Election Day And The Fate Of The Stock Market

I’ve been very busy today and that’s why this post is being done much later than I usually do. Between voting and listening to all the election news, it’s been been pretty hard to keep up with the stock market today. Don’t get me wrong, I’ve been able to follow the major stories in regards to the markets and I’m surprised to see that it was a good day for the three indices.
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The DOW and NASDAQ were both up over 3%, while the S&P 500 is up 4%. Considering that it’s election day with a lot of issues about our economic future, it was a great day in the markets. Some of the sectors did much better than others. Health care doing the worse of all of them. Consumer staples also didn’t fair as well as I would have thought with the DOW gaining 305 points.
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Alternative energy stocks did very good today and that comes after a great bounce for the sector in the last 5 trading days. Let’s look at the leader in that sector, First Solar (NASDAQ:FSLR) which was trading at $107 a week ago, had a intraday high of $178.60. There was a major move for the entire sector during that same period. Speculation is that the sector was oversold and it took awhile for investors to start taking a stake in the sector again.
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According to the experts, an Obama win in the election has already been calculated into the markets. The only thing that may become a problem for the markets is if the Democrats take control over in the Senate as well as Congress. If that does happen I would imagine that the markets will move downward throughout the rest of the week.
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The oil and gas sector did the best today as in regards to the sectors. Overall the sector gained over 6.5% today. As for the price of a barrel of oil gained over $6 closing over $70.

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Be Prepared For Anything

It’s amazing that I take a day off to spend the day with my daughters only to find out that the market tanked again. What I’m amazed at is that people that I speak with are shocked by the reaction of the markets. On Monday the Libor rate eased and there was talk that the landing market was opening up. Then on Tuesday it was talk about the world recession that is becoming more inevitable.
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Now for this morning the markets opened down by 200 points and ahs dropped as much has 350 points. So for the first two hours of trading, it’s been some what holding at the 8700-8800 level on the DOW.
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The big talk that’s going on now is the global economy. We on the whole are poised for a recession all around the world, which is nothing new to me since I’ve heard that for the last few months. The funny thing about all of this is that yesterday when I took the day off, my family and I went to Disney World, there didn’t seem to be a recession going on there. For a day that wasn’t a national holiday or even the normal time for vacations, the place was full. I did notice that there were many international visitors in Epcot.
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What I trying to say is that Wall Street as well as Main Street don’t really know what’s going on and because of that there is a lot of uncertainty in the markets. This will continue for some time, how long is really anyone’s guess. So don’t be surprised by the day to day fluctuation in the markets and make your trade carefully.

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The DOW Drops Below 10,000

It was only a matter of time that the Dow would drop below 10,000 points. Shortly after 10:00 this morning the DOW officially fell below 10,000 level. To make matters worse, it’s getting to the point that traders on the floor aren’t even trader between each other. By the afternoon trading, the only participants are the sellers. The confidence in the markets are non-existent.
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The markets have entered the same levels that we were at in 1998-1999. If you were in a IRA or 401K for the last ten years, you’ve gained nothing for all that time (please don’t shoot the messenger).
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Hedge funds are selling their interest to save any capitol they can. I’m sure there will be a lot of hedge funds that will close their doors after this horrible week. They are running around trying to save whatever assets they can. The markets are oversold and doesn’t seem like many people are jumping back in, which tells me that it just going to get worse. The short-selling ban is suppose to be lifted this week, but it’s still may be extended. If it expires, the markets will drop much more.
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No one is safe from this recession that we’re entering and I don’t see an end to it soon. Every sector has taken the hit today, there are a few winning today but they are far from being big. If anything is to be the silver lining, it’s oil that finally fell below $90. Who knows where it will go from here, but I won’t even try to guess.
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I will say that we need to continue to sell into any rally and preserve capitol as best as possible. if you hedge your investments with shorting then you obviously know what you’re doing. I’m going to wait a little and see what will happens.

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Congress Isn’t Doing This For Wall Street Or...

The market opened lower today and within the first half an hour it was down 300+ points. The markets are having a rough time while they wait for Congress to take a vote on the revised bill. Unfortunately Congress rather hear their own voice and use the time to look good on TV for the American people. If I hear one more time that they are voting on this bill for the American people and not Wall Street, I think I’m going to poke my own eardrums.
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Who do they think is on Wall Street? The Russians? They need to remember how many people have their retirement accounts and IRA’s in the stock markets. How many American people have over-extended themselves with credit because the government was not doing their job and regulating the industry. It’s a real shame that at 12:00 (about one and a half hours ago) Nancy Pelosi took the floor to speak to the house and spoke for about five minutes and since then it’s been one politician after another just talking about things that each of them know already.
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While this goes on Wall Street is holding steady at the 10,875. level. No matter what happens in Washington, the markets will suffer for some time.
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At this time the vote has started and it’s not going too well. With six minutes left to vote it stands (1:34pm)122 YEA, 111 NAY. Wall Street is started to react by dropping another 50+ points,

1:39pm – 155 YEA, 144 NAY, markets up 50 points

1:45pm the voting is over and so is the bill. The stock market has dropped another 400 points and sits at 10,474. The bonds rate have fallen through the cracks in the floor. I hope that you guys were not in the markets after Friday afternoon.

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Security Exchange Commission (SEC) Under Investiga...

The Security Exchange Commission is under investigation for not doing their job. The investigation will be conducted by the Inspector General according to news reports. The SEC is at fault for missing red flags in regards to Bear Stearns as well as allowing them to use inside auditors which is clearly against the rules.
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What I’m really surprised at is that it took this look to make the decision. Why is it though that the Inspector General hasn’t opened other investigation against Chris Cox and SEC for the lack of regulations that should have been done for the last three years?
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In a statement from Chris Cox, He comment that he’s spoken before about the voluntary regulations rules are not the way things should be. What is he talking about? He’s the man in charge for making these regulations and he’s already stating that someone needs to do his job. It’s the job of the SEC to do these regulation investigation and to make sure that the guidelines are enforced.
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This is one of the many reasons why this country’s economy and credit crisis is spiraling out of control. Accountability is something that is disappearing in this country’s government and it looks like it won’t be coming back anytime soon. This investigation is just a joke anyway because what are they going to do to the SEC? They can’t arrest the whole commission and there won’t be any fines that Chris Cox would have to pay. The worst thing that is to happen is the he will have to step down from his position as the Chairman. We all know what would happen then. he will be offered a position with one of the many financial institutions that he looked the other way for. It’s a shame that this corruption is going on right in front of our eyes and it seems that nothing can be done about it.

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What A Long Strange Trip It’s Been In The St...

For the last two days this site has been out of commission because it was being moved from one hosting site to another. I do apoligize for any withdrawal you may have had, but the site is back better than before.

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As for what has happened in the last few days of the stock market, well I’ll get to that with several post this weekend. It’s been a very strange two days and I’ll try to cover as much as possible to help make heads or tails, buy or sell out of it all.

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Better Than Expected GDP

Yesterday we had the release of the second quarter GDP (gross domestic product) number and the it was up from where the analysts was expecting it to be. The analyst forecast had it at 2.7%, but when the report came out it (and it was an updated number) it was 3.3%. I’ve never like the GDP to be used to gauge the condition of our economy. For the last 13 years there has been another report that was put together to better gauge the economy, It referred to as the GPI (genuine Progress Indicator) which is a topic that I wrote about last month. To better understand why I say this please read my post on GDP (Gross Domestic Product) Vs GPI (Genuine Progess Indicator)
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The latest talk now is that the recession is a thing of the past. The economy is turning around and is expected to improve from here. The initial claims report came out also to help reinforce this assumption. The claims report’s number was 425,000 for the week ending Aug. 23, down from the week before of 450,000. I’ve always laughed at this report because it only tells you how many people have filed a new unemployment claim. What it doesn’t tell you is how many people who are without work didn’t file. If someone claimed benefits earlier this year and went back to work for only 4 months, then they are not eligible to file again.
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I believe that it depends on who you ask about the economy. The foreclosure issue still has not shown it’s whole ugly face and there are a lot of people out of work at the same time.

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Stock Market News 8-20-2008 (FRE, FNM, FCX, DVN)

Again Freddie and Fannie are in the spotlight today with the media and investors. They’re both look like they’ll be put out to pasture at this rate. Today Freddie Mac (FRE) was down big after it was announced that they might have trouble selling off their $3 billion of their debt. This has made many think that they will need to be bail-out by the government (aka…the taxpayers). The stock is down over 22% in today trading and down 87% in this calender year. As for Fannie Mae (FNM), they too were also beaten up bad again today. Falling almost 27% today and down 85% for this year alone.
If you look at where they were in September and October it’s much worse than that. In other financial news…It’s all the same crap for them too.
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How about those energy stocks today? Crude inventory came out today. It’s pretty much as I expected since people are driving less. The inventory should go up, unless the refineries are pulling back on their production at the same time (which would be foolish). The inventories rose by 9.4 million barrels, much more than what the street was expecting. After it was all said and done, the price of crude did rise today to about $116 per barrel. Across the energy board today the majority of them were up a good percentage, but all were up.
Some of the commodity stocks also did quite well, take FCX, they’ve been down big over the last few months, but had a pop of 7.5% today. As for Devon (DVN) they had a 6.5% jump in today’s trading.
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I wouldn’t get too comfortable with the performance of the markets. Things are looking like it’s starting to settle, but be careful. Like I said earlier today in 5 tips on beating the stock market, we are in a bear market and it can give you the illusion of a bull market.

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5 Tips On Beating The Stock Market

At times we need a re-fresher course to help us stay focused on our goals. My purpose of having this blog is to offer advice and insight to anyone who might want it (and who doesn’t need help at times). I just wanted to give a few more things to remember while you trade.
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The best hot tip: there is no such thing as a hot tip.
I’ve said it before and I’ll say it again. Anyone with any “inside information” on a company wouldn’t be telling you. Remember what happened to Martha Stewart.
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Don’t fall in love with your stock; it won’t fall in love with you.
That pretty much says it all. You can not involve your emotions in your trades. The old saying comes to mind when I look into a company, “love is blind”.
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Never throw good money after bad investments (don’t buy more of a loser).
This part is quite easy when you keep your emotions out of the equation. As long as you do your research each week (at least 1 hour per company per week)

Bear-market rallies are violent; giving the illusion the bull is back.
Just look at what going on right now. I usually pull back and sit more money on the sidelines during a bear market.
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Bear markets begin in good times. Bull markets begin in bad times.
One of the other reasons that I’m sitting out right now is because we’re not done with the bears yet. When it gets a little worse (which it will) then I’ll start building my position in the companies that I’ve been watching during this period.
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I hope these tips (and these should be the only type of tips you should take) are helpful to you.
Happy trading.

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What To Expect For The Week 8-18-2008

Again this past week the dollar gained some strength. The gain was just over 2.5% against the slue of currencies. Gold and silver fell hard this week because of the spike in the dollar.
Gold and silver prices plummeted this week on a spike in the value of the U.S. dollar. During the the week gold lost 7.6% while silver shaved off 12.5%
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The markets have benefited from the strength of the dollar and as long as our currency strengthens it will get better. I’m not sure which way to look at it, but I’m an optimistic bull and expect good things.
The DOW was up for the week, not much but it was up. It started Monday at 11,681. and closed at 11,659. As for the NASDAQ and the S&P 500 were up also, but not enough to even mention.
Commodities and Energy stocks are to be kept in focus for the week ahead
For the five trading days ending Thursday, Aug. 14, the U.S. dollar index gained 2.85% against the basket of major currencies. Over the same period gold cast off 7.61% of its luster while the sliver meltdown sliced off 12.50%. It seems that the two have entered the bear market territory.
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If it wasn’t for the action in the dollar and oil, the markets would be pretty flat. The markets only do good if there’s downward pressure on the price of oil. When the American economy removed the relationship between the dollar and gold, it put too much emphasis on oil and it’s effect to our economy.
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This is one of those weeks where I’ll just say that we’ll have to see what happens. It does seem that the markets are finding their bottoms and in due time will be back on track for the bulls to come out and play. Keep an eye on stocks that are effected by the price drop in oil. As for stocks that are tied to the dollar, start looking for your entry point into those positions. The Olympics will end next weekend and China should be getting back on track to their growth. It’s been hard to see what they’re doing when they’re too busy showing off their stuff.

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