the "growth" wouldn't have happened. But the dollar would have retained it's value and we would not be in debt. So todays tax is tomorrows credit.

Enough of that.
The subject of todays post was supposed to be: " Why I read charts".
So here it is. In past posts I gave notice when I thought I saw significant days of selling or buying and significant volume associated with those days. Time passes and then the significance of those days becomes apparent. Here are some charts with notes. As far as the HOG thing goes we will have to wait and see if it is indeed a prediction for the fate of the smallcaps. But the whole demographic thing ties in there! And that explains the general trend of the bond market. (Note: as soon as I take notice of a trend there will be a violent countertrend move!LOL)




I am not impressed with the selloff today. Nor with the volume in the bonds. (TLT) We may see a sharp rally. Even if Europe dissapoints this weekend.... But.
Control risk. Cut your losses short. Let your winners run. And trade with the trend.(dont listen to bottompickers like me!!)
gh

Thursday, June 21, 2012

Goldman says sell....

GS came out with a call to short the markets today. They also warn of not only a fiscal cliff, (US debt) but warn that we are about to fall off of a monetary cliff. Meaning the US dollar is going to decline??
Meaning inflation? Meaning interest rates will climb?
Isn't inflation what we want out of this whole low interest rate thing? Inflation is good for the stock markets in the initial stages. Higher interest rates would make the banks even more profitable.
I don't trust their call. They are either short the markets and want them to decline or they are looking to buy long....
And the selloff today doesn't feel like more than a technical selloff.  At least so far.
Oil is well off lately. Gasoline is going down, leaving more money in the consumers pocket.
The switch to Nat. Gas is on.... Coal is way down.

Waiting to see....
gh

Wednesday, June 20, 2012

Facebook rounds the turn

We have been seeing the first signs of accumulation in Facebook since the IPO.
The chart and commentary illustrate why it works to be a trend trader and practice sound money management when putting on a position in a security.

Don't buy all at once. Buy new highs on increased volume after a period of consolidation. Watch what a stock does AFTER it makes a move. That is what validates or negates the importance of the move and the likelihood of a continuation of the trend.
By buying in three or four small purchases you give yourself psychologic support to let the trend develop. And your average price is always below where the market is trading.

The signs of a bottom were when FB held $27 and then held $28 and then broke higher. Look at the volume on the upmoves. And the lack of volume on the sideways price action. This means that there is no urgency to sell..... YET.   So while it is important to let a trend develop, it is also important to not hold on to any stock just because you have fell in love with it!  Maybe you will make some money, maybe not. The thing is to trade well! Even good trades lose money and bad trades make money. But putting the odds in your favor will let you win in the long term over many trades.

The Chart:
Control risk
gh

Monday, June 18, 2012

What is that feeling?

The Greeks voted to stay in the Eurozone, or so the politicians say who won. So they voted for austerity. So the world avoids financial Armageddon once again!  Actually, the feel of the markets from my perspective is of "much ado about nothing". The markets feel today like they are done with that little problem for awhile and now are looking for the next problem. If the Greece thing ended like this, with so little fanfare, why won't the markets go up from here. It just feels like we may be in for another stealth rally in the next couple months. The sentiment seemed to be that deflation was a certainty. But markets held up very well considering our close call with "financial armageddon" again. (Said with tongue firmly in cheek)
If a market holds up in the face of lots of bearish sentiment it is a bullish indicator. I may be rethinking my feelings about the value of the long bond market as an indicator of the future.....
Short bonds here??  A little.
TBT is the short bond fund:
Silver is looking well today. (Again)....
control risk
gh

Thursday, June 14, 2012

Why?

If the economys of the world are going to grow why is the U.S. Treasury's 10 yr. bond  trading at 1.62%?

Period.

gh

Monday, June 11, 2012

Easy Rider?

Lately I've been using Harley Davidson (HOG) as an indicator of strength or weakness in the small cap stocks. On a fundamental basis it seems that demographics must be working against Harleys as well as against the economy of the U.S.
How many baby boomers are left to buy a motorcycle? How many will want to buy one who have not bought on already?
China may be the next market. I do not know what stage that market is.
On a technical basis though the stock has been showing weakness similar to the markets in general.
A possible "head and shoulders" pattern is developing in HOG.
The chart:
Control risk!
gh

Thursday, June 7, 2012

Mr. B goes to Congress

Mr. Bernanke spoke to Congress today and we were again treated to the usual political gas from both sides of the aisle with an occaisional question directed at the chairman of the Federal Reserve. Notable among Mr. Bernankes answers was his admission that interest rates couldn't go lower and that, to paraphrase: "other options involve some difficult choices".
I think that his choice of the phrase "difficult choices" is a key to his reluctance to let the Fed take on additional significant debt. As well as a nod to the political battle going on over the debt levels of the Fed and the federal government.
To a stock market hooked on hopium delivered by frequent injections of Federal Reserve stimulus this must raise the possibility of  some withdrawal pains in the future.
Gold and Silver reacted immediately, but the stock market is hanging in there. So far today...
I pay attention to the precious metals as they are primarily an indicator of inflation expectations. And the stock market must have inflation to sustain these levels.
I put on a short stock position and sold my gold and silver trading position today....
Charts below:



gh

Saturday, June 2, 2012

Friday, June 1, 2012

Still no jobs. Still no demand.

U.S. stock index futures open down sharply this morning on news of poor job creation. The usual politicians will point at the president and claim it is his fault. I beg to disagree. The problem with the economy is the result of thirty years of economic sabotage by the neoliberal economic mindset that got it's start in the early 1980's and the "Reagan Revolution". Those were the times when it became fashionable to attack the unions and to make people work for less. After decades of lower wages, decreased benefits, the offshoring of manufacturing in the search for even lower paid workers, and constant economic stimulus each time there was the threat of a slowdown we find ourselves as individuals and as a nation deep in debt.
The jobs are the thing. The neoliberals, if you aren't aware, are the supply siders. They think that if wages get low enough business will create jobs. I am a demand sider. I ask, why would any businessman create jobs if there was no market for the things those jobs would make? And if there is a push all over the world to cut the wages of the people, how do we expect them to buy stuff?
If science and technology devises ways of saving labor and therefore cost of production who gets the benefit of those increases in productivity? The business owner gets those benefits in a world that will not give a worker a raise in pay. But who buys the things that a business will make or sell? Workers.
Henry Ford paid his assembly line workers more than his competitors. Because he could. And because he wanted his workers to buy his cars. It worked. The years when labor was strong were the years when things were good.
Debt is not working anymore. The workers and the middleclass went deep in debt in order to keep their standard of living where they thought it should be. The limit to debt has been reached.
The baby boomer generation is looking at retirement with not enough to live on. We are in saving mode now. But our retirement funds are in the stock market. Because that is where Reagan and the business interests wanted us to be. So we all have a vested interest in keeping stock valuations high. Isn't that convenient. We all have a vested interest in keeping corporate America profitable so their stock price stays high and so we have a nestegg. (But how do we cash it out?) So we are all susceptible to the talk that panders to business. We will vote to cut taxes on business even as that means our public benefits will get smaller. We will vote for politicians that want to do away with the minimum wage in an effort to bring our wages down. So that business stays profitable. We will vote for those who want to do away with our social safety nets. Social Security and Medicare are in their sights. Anything to cut taxes on business and give them next quarters profits. But where does it end? If the whole world is intent on cutting the share that workers receive where does the demand for goods come from? And what is the purpose of an economic system if not to facilitate the distribution of goods to as many people as possible. What is the purpose of any political system if not to facilitate the distribution of prosperity to as many as possible? If money represents wealth how come so many are intent on keeping that wealth in the hands of the few? And who is supposed to buy stuff if not the people? The race to the bottom is coming to an end. The whole world wants to sell stuff to Americans. Everybody can't be a net exporter. Somebody has to import!
Instead of the failed policy of cutting the workers wages maybe we should look at it from the perspective of getting as many people as possible more of the benefits of a modern economy. The money is out there. It is just in fewer and fewer hands. And they won't let go without a fight.
I suspect that we will have to let things get much worse before we, as a nation and as a world, will have the collective sense to take back what we once took for granted. I only fear that we will be led astray by demogogues and fearmongers and our search for scapegoats.

When will we see?