Thursday, September 27, 2007

sept 27 night continued...

Upon looking at the economic calendar, soft data or less than expected estimates may agree with my analysis, though will a more than positive GDP and strength remaining in Jobless claims, and if home sales can remain somewhat in the range it has been, the stock markets will react strongly in a bullish manner. Though with the current trend as seen in the past i feel things can only be near the same conditions ( as slightly better conditions) or a continued lagged weakened effect of economic data. What i mean by this is that things are indeed improving but the data coming is not current and may reflect poorer conditions in the past. Regardless the markets will react to this news. Though i would hope by now all the professionals have at least priced in some bad news...

Wednesday, September 26, 2007

Entry for September 27 (night)

The S&P 500 will dip slightly and continue upward. The dip extending to the lower trading channel around 1500 and may whipsaw to around 1490, and continue upward. Volume and momentum confirm this. Actually upon further analysis the MACD and RSI actually point to a failing in momentum. It appears as if resistance will win over leading to no break through. This will probably mean, a whipsaw will really be leading to a downward movement to support of the closest being 1500. Also to confirm this is the crossover of 100 SMA over the 50 SMA. This is only a legitimate indicator because it is standard with most packages and many investors just use it as a gauge to see what the non institutional investors are making their decisions of. Stripping away all the indicators though, sticking with simplicity with what usually works for some, the upward stepping pattern is bullish, only thing to worry about is if their is enough momentum to break resistance and continue with out all the people taking gains. Based off this simple analysis, i think that's what has happened in the pas, every time the S&P500 approached new resistance levels the peak was reached and the a slip dip occurred due to profit takers but people jumped right on the bull train. So despite all the indicators leading to a more bearish tone, i can't but help feel my gut says other wise. The US domestic equities are still seen as a viable financial capital investment, supporting this idea is the interest rates, today the interest rates yields continued to go up slightly, but i feel this move will soon come to a pause and reverse slightly. Though i need more time to research this matter.

Tuesday, September 25, 2007

Lennars, Lowes, housing, retail... all down. All in line with my expectations. All these all contribute to the downward movements in Housing and eventually bottoms will form sideways trending support opposed to a bounce off support. All this also may point into less inflation from a weaker economy. One argument to a temporary slow down in the economy can be that the higher end consumers are about 30%+ of the consumer make up a considerable amount of GDP drive. Tied close is their net worth and partly in the Stock Markets. This will have short term adverse affects in consumer spending, since the stock markets may continue a downward trend we may see a slow in economic growth, though this will all be lagging in the Economic data coming in. In other words when these reports come in as they do, conditions may be better than they appear, which presents a buying opportunity.

Oil prices starting on a retreat will also definitely contribute to future growth. This may allow lower end consumers to be able to spend house hold income else where.

Looking at interest rates on the 10 year note, support can be found around 108, there appears to be convergence which would lead me to believe a bounce of support thus current yields will start retreating once a slight increase is experienced. As the same can be said for the 5 year note with support at 106, 2 year note at 103. This predicted move in the bond markets can mean short term fears of economic growth and fear of further credit problems, and downward movements in the equity indexes.
Quick scan of s&p 500 chart:

Taking the S&P 500 on the max chart, the general chart is saying up trend. Though we are once again hitting resistance of 1550-1555. Starting at after 2001, during the crash, there seems to be a upward trend from august until the new year, where it which then experiences a downtrend. This trend continues to reoccur till present day. Though each year it is less and less prevalent and after January now makes more of a sideways trend. already we are seeing this trend, from June through July with the credit and sub prime problems dropped and hit support level of 1370 in August. Already an upward move is in place, i believe there to be enough momentum to carry this through to the new year.

In general there are enough fundamentals of the economy to reflect this move bullish idea, though it is very likely the markets will be moving out of sync with the true fundamentals.
I'm sure this upcoming month one can price in that auto sales will not be as reflective as they used to with the GM UAW strikes. Though an increase in market share of Japanese cars such as Toyota will be interesting to watch. As far as attributing to signs of economic growth one can discount it. As usual housing will be a slump, though if the Feds can produce another rate cut, I'm sure it would help housing to an extent. People should be able to take this advantage and refinance their mortgages with lower interest rates. It is already quite possible the bond markets will be factoring in another cut. As shown before, it may take more than simple fed cuts to fix this problem. If the Fed's keep cutting they may make a weak foundation that may present a great shorting opportunity later if this is correct. Though if perhaps if the mortgage discipline can sort this mess out properly right now can be a great buying opportunity as long as one has knowledge of what he she is investing in.

Though the mixed sentiment on the markets maybe shifting to more toward a bearish view which may spread more and more if credit problems keep surfacing. If anything sentiment could kill the model i presented earlier. I am sure retail reports shall point to a weak consumer, this maybe the certainly the case for now, but by next year the lag effect of the recent cuts should be able to buoy the economy. In short term the economy maybe very stale but in general i feel there will be stronger growth to come. Global growth will help keep the US chugging along 2% or a little more.

Short term bear in other words.

Friday, September 21, 2007

Thursday, September 20, 2007

Jobless Claims:

Interesting news today on the labor market. It appears that the loosening of the job markets may have been a fluke in the previous month. I think this report can only be substantiated with more labor economic reports. If as Bernake claims there are to be more turmoils in the market and if there is a consensus on wall street that supprime and credit problems are not over, people should expect the job market to continue to remain not as strong. I wouldn't be surprised to find a rise in unemployment. Though I don't expect significant changes in the labor market. Today the Dollar continued to further plummet against the euro, i can only expect that this weak dollar will be benifcial for the economy. I would expect to see an increase of manufacturing, and following a labor market that won't signficantly fluctuate. As i expect housing and the credit problem will take a while to sort itself out. This will leave a lingering taste of uncertainity in the mouth world investors, spectulators and traders. Because of this the dollar shuold not expect some extreme rally. Though if housing does in improve or a solid bottom is forseen, one can expect the dollar to return to an upward trend. But, all this rambling has its point, that if all these conditions are as stated, the logic shuld follow though i can be very wrong and this analysis may seem very simplifed and amateuristic...

supprime, credit problems and media should maintaing a --> Weak dollar --> good for exports ---> more manufacturing --> job opportunity --> nice tight labor market --> happy people (pending inflation) ---> consumer that will drive this economy at a decent pace...

though obviously housing will still be taking a decent chunk out of the GPD. I mean this is not even factoring in inflation and the other 459864905689 things that can happen.

The Lead Economic Indicator:

Contrasting today's good news on the Job situation was the downward movement of the Lead Economic Indicator. It is no wonder the domestic equity indexes experience a mixed to down day. I really need to look further into this economic indicator, I mean if the bond market can ignore and my beloved media glorify it... how legitimate is this. I mean its not like this any new news. It no surprise that the economy is not bustling, Though the move in equity trading is more relevant to this, so i guess one can attribute it in part to the downward moves seen today. But, it is not like this should be new news overall on the economy. I could have told you that the economy poised to not do as well as the we all hope...

it is as almost as if people these days relay on these indicators as the Word of God without doing any legitimate research themselves...

I feel this indicator is not an indication of a reversal/turning point or a pending recession (though recession is still very possible despite whatever the has done)... isn't this a lagging indicator anyway?
Bear Stearns - 61% down ;)
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Goldman Sachs up 79% 0_O

As i was trying to explain to those bear representatives, some funds obviously were better at managing their exposure and hedging properly, as Lehman and Goldman Sachs also have exposure in mortgage markets, though not as much, yet still manage to surprise analyst estimates.

Though on a whole, i didn't expect that much of a significant rise out of Goldman Sachs, then again comparing market caps and diversification of Gold vs Bears it does make sense in hindsight. Considering the more volatile moves in bond markets I can see how Bears Sterns fixed income investments could have taken greater losses since fixed income securities make up a significant portion of Bear Stearns bottom line ( as i was informed by representative). Though as mentioned, Bear Sterns certainly believes they are not doing horrible as shown in the move for significant buyback. Whether to inflate the P/E ratio, or whether they truly believe in future gains, time will show us the true face of Bear Stearns. I am sure a fund with their reputation will avoid the same mistakes of the past.

As these results come in, it still shows turmoil in the mortgage and credit markets despite the Fed's willingness to step in to " save the day. " .....

Bearing bearish bear stearns

Yesterday at the career fair, i spoke with some representatives from Bear Stearns, though they were only looking for career positions, i feel i was able to gain valuable insight upon the inner workings and environment of the firm.

I am quite surprised such a "prestigious" company would send desk controllers who have been working there for years that were quite unable to defend their company fundamentally or in an decent manner to convey confidence for todays earnings report. I mentioned that they have been headlined quite a bit in the past, and automatically in natural human behavior these controllers automatically i assumed i was attacking them and they reverted into some subprimal mode, and defended their great honor with the toddler defense. "Well we are not the only ones who have problems, everyone else is too..." i soon expected to see tongues flying in my direction. I am not to sure if thats how you respond to a major debt holder or share holder question who needs answers to see if they have made the right choice in the end. They further went to tell me that "we are known as a conservative firm, and we decided to risk more and we payed the price..." another explanation along those lines. What i heard was, we are a firm lacking in discipline and blindly dove into a risky investments just because all the major investment banks were also doing it, and we lacked the foresight to properly hedge our assets, well because... we simply didn't know..." After that they discussed how one of their "senior VP's came down to talk with EVERYONE personally, to reassure everyone that everything was going to be fine for the upcoming earnings report." This can be scene as a double edge sword, this can show that management actually has a grip on things and knows how to control their employees psychology, to inspire this sense of security (wheather fake or not, just look at the Enron environment) . Further noted by the desk controllers is that the executive did not simply send out a memo or a email saying all was fine but personally told everyone in person. Honestly doesn't that sound alarming? If an executive comes to talk to you personally, take time out of his massively busy schedule, you know there a serious problem, whether the problem be the stop or rampart fear from spreading, or to guise the truth as they try to sort it out.

Though Honestly all in all, Bear Stearn has had its days, and is a solid firm over all, Perhaps it has learned from its past mistakes, and will build a stronger foundation now. I asked about how the desk controllers felt about the environment, whether it was relaxed or more stressful and tight. They strongly emphasized to me that it was a more laxed and relaxed work environment... that may seem kind of troublesome, but considering the area of work they were in, im sure it is what prompted that answer.

Based on a purely information, sentiment, aspect looking at no technicals or fundamentals, i expect earnings for Bear Stearns naturally to be affected by the current credit and mortgage conditions, and post lower than expected earnings. To the degree that this significance, i feel it does not weigh to heavily on the overall future performance of the fund as long as they can stick to a discipline that works, and not loose way as before.

Wednesday, September 19, 2007

Entry for September 19

Today's domestic equity's are rallying off the news of the Federal Reserve. As a spring board you have worldwide equity markets reacting in the same manner. It is my fear that these substantial moves are not related to the fundamentals. It is just assumed that a fed cut will automatically fix the problems by providing more liquidity to the money supply.
After talking to a interesting consulting firm at the career fair today, it is in his opinion that there are many fund still lacking in discipline and knowledge of their own investments that are still to come in the red. In my past entries i have trying my best to paint a contrarian bullish scenario, but with the recently upward bounds in the domestic equity indexes, and as they approach old resistance levels it is my belief that key economic events will truely determine or not we are able to break these resistance levels. As these levels are approaching, it would wise to start looking for signs of weakness.

PPI and CPI.

The PPI and CPI were in general down on a whole, though looking at core rates slightly up. It is my belief these are only lagging indicators, and in the coming months with all this excess liquidity, inflation will be more prevalent.


Once again oils still have upward momentum, and continued today to press higher currently reaching aroud $82 a barrel and around 81.97 currently. Continued tight supplies of oil and fears of storms are ever prevalent 10 of the past 11 weeks oils have slumped to six month lows as cited by Angela Macdonald-Smith and Christian Schmollinger.

Similar conditions exist within natural gas, people are worried about there being enough supplies for the upcoming winter.

Once again the $100 dollar per barrel is being harped on again, which is no surprise. The effects of such an environment in my opinion would be to extreme and would not last long if ever to occur. Such repercussion could only have a negative affect on the economy strongly biting into the consumer (consumers would simply stop paying gas, and find other means of heating etc if prices were to reach that high)

If you are such one person who strongly believes in oil reaching $100 per barrel, you can only be a bear.

I am still taking the stance the Oil is indeed inflationary, though to what extent and at what time is all dependent on the zeightgheist of the time. One can argue with higher gas prices lower middle class and poorer classes will downgrade their means of living, and middle class americans will just save less and spend less on other items, either way its a negative impact on the economy.

It would be most important to maintain sentiment and volume and how much momentum remains in this move. It is possible that further momentum will lead to higher prices with a slight retracement and head back up to higher prices, but i feel seasonality will not let prices reach ridiculous levels. Unless pending, we have a huge supply crisis, or massive storms that will be wiping out supplies.


Considering the Bond markets, the majority of people had already priced in .25 rate cuts, so with this move its gives more free fall or cushion for mortgages to fall. My fear is that this significant drop will affect all the people who need lower rates to make these payments. Essentially we are only extending the problem, instead of fixing it. With these lower rates, banks will only continue this malicious practice. I'm sure now many prime lenders are finally loosing up, or at least the very tips are starting to thaw.

Expectations of the consumer to be confident from this rate cuts will not be fore awhile i feel. As with any cut, there is the lag affect with the consumer. I mean obviously i feel that the feds might over do it and cut more based on lagged information and indicators. Previously what happened is that there was not enough liquidity for these banks to make these loans, and people were not paying them aka defaulting etc... with this new wave of liquidity, we are back to where we started. As i have said before, long term bubbles can only mean long term solutions. The housing market will be stale for some years. Housing reports should be no surprise for people at this point, though im sure it will always will be. It is not as if we live in the time of Manifest Destiny with massive amounts of land to claim. Many internal problems in housing and bond markets need to be worked out, many investors have lost confidence in these secondary markets and that takes time to repair...

So all in all, if all other areas can perform well, we will see average growth in general.


This recent move With the Fed pushed the US to near all time lows vs the euro. Most interestingly this move may lead for some countries to abandon tying their own currencies to the US dollar, for example saudi arabia did not lower interest rates in synch with the US. News from the middle east might suggest that the dollar maybe sold due to inflationary risk. Im sure this move in the Fed further prompted carry trade. I'm sure the Yen and Australian dollar are benefiting from this. In terms of the dollar and euro, further downward moves maybe limited to the fact that investors will buy us currency to protect options if they should weaken further against triggers 1.40's. I can confirm this by looking on the currency charts, resistance seems to be form and volume slowing down. Right now the Australian dollar will should remain healthy vs the yen. Currently the US dollar presents a good deal of risk, but many people may be willing to take that risk as the dollar is poised to strengthen. The current weak dollar may lead to an outflow of goods and capital to other countries, which can be seen positive for GDP growth eventually...

The roommate is complaining, off to bed...

Tuesday, September 18, 2007

We sure like stomping on our own currency...

Entry for September 18, 2007 follow up

A person learns from his mistakes, and admitting defeat is only partly the path to greatness. Well it would seem the PPI experienced a 1.5% drop, which should admit tingly lead to a rate cut. But then again, sub prime, and credit problems don't seem as bad either. Take a look at Lehman earnings, surprisingly they did not do as bad as analyst estimates expected. Why? Simple, compare Lehman to Funds like Bear Stearns and Goldman whose funds have been infamously headlining. Sub Prime has not been as a significant problem for Lehman funds who deal with MBS. As i said before, with proper hedging and proper discipline the "subprime" and "credit crisis" is not a big a deal as everything thinks. Considering the amount of people involved with poor discipline though, adding furthermore average joe listening to every spoon fed word of the media, only sustains the problem, instead of resolving to action that would fix the problem, and as American culture is, we always want to depend on someone else to fix our problems, and blame everybody else.
This is why, in my opinion, the feds should not cut rates. By cutting rates it fixes no fundamental issues, but may only help persist already existing problems. One may argue that more liquidity is necessary to fix this problem, but by using a quick fix, many steps of the healing process may be over looked.
Also, the fact is that since Inflationary pressures are not as great as perceived, which i find so perplexing, since i see the prices of many of items I purchase are regularly increasing... I feel this decrease in the PPI is artificial. It is also quite possible that this drop maybe to attributed to the volatile food and energy part of the PPI. Though this idea of a drop being artificial due to the volatility of food and energy, can mean there is a more significant drop and a rate is more deserved or the drop is not as significant as stated. Perhaps as revisions for the PPI come in, this drop may be not as significant. (tommrow CPI report shall be interesting).

In regards to oil:
Perhaps there are still bull's fighting own ward to the very end of the season for oil or people are once again ignoring fundamentals as prices are back up over $80's (this would seem that this move in oil goes against the idea of tame inflation). Looking at the future's contract for october crude, it seems that today resistance level was broken and there is still upside momentum. By the end of October i would expect to see some divergence and people starting to close out positions for profits and start preparing to short.

But in general as Lehman has shown, the environment is not as bad as everyone thinks. Hopefully the federal reserve will see this so, and act accordingly. But with the recent news, i can find it hard to see no other way then a .25 cut considering the past actions of the fed (injection billions of $ for liquidity). But, perhaps they will see that the recent liquidity should be enough for the economy to work itself out. One thing is for sure though, if a rate cut happens, I'm not going to be happy when i see the price of more goods i need to buy go up further.

Domestic Equities:
On the interesting note, this would be a "surprise" as the technicals were reading more downward movements, but as i specified early in the morning, that this is a day heavily dependent on economic reports as market movers.

new news:
Upon finding a new piece of news, the feds have added 9.75 billion dollars of liquidity in the over night reserves. With this news perhaps a rate cut is not to be needed at all. Or perhaps this is a precursor to a more significant rate cut.

The housing market has not improved, the key media word is "soaring" which is probably propelling stock prices higher ahead of the opening bell. With housing this down, it is another reason to help the bears get a rate cut, but! in the past even with poor housing news the Feds never cut rates for that reason. Considering the new economic environment, i think many more presidents are leaning towards a rate cut, this new news can only add more to the equation for a rate cut... though i feel it would be most unwarranted.

This looks like its going to be an exciting day, until tonight then...

Monday, September 17, 2007

Entry for September 18, 2007

Many Many things to discuss, upon recently enlightenment, I have decided to expand my views abroad. I have taken an interest in Asian Markets, specifically Japan and Vietnam. Firstly I feel obligated to discuss our domestic markets, as promised of yesterday, and perhaps if fatigue not win me over, i will venture to discuss my premature developing knowledge on Japan, and hopefully to discuss Vietnam tomorrow.

Surprise Surprise, wall street finally fancied that they were once again engaged in the possibility of dreaming and the possibility lingers that no cut will occur (as reflected in this down day). though a good number still are betting between a .25 or .5 rate cut. As yesterday i had forgotten to mention the recent rallying in the bond market promptly spurred refinancing in mortgages, which can only been seen as small bullish step. Though as people started finally seeing the light, interest rates have increased. Actually seeing my folly now, i should have realized my own words and trusted them to foresee this slight sell off. In the equity markets, there are slight moves of up and down days, nothing too drastic, i can only see this as upward bullishness heading towards resistance once again. Considering todays news it would seem the bears are loosing some traction. On closer technical inspecting, there appears to be more downside momentum on the S&P 500, I feel this would only be worrisome if short term horizontal support was broken around 1450, which is a significant drop from 1476. If one were to perhaps purport what this to be fundamentally, one can say that tomorrow the feds will hold and cause a sell off. Looking at the economic calendar, Housing should be another big mover, unless already priced in, but as the markets appear to be reacting on news, i cannot help but feel volatility will be a factor in tomorrows trading day. Also another aspect to consider is the retail aspect, Perhaps tomorrow should be a reasonable day, a down day but not too significant, as i consider retail should be able to maintain too similar conditions before or slightly better. As i expect the PPI will show some signs of inflationary pressures and hence more reason for the Feds to hold. Thus further weakening the dollar vs the yen and euro. Already the dollar has weakened vs the yen since the recent selling of yen by domestic funds considering the resilience of Japaneses markets to this "credit crisis." Auto sales are not as bad as they may seem, though those recent strikes with GM certainly didn't help volatility. Again with the Job market one cannot expect it to be so resilient for so long and expect it to show any signs of negative deviations of past performance. In general, we are comparing our past expectations which are significantly higher than the norm and so i feel in that respect the job market is not too terrible but not great either.

With commodities:
Oil, as i predicted would top, though my top was off by $1.00+ or so. As a relief, it may appear that this is positive for containing inflation, but i would argue that the Gold Markets says otherwise. Then again others can argue that the Gold Market in regards to inflation and the domestic equity markets have not had a solid correlation for sometime. But i feel that with the legitimate fears in the market that this move in Gold is no surprise and people surely do feel that inflation is not totally benign. In general, commodity prices have been going up and up, i mean as i said before i discussed with my local pizzerias and they keep telling me that the prices of where they get their materials keep going up and thus they pass it on to the consumer. Which in part also leads me to believe that the PPI report will follow suit to my argument that inflation is still prevalent. Also, to go along with this is that, yes, while people are still spending money, it is primarily the middle class continuing the drive in growth. The high oil and gasoline prices may have some affect but no significant in my opinion, every weekend even on weekdays the malls and all shopping plazas are filled with cars upon cars. Though as many kids return to school, this may have some affect on energy prices. While higher energy prices do not matter for a good number of middle class consumers, it will show a slight slow down as reflected in the recent down trends in retail.

*one more thing on oil:
The summer season approaches an end. This can be part of the reason why there is a slight decline, what would really surprise me is if oil continues to rally through October! Though with the majority of people following seasonality will be more geared towards shorting or having short positions on oil, and looking towards heating oil. Though is very possible that warm weather persist, or news of the oil supply being disrupted and hurricane problems keep oil in the 70-80's range.

In other respects for producers, they maybe feeling the squeeze in a different sense. Corn prices... Well lets see what corn is used for.... feeding live stock, food obviously, candy, corn oil, and in large boosting the price of this commodity is demand for biofuels. Obviously there are more uses but I'm sure by examining these parts tied with corn we can get a general idea of the situation. Because many farmers are now turning over lands to convert to corn production prices are being increased. Anything tied to this will follow suit, and for countries who are highly dependent on foreign imports for food will also be feeling this price increase (ex. japan). Its also to consider that in general, demand for things like corn from emerging countries have not disappeared, but may have slowed due to higher prices since the summer or something along the lines of that. At any rate one can see the relation, Corn price go up, producers in economies have to pay more, and pass it on to the consumer, this can be perceived as inflationary. I am moderately bullish on corn. Though, my argument for inflation may be far fetched.

Enough about the domestics, 12:49 a.m.

As i do not know too much about Japan, other than the average stereo types i have familiarized myself with its culture through years of indirect and somewhat direct research. As a kid i studied the martial arts of Karate for 11 years. As of recently I have been following the film industry from the very old to the very new, such as films of Akira Kurosawa. The expression of the ideas of the samurai, warrior culture, handwork and loneliness all explored. Also i started seriously engaging in anime for the purpose of gaining insight on language and culture. By specifically picking the correct anime, especially the ones pertaining to school life and city life, one can derive vague generalities that cannot be taken seriously, but yet still hold some truths. It is as if one studies the bible, he or she does not take every word literally. The various regions dialects and accents are ever prevalent in anime, how schools work, how students interact, festivals and celebrations, holidays, are part of the culture that can not lie when i watch it so in anime. Also the themes explored in these animes shows the thought of what Japaneses choose to express, just how American media and movies a reflect a way of American thought. The danger lies in that people expect to find japan to be like anime when that can be father from the truth. In fact reality, is never anything like TV EVER, and one has to keep this in mind at all times. The history of Japan shows a race of hard working people who value the ethics of working hard and doing so. Honor family discipline... etc... And there are so many things i do not know will not ever know do to the fact that i am a foreigner. But as it may be, i will still endeavor to continue my studies of this foreign culture, As of now i continue as the aforementioned and will engage to studies further of the history particularly the 1980's and or the 1950's onward. I have tried my best to convey my biases and what little i know of Japan, Read onward with discretion(If i come off as ignorant and offensive i apologize, but i cannot apologize for being who I am, I was born an American and simply can be nothing else but so):

Random thoughts to be reorganized later:

An aging population with lots of money exists in Japan. Many of these people do not know where to put this money. Many possibilities can arise, similar to any other aging nation such as America, though to the extent of people and amount of financial capital is quite different (also ideas of materialism).

The BOJ decision to hold pending the US fed's decision: So if there is a cut a rally, dollar further weakens yen strengthens. This good for US exports bad for Japan exports, and already this is not helping the inflationary pressure japan already feels. I don't think the BOJ will raise rates, but will also hold if anything.

The financial markets of Japan slightly trouble some, but are better off than most of the Global markets, in terms of shock to the Credit problems. Housing, is not terrible but not in doing amazing. I feel this can only be good if housing is steady and moderate, considering the small fixed amount of land available on the Island, and the growing population of Old. What maybe troublesome is that the youth will be fleeing japan eventually seeking opportunity elsewhere.

Political intrigue is never a dull drum these days with Japan, whoever steps up from ABE will sure have a lot to work with in bettering japans economy for the future. Politically whatever turns out will be significantly felt through the financial markets of Japan.

Enough for tonight.... Vietnam tomorrow

Sunday, September 16, 2007

Entry for september 16 2007

I haven't been able to write for a long time, settling into school and getting into class has been my present priority. Though as not to say that i have not been following the markets, because i have been to the best of my ability. In general, I will start making this blog more formal throughout the school year. And so... There are so many things i have not written about it would take me many many many hours to discuss in full. I will do my best in order to convey the generalities of what my opinions hold...

Upon attending a finance club meeting, I just learned that many of the i-banks get all their training from the same company, and that they are coming to my campus for training workshop. I found this most pleasing for my amusement. It is no wonder that all the people on wall street tend to mimic each others like monkeys or toddlers. No originality, maybe its my previous bias from working at a hedge fund, but finding new talent and ways to do things in a distinct manner is something that i hold important for analytical finance and in general for my way of living. Perhaps it has to do human survival or an idea along those lines, but it something I feel is something big cooperation's should address to better define themselves; is this not a capitalist nation that we live in? Isn't part of capitalism the ability to be able to advertise and differentiate to make companies different or is only there to make it appear so... But anyway, let us just look at delayed treasury quotes off Bloomberg 1:29 am:

3-Month12/13/20073.88 / 3.990.01 / -.00009/14
6-Month03/13/20084.05 / 4.200.01 / -.00009/14


2-Year4.00008/31/200999-29½ / 4.040-00 / .00009/14
3-Year4.50005/15/2010101-03+ / 4.050-00 / -.00009/14
5-Year4.12508/31/201299-24+ / 4.170-00 / .00009/14
10-Year4.75008/15/2017102-09+ / 4.460-00 / -.00009/14
30-Year5.00005/15/2037104-14 / 4.720-00 / -.00009/14

Well it was in a much different state not but a few days before. I remember the 10 year treasury note was around 4.30 something, it seems some normalization is occurring. It only seems like yesterday that the rates were 5.00+... There are many many reason why the fed should not cut rates coming up. For instance, inflation would get out of control.

It is possible that people in the bond market are doing what they did before, another over reaction. Just as during the summer when everyone wanted another cut. The markets are still not reacting purely on fundamentals, though they never in totality do follow fundamentals, but they follow them even less so now. Taking a look on the S&P 500, when i called that support at 1370 (I'm not checking so maybe double check this) I wasn't totally wrong since the low of the next day did hit that low, though the close obviously was significantly higher, but it was a great fight between the bulls and bears that day. But since that day there has been no significant drop to quantify a reason for people to follow fundamentals more so. But about fundamentals people are worried about labor markets, I love how people always get surprised about these instances like they would never come. People should be predicting better, I mean once problems come up and considering how many things are tied together in markets people should have seen that since many firms vested heavily in MBS or CLO CMO's etc... were bellying up which would lead to less jobs. It should have been no surprise for people who immerse themselves everyday in finance for a living, or has it gotten to the point where people are too focused on one tiny little aspect that they forget the "big picture" (yes we work on the little things and do our part, but its the little things that make up the big picture).

August retail was down, this should be no surprise, retail has been down or not doing so hot for how long now? As least through out summer retail sectors have not been at its best. This shouldn't be shocking news... Considering the amount of consumer spending that i see at my local home. I live in the bronx during the school year, and every day i go up East Fordham Road or farther down, I see an innumerable amount of people shopping, and the Bronx is supposed to be one of the poorest neighborhoods in America? I find it most interesting that the corner bum has a better pair of timberland boots than me and everyone walking around has over $100 pair of nike shoes. Makes me wonder the extent of poverty and the allocation of financial capital. I don't know but I can't speak farther than the east coast, but i think people still like to spend their money even if its begged for. Also, i speak to my local pizzerias... complaining, why? because i have to complain that im a " Poor college student" and why is my pizza now 2.50? Perhaps it has to do with higher commodity prices. I don't think this bodes well with a rate cut in my humble opinion. What is my pizza going to cost in the next year 3.50??? Another reason that the Fed should not cut, Global demand... I'm sure people love talking about oh all these baby boomer's are going to slow and interest rates will be some ridiculous number like 10%(a.k.a Alan Greenspan and his new book). Ok that is a different topic but, in my generation im sure we are still going to continue with making our babies, the promiscuity of students is rampart as ever and people are love making everywhere. I'm sure at least if anything a slow down may occur at the end my life? even still if we aren't going to be making babies other countries will, and growth won't stop there. I'm not trying go to extremes though, its not going to be as literal or drastic as i say, but it something to consider. Global growth will slow, do to the enormous size of emerging nations suck as China, India, Russia, though smaller countries, such as Vietnam, Brazil etc... will also have problems but not as big which means a higher standard of living is more achievable for smaller emerging countries. Global demand or slow down will occur with the challenges theses countries will face in the upcoming decades. But to say slow down in a negative way is not what i mean. If anything steady growth upwards in general. Thats balancing out or averaging the countries who are stagnating and those who are growing. My point for now is that in the short term, due to the recent financial shock of sub prime and credit woes are significant to slow it down temporarily, but we will be back on track. People often forget that its the Feds job to watch inflation primarily and labor, though as Greenspan stated before, halting systemic risk is not part of the job. Bernake is now the chairman, given his track record another hold would not be surprising though cuts may seem to be more warranted now which means a cut is not surprising either. I feel that a cut should not be done, its a quick easy band aid temporary fix that does not fix the mentality, and or the policy of what created the problem to begin with. I mean the past two quarters have been just about 2% GDP growth bordering recession, but it hasn't fallen yet. Id say primary things like housing should be factored in by now but its clearly not the case, as the domestic and even foreign markets are reacting off them. Though my opinion is what it is, i say no cut but hold, it may not be so. The truth is what shows, not what i think it should be or ought to be. As we have seen many bank presidents have spoken forth about credit and sub prime being a bigger problem, but i think this only indicates that, yes, "we as the fed" are listening but, i don't think it translates into a rate cut. Its just what people want to see. And all the people on wall street want to translate it so, so its hard for them to see it otherwise, and so the people on the bond markets follow suit and decide to price it in... All this is saying is that its up in the air where this will go, i mean previously in the past i was able to confidentially say hold, despite market sentiment, but now is more worrisome considering conditions have worsened and one has to admit it. My piece is that i feel its not that bad and still want to lean more towards a hold. The only surprise i can see is a rate hike, well that would definitely be interesting... its not happening.
Another interesting to discuss is the recent move in currencies. With the dollar weakening vs the Euro and Yen presents an interesting environment. I just read that middle class Japaneses home moms have been hit hard by the recent credit shocks. Japan has definitely developed a very very interesting culture on this aspect. Let us examine the delayed Bloomberg currencies for us now 1:57 a.m. :

looking at my previous currency database, the yen is about where it was

12:47 09/05/07 (bloomberg).

Interesting the dollar strengthened a bit from 113.906 9/12/07 8:00 am.

the euro seems to be holding its own, the the dollar barely appreciating vs it.

I had predicted earlier that this move in the markets would help exports and possible the trade deficit, one of the problems Greenspan addressed in his book, but he was projecting way in the futures and I'm sure the dollar would normalize by then so my argument vs that would not be relevant. Either way, with more exports it has to be positive for GDP another reason for why Fed should not cut.

I have been following futures more so, but will try to talk more about them tomorrow, i also need to look into the domestic equity indexes... But for another day...

^GSPC Chart - Yahoo! Finance

^GSPC Chart - Yahoo! Finance

I had mistaken my previous pivotal (lateral/horizontal support levels) of 1420's, widening my scope literal pivotal support to 1374, though as support is mostly never literally hits i would call support around 1380's. Personally i would see this as a great opportunity to get in the markets as when the price level is reached. As i see it now, around 1420's on August 9th a huge spike in volume accompanied by a large bearish bar occurred showing signs of a false recovery, quit possibly a dead cat bounce (minus the tell tale gap to the downside). Huge spike in volume can only indicate a further down trend. AND so a doji was formed the next day and the following day on the 11th a doji to the downside only confirmed this with lessening volume .... all bearish indicators. The reason i call the support level of 1370-80's to be legitimate is because it is a level everyone is drawing the same level of support. The fundamentals of the economy with a some what tight labor market, complacent but not weak consumer, w/ the start of school season coming in full force, with low interest rates only can say that this is a temporary pull back. All reflecting credit and mortgage fears, moves purely based on news not fundamentals. The other possible scenario is that fears and panic are only starting and hit force and BREAK down support, and would only lead into a recession until price levels reach support at 800's but that would be ridiculous to call such a thing in my opening. Though the idea of recession is quite an apparent risk, i doubt it it has the momentum to continue so low considering the pure fundamentals. Considering on the MACD, volume is letting up i can only see as imminent as bears are getting tired and bulls will at least lash out at the 1370's support level. By taking a picture on the fullest of the S&P this is a merely tiny bump in the road that can possible fall to 800's but unlikely. considering steady GDP and core cpe growth. The S&P 500 is merely hitting resistance at the 1500's and needs some more pivotal support to build up before it breaks through and continues steadily.

Reiterating, i still believe fundamentals are strong but are still reacting on news and media and will reach support of around 1370's-80's as where a good buying opportunity exist. Naturally for all you people who have margin/futures account can easily hedge your positions. Suggesting to hedge it with index options or future contracts. simply go short on the positions, and you can further hedge those , though if Im wrong you can sell the short positions right away and the bullish call should be more than enough to make up for the slight lose. I will not go into a complex strategy as i have not been following future markets as thoroughly.

Again i think the bond markets are being too wishful, interest rates are low as ever, with a double whammy with mortgage problems/credit + housing there is no way the Fed's will cut if the other fundamentals remain with the presence of inflation at hand. And as it is now, people are still scared of the equity markets as reflected in the sudden price move in the bond markets reflecting as the yield shows to be at 0.471%. (it can see how bears can put up a decent argument for a recession, but not as compelling as a bullish stance).
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Thursday August 16, 2007 - 07:57am (EDT) Edit | Delete | Permanent Link | 1 Comment

^GSPC: Summary for S&P 500 INDEX,RTH - Yahoo! Finance

^GSPC: Summary for S&P 500 INDEX,RTH - Yahoo! Finance It will be any time before the markets start looking at financial and people stop reacting off news of liquidity crises, spill over effects of mortgage problem, or credit crunch problems. The market will have to fall to a significant support before returning to a normal trend based off strong fundamentals. Swing traders must be having a ball currently. No doubt technicians should be working hard about now. In terms of what i have heard from wall street, i feel another premature analysis about the consumer has been made. Considering my own circumstances and areas many of the people around here are not looking for new housing though it is still an area most desirable to new home buyers. In general it is way to early for the majority of kids to be buying into school supplies. The last to weeks of august shall prove be an effective one, and thus saying a weak consumer due to the fact that it has not been strong back to school season is fasley addressed. Consumer as i see it from a normal person, from an average standpoint, you can't expect people in this day in age of America to be wildly driving the economy, but no doubt we are still a greedy people and still demand very much. In terms of technology a steady slow growth and can be reflected in consumer spending. Also, we as consumers are still buying it is not like it has stopped. A healthy consumer is still at hand. Tight labor markets though fears of them loosing still remain. The liquidity scene is not much changed and i still believe the Feds will no doubt remain in hold for awhile. An extreme disaster that directly leading into a recession would cause them to step in and as i see the fundamentals are still strong enough to keep GDP and real GDP at the average 2-3% or so. As i do see a slight pick up in technology every kid these days wants a damn laptop.... i think laptop says of big box retail or tech/comp companies would be a good indicators for the up coming quarter. It would seem everyone wants an apple laptop too considering everyone these days likes to be name brand whores too. This is a one skewed biased considering i come from a white collared family. BUT even still my friends who are middle to low middle class still afford to buy apple laptops and even other laptops and luxuries because the culture we live in affords students to work part time or full time to buy such unnecessary necessities. In general i don't see a strong strong consumer to come but an average one in general America being average in general. Due to what... everyone likes to beat the drum of oil prices high gas prices, etc... though as the summer trends are coming to an end with the upcoming months and as oil has already taken a significant dip, the consumer is likely to pick up somewhat more than over these summer months.
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Friday August 10, 2007 - 01:20pm (EDT) Edit | Delete | Permanent Link | 0 Comments

Entry for July 31, 2007

This think with the nikkei being down though all other major indexes are up is quite troublesome...
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Tuesday July 31, 2007 - 09:27am (EDT) Edit | Delete | Permanent Link | 0 Comments

Entry for July 31, 2007

It would seem that a reversal in is in place, though it is hard to trace support levels. Anything lower than the newest low of 1462 on the S&P 500 can be trace all the way back to mid April of 1452. My natural instinct is to go with the fundamental feel, but with volume consistent with a down trend this may only be temporary before the S&P falls to a more solid support of say around... based on a glance of only support levels of 1438 to 1440.

One thing i would like to note off subject, it is amazing the influence American culture has on somewhat remote societies like in Vietnam. It is not even just the effect on cities. Well known hip hop artist and other culturalistic icons of which express our zeitgeist are quite popular in modern Vietnamese society, as well I'm sure would have to be similar in other countries. It would appear as if America though maybe not predominantly going to be leading in the future economically, but sure as hell will with pop culture. Though no doubt, it almost seems reminiscently familiar with the ideas of European fashion in America, and how Europe seems to be where "fashion" originates from and goes to hip scenes like NYC. Perhaps over time, everything will naturally recycle itself. As Eastern countries rise to power, and America will become more socialistic. Though this is not like it will happen in one day or anytime soon. Naturally globalization will fuel this further no doubt.


A similar picture develops on the DOW with its more overstated moves and psychological effects.

All and all i still feel more bullish on the fundamentals of the economy, though as i have been told many many many times, economy DOES NOT equal the markets. It seems that may as well have fallen in love with my own idea too much. The technicals were all there telling me it was time to sell, and i did not listen. As we speak, the bond market seems to be back on its upward rise...

Another side note, only in American can we find such a diverse crowd that which produces our unique and appealing pop culture. The mix of people, though arguably still skewed in favor of the white man, is at least more than what most countries have. At least what our country IS supposed to built upon is represented by the people. As to how this will affect our future is truly hard to say, but definitely America is something that cannot be ignored, and people spewing nonsense as other people taking over the world etc... I tend to see it more as a push towards globalization = a push towards socialization since people will have to learn to cope with each other as more and more peoples lives improve. To have a society IN modern today cannot simple have the amount of capitalistic countries we are developing now. It will be too inefficient to be able to sustain all scarce resources, Either that large amounts of people will become even poorer to sustain the other capitalistic countries. There is not doubt a balance exists between poor and rich. IF you have rich you need poor, if not it must level out some how.


in terms of market, temporary upward trend and continue downward trend, is what i would have to say technically, though i can't seem to get rid of that itch saying this trend will only continue up and that support levels aren't literally touched every time or even most of the time... Well lets see how this pans out for the rest of this week.
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Tuesday July 31, 2007 - 09:08am (EDT) Edit | Delete | Permanent Link | 0 Comments

Entry for July 26, 2007

As i meant to say before, the dollar was weak vs the yen and only slightly down vs stronger currencies such as Euro and Aus dollar. Though sub prime may turn into what housing is now. A prolonged correction, it should not be a major drag though it will drag as housing is now. A credit crunch is something i doubt. Interest rates are still low for enough liquidity, and the global economies are strong and diverse and so is the domestic US economy.
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Thursday July 26, 2007 - 05:45pm (EDT) Edit | Delete | Permanent Link | 0 Comments

Entry for July 26, 2007

WOW, talk about a selling frenzy... Well it appears everyone is in panick mode and those nifty computer programs are probably going berserk. I guess bearish would have been the right call last time i checked. Though people are already looking for signs of strength, which now would be a good time. An economic calender would be essential around now. Hopefully a few good economic reports and we will be back on our way up. Amazing how the bonds are where they started a while ago during the school year and previous summer etc...

Interestingly the dollar weakend against the yen, which makes sense considering this situation of the markets. The euro weakend against the dollar though. Fundamentally i can not see why though it is quite possible the euro has lost momentum.

when i get home from school i will look into this more.

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Thursday July 26, 2007 - 05:37pm (EDT) Edit | Delete | Permanent Link | 0 Comments

Entry for July 25, 2007

It is hard to be anything but a bear right now, all things considering the huge sell off in the equity indicies accompanied by the huge spikes in volume. All things considered, i do not think this to be a full fledged reversal. People were waiting for the dow to hit 14,000 and start shorting, i believe short covering shall take affect around the 1490's on the s&p 500, though the dow has slightly a little more room to fall before hitting support. A couple of lower highs, and we will be back on the bull wagon. Though the technical evidence compells me to say otherwise. If i do not see volume decreasing significantly to support my latter thesis, i would only have the choice to be bearish. A lot of bad news sited in the media are only temporary movers, though like i said before, housing should have been no surprise, but it is only natural that it is. Self full filling prophecies seem to be what everyones is into these days... \

The bond markets seem to be finally hitting a one way trend. For what reason are people buying into bonds now. The inversion of the yield curve would have been more significant, if it hadn't been inverted for so long prior to this one. Fear of Fed cuts, bearish market sentiment, poor economy news reports, bode well for the bond market. I had not expected it to drop this much, apparently, there are greater forces at work that i must discern before commenting further.

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Wednesday July 25, 2007 - 01:56pm (EDT) Edit | Delete | Permanent Link | 0 Comments

Entry for July 24, 2007

Sub prime, 15% of the of the mortgage market opposed to 85%. 85% which has really really gripped down. housing... after a huge bubble it is only natural to expect such prolonged state as which it is in. Considering the "fixed" supply of land, its hard to imagine huge booms of growth. Though considering there are many many many uninhabited areas, but due to governmental regulations... are really foreign investors basing their decisions purely on us, perhaps it is vain of our media to think so. Foreign investors, not domestic to the united states, have and will find other opportunities. Plenty exist, Europe, Asia south America, Africa. Though naturally one cannot neglect the fact that the US is still an attractive place to invest. All this stuff said, stuff that everyone knows... since everyone does know this, this globalization, where does it ultimately lead us? What we need, is one unit of currency. Some along the lines of credit, just called credit. We should utilize everything by means of credit. You are credited a certain amount of credits. Cash and hard money are obsolete. The great challenge to eliminate such a thing. Perhaps cards that hold the information that says how many credits you have. Backed by what? Fear of technological failure. One currency... one government, one world. Capitalism is quite outdated, the problem... how to develop a better system. the united nations... the problem of people wishing to retain diversity, what we as humans truly prize, natural human behaviors. How to understand this to overcome or to accommodates. the smallest action creates the greatest demands.

I was watching the other day, in my school library, as people walked in and out of the library, they pressed their fingers, their tiny fingers that exist in the universes on the door. There dirty little smudging fingers.

now what does that have to do with anything?

demand, naturally...

Because some absent minded action, we never even think about, a demand is created. Someone is wanted, to clean that, and who is to do such a thing, besides us white collars who such an actions is beneath us...

natural human interaction, each movement we take each breath, all forming a demand. AND not by need, but by desire. the key word in the example of cleaning a dirty window, is someone is WANTED, not needed to clean.

this desire must be quite important...

anyway before i trail on before anything else,

reasons why the fed won't cut rates,


well perhaps i shall go study the causes of inflation and deflation in more in depth...

well its everything or at least some what of the bond markets fear...
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Tuesday July 24, 2007 - 02:42am (EDT) Edit | Delete | Permanent Link | 0 Comme

Entry for July 19, 2007

Today markets again, are acting predictably. I believe for the equity indexes to trade around this range some time before continuing an upward trend. Considering the technology woes with weak earnings reports, the nasdaq is not lagging significantly at the start of the day. Though, technology stocks and the ^soxx are suffering. Despite Bernake's statement about subprime losses i expect, by now people have already hedged positions, or the markets priced in such losses. As we can see today the markets are reacting to other news such as M&A action, Strong earnings reports, and steady economy. More specifically having a tight labor market. Most interestingly Bonds are reacting to housing statements made by Bernake, as the dollar strengthend agaisnt the euro and yen. It is no doubt that housing is a drag, but not enough so far to choke the economy, there is in my opinion, no reason for the Feds to raise rates at this point. This is quite possible we will be on hold if the economy keeps up, and housing keeps dragging through the next year.

I would like to note, about early on my poisition on energy specifically oil, it is often a newbie as myself, gets to intangled with his own ideas and ignores what is actually happening, It is perhaps as i said in my Eton Park entry, that summer seasonality is still holding strong, and i when writing my report already missed the slight down turn. I expect oil to stay in the mid 70's range until people start pricing in for the upcoming winter. (oil referencing to light sweet crude).

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Thursday July 19, 2007 - 11:12am (EDT) Edit | Delete | Permanent Link | 0 Com

Entry for July 18, 2007

Lovely, the bears were just waiting for any excuse to take down the DOW 14,000, while the media was taking up any chance to jack up the sub prime "woes". There is no doubt now that the subprime problem is a bigger problem than i thought, though not so much as fundamental a problem, just a reoccurring hypocrondriactal problem. It is still in my opinion, still looking at the charts of the equity indexes that they shall continue upward, plus economic indicators are still pretty much intact. Housing SHOULD be no surprise though often i like to compare wall street to overeactive senstive suit pants monkey jockies or the likes. It is only natural for the markets to react in this manner. IF housing are part of this problem the bond markets should be expecting interest rate cuts, BUT as i see it they are fleeing the equities and buying bonds instead, the yield now around .501%. Across the board equity indexes are reacting to this, another natural reaction. Bond markets ignoring the usual, not even thinking about inflation, or possible cuts, but reacting to the current circomstance. Though tommrow i expect a continued downtrend or at least a somewhat pause. As i had not much time to research this furthur, this is only a glimpise of morning headlines analysis. More later tonight...
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Wednesday July 18, 2007 - 12:16pm (EDT) Edit | Delete | Permanent Link | 0 Comments

Entry for July 17, 2007

The Dow not able to hit 14,000 today, though again, all a matter of time now. When the Dow does hit, it will psychologically be bullish causing more upward momentum or depending on the sentiment of the time, might cause people to start taking profits on long positions. Most likely when breaking through a slight pause or even a slight dip before continuing upward again.

Ahead of the PPI, expectations for inflation to be slowing, i would expect inflation to be either the same or slightly higher. Though i would expect the core PPI in general to be the same. The markets might be caught off guard, this might be a good opportunity to set up some short positions, or hedge against long positions further.

Like i said before the Dow is a more psychological influence if anything, looking at the S&P today and the FTSE, both indexes are pausing or pricing for the upcoming events.

It is also possible that good earnings reports will add to further bullishness.

Though despite all my bullishness, in the back of my head lurking, i can't help but get the feeling i should start looking for more signs of weakness...

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Tuesday July 17, 2007 - 05:39pm (EDT) Edit | Delete | Permanent Link | 0 Comments

Entry for July 16, 2007

Given current conditions i still predict upward movements, DOW 14000 is naturally a matter of time, perhaps earlier than most people think. Perhaps psychologically, there may be some resistance from left over short sellers, though the majority are realizing sub prime is not a big problem and are jumping on the bull wagon. Interest rates are still low, and i expect the to still hold out for the rest of the year. Housing, still will be down for some time i believe despite that other economic indicators will still hold strong.
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Monday July 16, 2007 - 05:09pm (EDT) Edit | Delete | Permanent Link | 0 Comments

Entry for July 16, 2007

Bernake will naturally enforce the ideas of inflation, which in turn will potentially drive the dollar lower. In regards to the sub prime problem it is true as Greenspan has said, that the job of the Fed also does include preventing systemic risk. Though in theory, it is not the job of the Fed, and when speaking to the house, inflation will be the main discussion though, he will no doubt have to address sub prime issues, as that issue will be pressed on him. The up comings reports PPI and CPI will definitely be market movers. Because of these i expect the interest rate yields will be rising due to this environmental. Volatility is still strong in the bond markets. If demand from abroad continue to decrease for US treasuries, this will also add to the increase of yields. One can expect other currencies to continue an upward trend. Though as it is not the far future yet, the United States still is a great place and has many opportunities for investment, though in the short term i expect investors to seek better investments else where. I expect all these recent reports of sub primes and them starting to hit prime times for the public to see, will have a greater affect than i had expected. If the public starts getting wind of this this can not bode well for the market. Though potentially good for bond prices to rise once new on the economy stabilizes.
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Monday July 16, 2007 - 04:22pm (EDT) Edit | Delete | Permanent Link | 0 Comments

^GSPC Chart - Yahoo! Finance

^GSPC Chart - Yahoo! Finance

It appears as if we have a slight encompassing pattern that is not valid. This would lead me to believe this rally will not be substantial, but with decent economic news with inflation in check, pending if oil prices can continue to trend down, it maybe surprising how far momentum can carry this rally.
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Entry for July 13, 2007

It is amazing still!!! how people can still talk about sub prime, despite the rallies you would think all these smart cookies would stop listening to the media and price it in already. Though at least a cautious presence is still there, nothing like the late 90's i hope. Though it is always good to see the markets going in the direction you predict, though surprisingly despite a shift in sentiment on the economy. Though this huge leap today in the Dow should not be that amazing considering it is only 30 of the "blue-chip" stocks and is price weighted. What i would be looking at is the S&P and it testing the 1530ish resistance levels. THOUGH, i must say I'm sure local new reporters and international ones will be report on the surge in the DOW thus adding momentum the the markets in general, and i would not be surprised to see the S&P break through resistance too.
It would appear as if oil is taking a slight pause before choosing its direction. As usual watching supply and politics would be crucial at this point. Though considering my schedule it has been had to keep up with everything.
It is amazing how the Euro has keep on rallying. The dollar appears to be weakening, this should be favorable for the export part of the import/export reports. Though i am not quite sure what is more inflationary, something i must look up. Though a weaker dollar should definitely help the U.S. economy. I will predict, though i have not had much time for research, but the dollar will continue to weaken a bit before stabilizing, and the markets realizes the economy will be fine for the rest of the year.
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Entry for July 11, 2007

It appears today the market is acting more rational. Interest rate Yields are reacting as expected to the recent news. Though i would expect yields to eventually settle slight above 5.00, a higher estimation than before due to the pricing in upcoming events in the economy. Again the today the stocks rose, but barely scratching resistance levels. Everyone will be watching closely to see if the markets can break through. I predict that the markets will stay in this trading range for a while longer before continuing upward...

Entry for July 11, 2007

Again the market is testing resistance levels, though i must admit as there have been greater changes to the fundamentals, which might make me retake a stance for the rest of the year. Though i predicted steady economic growth, with the markets rallying on this and plus liquidity and M&A action. The markets may take an earlier down turn. Most curiously interest rate yields have followed suite of the equity indexes. Though i think i may have found an explanation. Despite fears of inflation of the fed, which would usually lead to a sell off in the bond markets. I noticed before the weekend on Friday the 6th i believe. The Dow and S&P were testing resistance levels as usual, though i should have looked into this deeper and looked up economic reports, i regretfully did not. So i did not see todays immediate downturn. But as i was saying, on that Friday, all equity indexes were up and bond yields had volatility risen to 5.20%. Every index i saw domestically and abroad were up EXCEPT the Nikkei 225. I did think this as odd and knew that the BOJ was warning on raising rates, the sell off must have meant to me at the time that money was looking for better investment in the interim. Hence this Monday and Friday the yields have considerably dropped to a 5.04. Perhaps part of this reason had to do with the flight to quality in the mean time when Japaneses investors were looking for a better investment.
At any rate my oil top prediction of around 70 has been considerable off for a few days now. As to why i must now figure out before i can proceed trading oils ever again. Though this rally in oils i still do not expect to last much longer.
As to if the equity index can break resistance i still think it is possible though i would put more of a longer term downtrend more possible with the number of tops which may be indicating momentum loss. Though as looking through back charting on the S&P this was quite common before steady or mild rallies.
As far as currencies go, i truelly did not expect the Euro to shoot all the way up to 1.37, considering the sentiment of market it appears as another overreaction though, i would not consider this to be as superficial as previous ones. Because it is a slight overreaction the dollar will strengthen after things calm down and the euro will probably fall with the change in dollar.
Also considering the change, and change in market sentiment it maybe possible people will start a shorting frenzy.

Though i am still in favor of steady growth in the markets and economy for the rest of the year. Though, what i may see, may not happen. The truth is not what it should be or what we think it should be, but what shows. And currently, the markets appears to be on a turning point, or a breather before breaking through resistance.
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Wednesday July 11, 2007 - 01:44am (EDT) Edit | Delete | Permanent Link | 0 Comments
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