Thread: Market Talk / August 6 - 12

From CNN article Sunday morning:

http://money.cnn.com/2006/08/06/mark...head/index.htm

The Federal Reserve board meets Tuesday to discuss interest-rate policy and for the first time in more than two years, there may not be a rate hike.The Federal Reserve board meets Tuesday to discuss interest-rate policy and for the first time in more than two years, there may not be a rate hike.

But now that the much longed-for event is actually nearing, investors don't seem quite as happy about it as might have been expected, and that could set up a potentially tough week and month ahead for stocks.

However, pause or no pause, "the whole notion that a pause in rate hikes is always good for stocks is ridiculous," said Michael Darda, chief economist at MKM Partners

In addition, there is no reason to suggest that should the Fed pause next week, they won't resume lifting rates in the fall.
Darda said that he thinks the economy will show greater strength in the fall, which could lead to a need for more rate hikes. Additionally, all the analysts said that they were worried that rising inflation would force more rate hikes going forward, a scenario even more troubling for stocks.

Originally Posted by Pilgrim

From CNN article Sunday morning:
In addition, there is no reason to suggest that should the Fed pause next week, they won't resume lifting rates in the fall.
Darda said that he thinks the economy will show greater strength in the fall, which could lead to a need for more rate hikes. Additionally, all the analysts said that they were worried that rising inflation would force more rate hikes going forward, a scenario even more troubling for stocks.

I've heard this a lot and I still think Ben could raise the rate one more time and then wait and see what happens this fall. Basically overshoot the rate hikes then wait for the market to catch up during the mid-term election year.

Just an opinion.

When will he make the rate hike/pause announcement?

2nd tuesday of reporting month, not every month. 2:15 is traditional.

Originally Posted by Gilligan

When will he make the rate hike/pause announcement?

http://www.federalreserve.gov/FOMC/#2006

I think a recession is coming.

Good points above about the Fed.

If the Fed does decide to pause this month in its rate hikes, you can be sure that in its announcement after the meeting, it will keep the door open for future hikes should inflation continue to be a problem. And that will keep investors on edge and still guessing, still concentrated too much on what the Fed might do, and too little on what the slowing economy means for corporate earnings going forward.


http://www.decisionpoint.com/TAC/HARDING.html



Friday the Dow spiked up around 100 points early on the employment numbers.

The thinking that fewer people getting jobs is a reason to buy stocks I don't understand.

Later in the day the market seemed to think maybe a weaker economy means lower earnings and that could be bad for stocks and gave back the gains. Next week should be MORE OF THE SAME. I'm staying netural for now..
I'm also keeping a eye on IRAN/SYRIA AND OIL MY FRIENDS....IRAN AND A NUKE IS A MARKET MOVER...


I'm not sure what it all means, but I'm currently trading and not adding new investment money. It's August and the current world enviroment I don't want to add any new long postions.. I don't like the Dog Days or the current Middle East talk from Iran... I do hope we get a big rally for those that are long..

I'm trading in my Brokerage account using ProShares now in my Roth and some short-term moves in TSP. Shorting rallies and buying dips. Some Traders made nice gains on Friday.. Some on the board also made some very nice short-term moves lately. I continue to watch the board leaders.

They are beating every paid service professional I get. However, they don't beat some of the traders I get, but apples to apples the leaders on this board are Kicking A..!!!!

http://rhodes-capital.com/


http://finance.yahoo.com/q?s=DDM+DOG...QLD+SH+SSO&d=t

http://www.proshares.com/

I know this is not for everyone, but we do have some very sophisticated investors along with some novice folks on the board. I trade these Funds no different than I trade/invest my TSP account. CONSERVATIVELY AND CAREFULLY.


TA's I follow.. 4 stay in cash

2 Shorting rallies ETF's / These two guys are traders..

5 Long 50% to 100%


I did get some new buy signals for the C Fund/S%P 500 last week when the S&P was around 1275. Longer Term recommendations. I did not add stock...

Conclusion
Diminishing new lows make a good case that a cycle low occurred on July 21, but many of the short term momentum indicators are at or near their highs of the past 3 months suggesting a pull back next week.

I expect the major indices to be lower on Friday August 11 than they were on Friday August 4.

This report is free to anyone who wants it, so please tell your friends.
They can sign up at:
http://alphaim.net/signup.html

If it is not for you, reply with REMOVE in the subject line.

Most of the major indices were up last week making my seasonally based negative forecast a loss.

Thank you,
Mike Burk
YTD W16/L6/T9

Another loss for Mike.

http://www.tspmoney.com/tspm_tool.ph...cal_chart_tool

They Market Timing Discipline, Not As Easy As You Thought.
Market timing discipline means controlling impulses and controlling emotions. When emotions rule our trading, loses are usually the result.

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Usually the first problem arises when the markets are between market trends. Possibly you had a nice profit during a rally, but now the market is trading sideways and has generated several small false signals. There is now no trend, or one is certainly not obvious.

You were strong the first couple of signals, making all the trades, but after a couple of small losses, you are starting to second guess the timing strategy.

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Originally Posted by Mike

I think a recession is coming.

"Ironically, a world economic slowdown caused by slower growth or a recession in the US would mean a probable drop in world oil consumption and a drop in oil prices. Since oil is priced at the margin, a serious slowdown could mean oil drops back into the $40s. Everyone would breathe a sigh of relief and assume that the lower price is now the wave of the future. It would forestall any significant change in legislation or lifestyle in the US and much of the world." Could that be why the Fed is pushing the economy into a recession, or worse?


You might be on to something Mike.. Is the the goal 40 a barrel oil to take the money away from the terrorist states...

I doubt the above, but you could be correct Mike. The Fed must be careful here... What's more important Iran with a Nuke or a recession?? Both bad...

Stocks: Unemployment Up Sharply in July

The stock market rally continued on Friday, boosted by the Employment Report which indicated a sharp increase in the number of persons unemployed. Profit-taking late in the day ahead of the weekend trimmed the gains and the market closed flat for the day. Traders were unwilling to hold long stock positions over the weekend as the fighting in Israel and Lebanon is seemingly intensifying daily.

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The Employment Report released Friday morning confirmed what our other indicators have been saying for some time. That is, this is an economy that is quickly losing momentum. The big shocker to the markets Friday was that the annual rate of increase of the number of persons finding themselves unemployed is 50%. Yes, if the unemployment rate continues to increase at the same rate it did from June to July over the next year, the number of persons unemployed will rise by about 3 million (the number of people who lost their jobs in July was 248,000). In fact, the total number of persons employed declined by 34,000 in July. Clearly, an economy where the number of persons employed is declining cannot be claimed to be a "strong economy" as the current Administration claims it to be.

The market is betting that the rapidly-slowing economy will stay the Fed from hiking short term rates on Tuesday. However, if the Fed does hike rates in the face of a weakening economy, they will be confirming that their goal is not a soft landing for the economy, but an absolute hard landing (depression). If that's what their goal is, we'll know by Tuesday afternoon. Until then, the best way to bet is that the Fed will be reasonable, not raise rates and will, in fact, start lowering rates before too long.

If they're aiming for a depression, the best investment choice will be bonds. The bond market will act opposite the Fed and will lower long term rates to counteract the drag from short term rates. In fact, that's exactly what the bond market has been doing since late June -- they have lowered long term rates by 28 basis points (hundredths of a percentage point), which is more than the Fed raised short term rates (25 basis points). Lower long term rates translate to higher bond prices and substantial capital gains for investors. Bonds are not just for coupon-clippers, they are a very profitable investment vehicle for capital gains. Since the last Fed rate hike, in fact, the September US Treasury Bond with a face value of $100,000 has risen $3,850 in value, which is almost three times the margin requirement needed to buy the bond ($1,350)!

Otherwise, if the Fed doesn't hike rates, stocks and commodities will be the favored investment areas to focus upon if we're to have a soft landing in the economy. Of course, at this point, it may just be too late to avoid that hard landing since the Fed's prior moves to hike rates may have sealed the economy's fate already. In that case, the Republicans will have spoiled any chance they have of keeping control of Congress and the White House after the elections in November. Given the Administration's propensity for shooting itself in the foot at every turn, simple stupidity appears to be the simplest and most likely explanation for the actions of the Fed in driving the economy right into the ground!

http://marketclues.blogspot.com/