Best of the Week
Most Popular
1. Will Gold Price Breakout? 3 Things to Watch… - Jordan_Roy_Byrne
2.China Invades Saudi Oil Realm: PetroDollar Kill - Jim_Willie_CB
3.Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - Nadeem_Walayat
4.The Stock Market Trend is Your Friend ’til the Very End - Rambus_Chartology
5.This Isn’t Your Grandfather’s (1960s) Inflation Scare - F_F_Wiley
6.GDX Gold Mining Stocks Fundamentals - Zeal_LLC
7.US Housing Real Estate Market and Banking Pressures Are Building - Chris_Vermeulen
8.Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - Buildadv
9.Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - Nadeem_Walayat
10.Warning Economic Implosion on the Horizon - Chris_Vermeulen
Last 7 days
Sheffield Local Elections 2018 Forecast Results - 22nd Apr 18
How Long Does it take for a 10%+ Stock Market Correction to Make New Highs - 21st Apr 18
Sheffield Ruling Labour Party Could Lose 10 Council Seats at May Local Elections - 21st Apr 18
Crude Oil Price Trend Forecast - Saudi Arabia $80 ARAMCO Stock IPO Target - 21st Apr 18
Gold Price Nearing Bull Market Breakout, Stocks to Follow - 20th Apr 18
What’s Bitcoin Really Worth? - 20th Apr 18
Stock Market May "Let Go" - 20th Apr 18
Overwhelming Evidence Against Near Stock Market Grand Supercycle Top - 20th Apr 18
Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - 20th Apr 18
The Incredible Silver Trade – What You Need to Know - 20th Apr 18
Is War "Hell" for the Stock Market? - 19th Apr 18
Palladium Bullion Surges 17% In 9 Days On Russian Supply Concerns - 19th Apr 18
Breadth Study Suggests that Stock Market Bottom is Already In - 19th Apr 18
Allegory Regarding Investment Decisions Made On Basis Of Government’s Income Statement, Balance Sheet - 19th Apr 18
Gold – A Unique Repeat of the 2007 and How to Profit - 19th Apr 18
Abbeydale Park Rise Cherry Tree's in Blossom - Sheffield Street Tree Protests - 19th Apr 18
The Stock Market “Turn of the Month Effect” Exists in 11 of 11 Countries - 18th Apr 18
Winter is Coming - Coming Storms Will Bring Out the Best and Worst in Humanity - 18th Apr 18
What Does it Take to Create Living Wage Jobs? - 18th Apr 18
Gold and Silver Buy Signals - 18th Apr 18
WINTER IS COMING - The Ongoing Fourth Turning Crisis Part2 - 18th Apr 18
A Stock Market Rally on Low Volume is NOT Bearish - 17th Apr 18
Three Gold Charts, One Big Gold Stocks Opportunity - 17th Apr 18
Crude Oil Price As Bullish as it Seems? - 17th Apr 18
A Good Time to Buy Facebook? - 17th Apr 18
THE Financial Crisis Acronym of 2008 is Sounding Another Alarm - 16th Apr 18
Bombs, Missiles and War – What to Expect Next from the Stock Market - 16th Apr 18
Global Debt Bubble Hits New All Time High – One Quadrillion Reasons To Buy Gold - 16th Apr 18
Will Bitcoin Ever Recover? - 16th Apr 18
Stock Market Futures Bounce, But Stopped at Trendline - 16th Apr 18
How To Profit As Oil Prices Explode - 16th Apr 18
Junior Mining Stocks are Close to Breaking Downtrend - 16th Apr 18
Look Inside a Caravan at UK Holiday Park for Summer 2018 - Hoseasons Cayton Bay Sea Side - 16th Apr 18
Stock Market More Weakness? How Much? - 15th Apr 18
Time for the Gold Bulls to Show their Mettle - 15th Apr 18
Trading Markets Amid Sound of Wars - 15th Apr 18
Sugar Commodity Buying Levels Analysis - 14th Apr 18
The Oil Trade May Be Coming Alive - 14th Apr 18

Market Oracle FREE Newsletter

Trading Lessons

Wild Stock Market Start to 2013

Stock-Markets / Stock Markets 2013 Jan 02, 2013 - 07:42 AM GMT

By: PhilStockWorld

Stock-Markets

Happy New Year!

And what a way to start it off with our Futures flying up another 1.5% – on top of Monday's 2% gains you might have missed as we celebrate the non-event of the Fiscal Cliff that we kept telling you not to worry about last year (see any post). On Monday morning's Alert, and in our Chat Room, I reminded our Members, as the market tanked, not to be too bearish, saying:


Keep in mind that we need to spend 2 days below our levels to be officially bearish so let's hope we do get some good news today and take back those 50 dmas so we can treat them as a blip and throw the spike out in our forward calculations.

As you can see from Dave Fry's SPY chart, that was pretty good advice as we quickly reversed that bad open and flew higher. We looked over our virtual portfolios at 11:52 and decided, fortunately, to maintain our very bullish stances based on the news available to us and, of course, our general attitude that the whole cliff thing was overdone.

We added long plays on GDX and CIM but maintained general hedges (medium-term) on TZA and USO – just in case talks broke down or the cliff deal turned out to be a "sell on the news" event – which still remains to be seen after this morning's excitement. As you can see from our Big Chart (welcome back StJ!), we still have a long way to go before re-establishing a bullish position – as opposed to confirming a double top in the high end of our channel.

This morning, in Member Chat, we already had 4 pages of extensive commentary on the cliff deal and Europe, 2012 in review and 2013 looking forward, so I'm not going to get into that again here and I've made commentary over the last two weeks on why we are bullish about 2013 – especially in the housing sector.

Pimco's Mahamed El-Erian made the point well this weekend on why investors HAVE to have confidence in equities for 2013 – the Fed. El-Erian said: "If you have an institution that has a printing press in the basement, you respect it." That's a nice, simple, investing premise…

As the chart on the right, from Business Insider, clearly illustrates, the Fiscal Crisis is very clearly the Republican's Fault (their title, not mine) as Federal Spending (red) had simply gone out of control at the same time as Tax Revenues, (blue) had been cut to long-term lows. It took Bill Clinton more than one term to reverse the madness of 12 years of Reagan and Bush the First and it is taking President Obama more than one term to reverse the madness of George the 2nd – this is not a complex issue folks.

Don't forget, Obama only did the 2010, 2011 and 2012 budgets and we're currently in the middle of Fiscal 2012 and look how drastically he's already cut the out-of-control spending – now the revenues need to catch up a bit and then we'll be making some progress – maybe on the way back to those Clinton surpluses that were squandered away at the turn of the century.

How did Bill Clinton reverse the horrible Republican "don't tax and spend anyway" policies during the 80's? Clearly from the chart – he cut Government spending significantly and raised taxes significantly, in fairly equal measures – until those red and blue lines crossed back over each other. This is not complicated folks – you can see what needs to be done – we just have to have the will to do it and today is a good first step but it sure as Hell better not be the last!

Unfortunately, we have what the Rude Pundit aptly calls "A Congregation of Motherf*ckers in the Senate" as well as the House, of course, of GOP hard-liners who are willing to throw this country into chaos rather than allow their precious contributors to suffer tax increases. In fact, just to get this deal past those same MF'ers, $205Bn in Corporate Tax Breaks were handed out to the people who need it the least.

Like $1.6Bn in tax-free financing for Goldman Sachs to build a new headquarters along with $9Bn in tax loopholes to banks and other lenders like GE, who can engage in certain lending practices and not pay taxes on income earned from it. According to this Washington Post piece, supporters of the bill include GE, Caterpillar, and JP Morgan. Steve Elmendorf, super-lobbyist, has been paid $80,000 in 2012 alone to lobby on the “Active Financing Working Group.” With his $205Bn win for just $80,000, or even if you include $700,000 over the past few years, Elmendorf may be the most cost-effective employee in America (next to Grover Norquist, of course)…

$205Bn is more money in tax breaks than US Corporations pay in taxes – total! It's also twice as much as the payroll tax cuts, which were lost by the people who work for these corporations (although 85% work for small businesses who don't get any benefits from these top 1% cuts). There are not small business tax breaks here. In fact, it's tax advantages like these that give large corporations unfair advantages that they then use to crush the life out of small businesses – further eroding the middle class – all the while crying crocodile tears about how eliminating tax cuts will hurt small business people. MADNESS!

We know we're going to get a knee-jerk rally as the shorts run for cover today but we'll see how long it lasts against incoming data, as well as pending earnings reports that will give us a much better picture of what to expect from this brand new year.

- Phil

Click here for a free trial to Stock World Weekly.

www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

© 2012 Copyright  PhilStockWorld - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

PhilStockWorld Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules