Saturday, July 4, 2009
By Martin D. Weiss, Ph.D.
“As California goes, so goes America.”
California has a GDP of $1.8 trillion, larger than the economies of Russia, Brazil, Canada and India.
It’s America’s most populous state with 38 million people. And it’s in the final throes of financial death — bankruptcy.
In Governor Schwarzenegger’s own words, “Our wallet is empty. Our bank is closed. And our credit is dried up.”
Yesterday, the Golden State had no choice but to begin paying its bills with i.o.u.’s.
And now, Moody’s and S&P are watching from the sidelines, poised to downgrade the state’s bonds by several notches to junk status in one fell swoop — a move that’s going to crush the tax-exempt bond market and could send stocks off the proverbial cliff.
We have done everything in our power to warn you that this shoe was about to drop — and the national media is taking notice. I think you should too.
I warned you in Money and Markets ten days ago. Remember? The headline was “California Collapsing.”
Three days later, Fortune picked up the story, featuring our warnings with the headline, “A warning bell on California muni bonds: As sure as the sun will set on the Golden State, analyst Martin Weiss says California is going to default.”
My main point to Fortune: California is facing a $24 billion budget gap with no obvious way to close it. The state has appealed to Washington for a federal bailout, but it has gotten the cold shoulder from the Obama administration. Next, expect draconian cuts that will merely deepen California’s depression and cause a rash of ratings downgrades.
A New Short-Term Target for Stocks
By Jeff Clark
It's hard to stay bearish.
Everything I look at tells me it's right to stay on the short side of the market. But it's been that way for six weeks, and so far it hasn't worked.
It hasn't worked to be bullish, though, either.
Anyone who turned bullish back in early May is suffering the same frustration. The S&P 500 closed at 919 last Friday. That's where it was six weeks ago. So stocks haven't lost or gained any ground.
It's the investor equivalent of purgatory.
At the risk of pressing my bet too far, I'll share with you this updated chart of the S&P 500...
A "head and shoulders" topping pattern is developing here. This is a bearish pattern and often indicates the reversal from a bull trend to a bear trend.
You can calculate the projected move by taking the difference between the top of the head (950) and the neckline (880) and subtracting it from the neckline. (Here's how the math works: 950 minus 880 equals 70. Then, 880 minus 70 equals 810.)
So if the index drops below the neckline, the intermediate bear trend is in force, and the pattern projects a move all the way down to 810.
Granted, a move down to 810 isn't exactly a disaster. After all, the index was at 670 just three months ago. I suspect, though, most investors didn't get on board back then. They likely bought in a bit higher, and a 10% correction right here will wipe out most of their gains and quite possibly put them underwater.
On the other hand, if the S&P can move on and break out solidly above 950, then that action will invalidate the head-and-shoulders pattern, and the path of least resistance will shift higher. Given the multiple bearish technical indicators we've covered over the past few weeks, an upside breakout is a low-odds proposition.
It makes more sense to me to bet on the downside right here. That's been my story for the past few weeks, and I'm sticking to it.
Best regards and good trading,
Saturday, June 13, 2009
WOW, today's stock market is very interesting and full of fun. Why did I say that? Imagine this:
Fundamental View of the Market
- Valuations (bankruptcies, ailing financial sectors, ailing auto industry, real estate sector continuous to be battered, etc. etc.).
- If you then look at the economy of the USA (dollar falling, jobless claim hitting all time highs, nation debt ballooning, treasury in money printing spree which will cater inflation, bailing out of ailing companies, budget deficit going all time highs also) the view is still very bad (although some economic figures are starting to look less bad than the previous month).
Technical View of the Market.
- Summation Indices on bearish moods
- Momentum Oscillators are mostly on the hyper extended overbought zones.
- Stock Prices are meeting and breaching falling long-term moving averages.
- Chart of bell-weather indices are in a rising wedge pattern.
- Although the bullish percent of major indices are still in the bull zone.
Above conditions suggest a down market, if not crashing. But look, the market is going up. Bullish traders are celebrating and singing the phrase “Bull Market Is Here Again”.
Why is this happening? This is because of the government’s effort to counter negative forces by spending billions of dollars to pump prime the economy to lift the present Great Recession and avoiding the Great Depression just like in 1930s.
Another question: “How long and how much power (in terms of monetary arsenal) does the U.S. government holds in order to withstand and counter another wave of economic pressure when the tail of this economic hurricane begins to attack?” I don’t have the clue and answer to this but for sure: In the End The US Government will Win. It might be a hard fight but surely, US will win.
This is what I call “A Very Challenging and Full of Fun Situation” because it requires for an investor or a trader to be on his feet to make profits. It requires monitoring of down to the last details so as not to be taken by surprise by the market. Any investor or trader who blinks then he is finished. Very Interesting, isn’t it?
For me I am playing the market right now in WYSISWYG (What You See Is What You Get) attitude. When I see a bullish mood then I’ll go long, when the bears dominate, I go short. In other words, I am emptying my mind on any pre-conditioned or pre-conceived idea(s) on the direction of the market. What the market gives I accept.
What’s yours my friends?
Sunday, April 19, 2009
- Education. You need to know all the details, the whats, the hows and the when, of these techniques before you throw your money in the stock market. After you have knon and learned about all the information and details of the techniques, you need,
- Discipline. This is the time when you will put your learned details and information into a "discipline"others call it a system, I call it a discipline, that would fit your investment desires and goals. This will increase your probability of winning. Then,
- Money Management. This has to be incorporated with your "Discipline" so that you will not lost your shirt in the stock market. This will decrease the amount of money that you will lost in the stock market. Without money management, you will be gambling at the stock market, and this is very,very, very risky. Then,
- Mastery. You should and without exception, master your "discipline and money management" first before getting IN to the stock market. You need to fine tune your "discipline and/or "money management" to increase the probability of winning and narrow down the amount of money to be lost in the stock market
- Patience. After mastering your discipline or system, you need now to be patient in waiting for the right opportunity, the right time to really get in to the stock market.
If you can incorporate these requisite within your whole body system, chances are you will make good in the stock market (click for related topics). Although this is not a 100% assurance of profit since stock market is very risky, and conditions are changing every second, the odds will be in your favor since you will become an informed investor with mastered techniques before jumping in to the stock market.
These ideas i gave are just tip of the iceberg in stock market investing (click for related articles). You need to do a lot of research to expand your capacity in investing at the stock market.
For some basic ideas click this
Saturday, April 18, 2009
In gambling, when you do your bet, the situation is always zero (0) expectancy.
50% win x $1.00 bet + 50% loss x (-$1.00 bet) = 0
In Stock market Investing, when you do your bet (will just call it a bet for comparison), the situation is always not zero (0) expectancy.
60% win x $1.00 bet + 40% loss x (-$1.00 bet) = 0.20, or
50% win x $1.00 bet + 50% loss x (-$0.90 bet) = 0.05
Ther are so many proof pointing to the fact that today stock market (click for more insights) is not Gambling. For now I will just give you two (2). Keep your browser on this blog for mor investment information or click this.