Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
USDT Ponzi Scheme FINAL WARNING To EXIT Before Tether Collapses Crypto Exchange Markets - 22nd Jun 21
Stock Market Correction Starting - 22nd Jun 21
This Green SuperFuel Could Change Everything For the $14 Trillion Shipping Industry - 22nd Jun 21
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Markets End Week with a Whimper

Stock-Markets / Financial Markets 2010 Dec 10, 2010 - 12:08 PM GMT

By: PhilStockWorld

Stock-Markets

Best Financial Markets Analysis ArticleI thought some uplifting music might help today as the markets have not been turning in a super performance this week despite a $1Tn tax cut/stimulus package pumped into it just 3 days ago.  That morning, I posted Chris Kimble's charts from our Chart School and we were looking at key resistance at S&P 1,224, Nasdaq 2,600 (NDX 2,191), NYSE 7,751 and Russell 756.  We're above all those this morning but what we're not above is my 11,500 level on the Dow.  In fact, if you look at the Dow over the past 6 sessions, you'll notice we hit quite a wall at about 11,375.  


What's it going to take to punch through that wall and get us up over our 11,500 breakout target?  We had this same problem in early November, when the Dow just couldn't close the deal over 11,450 and fell sharply after 3 days of trying despite the fact that the Dow Transports are up significantly (but also flatlining) since then (how now Dow theory?).  

I had said we would wait PATIENTLY for confirmation at 11,500 but it's already getting tedious.  Our picks from Tuesday's post were C at $4.56 and BAC at $11.79, with BAC outpacing C but both positions much more exciting with option plays than straight stock picks, of course. By Wednesday morning I had done the math on the Obama Tax Cut and concluded that, for 95% of America, all we could say was "Thanks for the Gas Money, Mr. President" and I'm not even sure we'll get that as oil once again tests $89 this morning, which is fine for us as that's our shorting spot on the Futures and has paid us for many, many tanks of gas this week.

It is, of course, all about the Dollar and our poor currency has been brutalized in the past 24-hours, with a relentless push down from yesterday's high at 80.82, all the way back to 80.25 at 6am. This did, not, of course, make our friends in Japan very happy and the Nikkei fell off a ridiculous gap open all the way to 10,375 back to 10,211 at the close but, ignoring the gap up, that was down just 0.72% for the day, pretty much tracking the dollar tick by tick as exporters were very upset about the Yen's failure to hold 84 to the dollar.

Of even greater concern is China (see David Fry's chart) which was pulling us up and now threatens to pull us down. In fact, Monday promises to be a wild ride with China raising its reserve bank requirements 0.5% this morning, after its markets closed for the weekend in another step to the cool its economy after new data showed a sharp increase in exports and a continued pickup in the property market.

"Exceedingly strong exports growth amid an already overheated domestic economy is not good news, as it adds to the overheating pressures which will require the government to take even more stringent measures to bring down inflation," Goldman Sachs economist Yu Song said in a note.  Last week, the Politburo of the Communist Party, the highest decision-making body in China, ratified the transition to a tighter monetary policy, which it now officially describes as "prudent" rather than "moderately loose."

Meanwhile, over in Europe, things are still a bit shaky as the European Central Bank warned governments Thursday that they risked unleashing an "unsustainable debt spiral" in the financial markets if they failed to follow through on their pledges to cut budget deficits. Although turmoil in European government bond markets has eased in recent days, the central bank of the 16 economies that use the euro said the "overall economic and financial situation is still fraught with risks."



In a 210-page report, the ECB also highlighted vulnerabilities to the region's banking sector, but didn't provide—unlike in its previous report in June—an estimate of future write-downs.  One potential trouble spot for banks in the euro bloc will be their need to refinance roughly €1 trillion (about $1.32 trillion) in bonds over the next two years, it said. That task will be even more difficult as private banks compete with governments for investor funds. "There is this question of competition with sovereigns," ECB Vice President Vitor Constancio told a news briefing.  Asked whether banks will face difficulties in meeting their refinancing needs, Mr. Constancio replied "it is hard to predict, of course, ...even for the next two weeks."

Have I mentioned I like cash lately?

Well cash and our EDZ play.  We found another one of our famous 2,900% plays on EDZ in Member Chat yesterday and we only need them to hit $24 at January expiration so we'll be sleeping pretty soundly over the holidays, not in the least worried about a meltdown in Asia - or anywhere else in the World, for that matter.  EDZ (now $22.55) makes a nice hedge against bullish commodity plays as most of those countries rely on exports, other than China, who are the net importer these days.  

China’s economy is history’s biggest bubble and may be headed for collapse, according to Richard Duncan, author of “The Dollar Crisis”.  A more than 50 percent surge in China’s money supply since 2008 helped fuel economic growth in excess of 9 percent per year, even as trading partners sank into recession. The expansion also saddled the country with factories that produce three times more goods than can be bought by China’s workers, 80 percent of whom make less than $5 a day, said Duncan.

“China has the greatest economic bubble in history.  There’s a real risk it’s going to collapse in a Great Depression-style scenario.” 

Monetary and fiscal stimulus by governments around the world helped keep the recession from becoming a depression, Duncan said this week. They don’t address the core problem, which is the collapse of American manufacturing.  The U.S. government should boost investment in fields such as nanotechnology and solar energy that could help rebuild the nation’s export sector, according to the economist. “The current policy response -- trillion dollar budget deficits and paper money creation on a mind boggling scale -- is based on the belief that it’s better to die tomorrow than to die today,” Duncan said. “There’s no evidence to suggest that it’s going to correct the root cause of the problem.” 

I have said for a very long time that only hyperinflation will save us.  It will be a de-facto default on International debt and a means for the remaining 67M US homeowners (down from 70M) to pay off their mortgages and credit card bills with monopoly money and we can all start from scratch again. Shadowstats' John Williams says the numbers are already creeping into the data and, like me, he is concerned that Bernanke's Top Down inflation is the WRONG kind of inflation as it will cripple the people.  What we need is wage inflation and, as Duncan said above, that's only going to come through stimulus measures that are laser-targeted towards job growth.  

Speaking of China AND job growth, one industry that's booming in China is: Day Trading!  That's right, as many as 10,000 people in China are doing speculative day trading of American stocks, according to the NY Times.  They have been hired (ie. outsourced) by our own Banksters to mess with our markets from 9:30 pm to 4 am China time.  

Before you rush over to Beijing to put in your job application, consider that the Gang of 12 is using thousands of Chinese traders for the same reason our Manufacturers are using tens of millions of Chinese workers to do our jobs - it's much cheaper!  Chinese firms are paying roughly $1,000 a month but that still attracts top talent when the average college graduate in China earns $300-$400 a month.  

China prohibits its citizens from using Chinese currency to buy or sell shares of companies listed on foreign stock exchanges, though there appears to be no prohibition against trading stocks for an account owned by a foreign entity. “This is a jurisdictional mess for the U.S. regulators,” says Thomas J. Rice, an expert in securities law at Baker & McKenzie. “Are these Chinese traders essentially acting as brokers? If they are they would need to be registered in the U.S.”

“Day trading is like a battlefield,” says Qu Zheng, 24, who has been trading for over two years and typically trades a million shares a day at Lazer Trade’s office in Beijing. “It’s very challenging because you can feel the pulse of the market.”  Gee, I guess we do have a lot in common with our Chinese cousins!  So be careful guys, that Bot you're trying to trade against may actually be a kid in China with a real pulse...

Those kids better be making big bucks as China's official November Inflation numbers (to be officially announced tomorrow) are looking to come in at 5.1%.  Anything over 4.9% is very likely to lead the PBOC to raise rates next week.  Currently the key one-year lending rate is 5.56% while the deposit rate is 2.5%.

You don't have to warn Fund Managers about inflation - $50Bn worth of new investments have already flowed into commodities in the first 11 months of this year, smashing previous records as the multitudes panic into gold, copper, silver, oil, wheat, corn, cotton and a stunning 91% of 300 investors surveyed at yesterday's Barclays Capital Conference in New York yesterday said "they will initiate, maintain or increase commodity investments over the next three years."  This is, of course, why I don't go to these conferences - the only way I want to hang out with a herd of sheep all day is if I'm picking one out to roast for dinner...

It's not that I don't think commodities may go higher - in a hyper-inflationary scenario they certainly should.  It's just that they will only go higher to offset the decline in currencies but that doesn't make them a good investment.  As I pointed out to Members yesterday our July investments in NAK, HMY and ABX have done considerably better than a similar investment in GLD (the gold ETF) as, in an inflationary scenario, you want to own the companies that MAKE the commodities, not the commodities themselves:

Please note that we feel gold is bubbliscious at the moment and have short plays on it - our longs on gold, as well as pretty much everything else, are off the table as we have moved back to cash, probably through the holidays and gone short with what little cash we're willing to put at risk with some financial plays as our upside hedges (see last week's posts for some interesting trade ideas there).  As I said to Members yesterday:  

Why does a kid take an armful of cash to the store in Zimbabwe? Is he buying gold? Is he buying stocks? Is he buying oil? No, they buy bread and seeds and milk. Gold is an artificial construct. Stocks in companies that produce things have value, stocks in companies that trade other stocks and commodities are a joke and if you didn’t learn that lesson from their 90% fall in "value" during the last crash, you never will. 

That's what The Bernank is doing now, he is pumping endless amounts of fake money into the banks, who produce nothing but more fake money and it pumps up the PRICE of the things they trade but does nothing to create real wealth for the people.  The Fed doesn't give a damn about the people, the Fed is there to make sure that, come hell or high-water, the banks get paid!  

Oops, I was trying not to get angry today.  We're having a great week so let's just enjoy our own piles of cash as we head into the weekend!  Speaking of cash piles, it may be time to pile on top of NFLX again as they have been included in the S&P 500 and have shot back over $200, which is fantastic as we were forced to stop out of our short position on NFLX on Wednesday afternoon, as they began to recover and only yesterday in Member Chat, I was saying (about re-entering the Jan $155 puts):

NFLX/SrF – I’d go for $1.70, maybe $2 but a bit greedy to try to get back in here. Of course, you can use that logic to set up a small scale on it as it is the kind of play we’d roll along until they finally fall but not the kind of thing I feel safe enough with right now to make a general call.

Well we didn't get $1.70, or even $2 yesterday as the $155 puts finished the day at $2.15 but it is game on again over $200 and I think this time we may be able to go a little bit more aggressive but first, we'll have to see how much legs the S&P addition gives them.  And boy, do I feel sorry for the S&P for including this empty suit of a stock, but that too is just a game played by the Gang of 12 to give them nice exits on momentum stocks as the "force" index funds (that would be your IRA!) to buy the crap they run up to extreme valuations by suddenly including them into broad indexes and forcing them to "rebalance" their portfolios to include whatever they've run up the flag pole.  Today we'll play along and force those funds to buy overpriced call options from us - great fun! 

So sorry, passive investors - between the Banksters in the country and the day traders in China - it's very hard to catch a break, isn't it?  
We caught an economic break today as lack of demand for oil at these ridiculous prices drove the October Trade Deficit down over 10% to $38.7Bn, down from $44Bn in September as exports also surged 3.2% and imports fell an overall 0.5%.  In fact, oil, gas and other petroleum product EXPORTS were up $1.3Bn (30M barrels) in just one month (up $17Bn for the year) as our local energy cartel desperately attempts to create the impression of demand in the US by shipping as many barrels as possible out of the country.  Oddly enough, no arrests will be made... 

You stay out of trouble and have a great weekend,

Phil

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)

© 2010 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.


© 2005-2019 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