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Dallas, TX
December 1, 2009, 08:00 EST |
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Dr. Joe Duarte's Market I.Q. |
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The Internet's Intelligence Digest
Intelligence, Market Timing, And Trading Strategy For Traders and Investors
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The Angry Nation
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What's Hot Today: |
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U.S. stock index futures were pointing to a higher opening
on Tuesday morning. It's the start of a new month, and traders seem to
be looking to put short term strategies to work before the employment number
later in the week.
Today's Economic Calendar:
- Motor Vehicle Sales[Report][djStar]
- ICSC-Goldman Store Sales 7:45 AM ET
- Redbook 8:55 AM ET
- ISM Mfg Index 10:00 AM ET
- Construction Spending 10:00 AM ET
- Pending Home Sales Index 10:00 AM ET
- 4-Week Bill Auction 11:30 AM ET
News For Thought
Dubai World to restructure $26 billion in debt. According to CNBC.com: "said
it would try to restructure about $26 billion of debt, far less than the nearly
$60 billion in total liabilities that the Dubai government's investment arm had
as of August." The announcement may take some of the pressure from global markets.
The central bank of the United Arab Emirates has also been supportive of local
banks in the area, but has not openly provided support for Dubai.
Dubai, the country, says it's not responsible for Dubai World's (the hedge
fund) debt problems. According to Reuters: "The Dubai government said on
Monday it was not responsible for the debts of Dubai World, dealing a blow to
creditors' assumptions that the Arab emirate would guarantee the conglomerate's
liabilities." When in doubt, wash your hands eh?
China: is a credit card meltdown ahead? According to Marketwatch.com: "Credit-card
debt at least six months overdue rose 126.5% for the first three quarters of
2009 compared to the same period last year, Xinhua news agency reported, citing
People's Bank of China data. By the end of September, China's banks had issued
175 million credit cards, a 33.3% increase from last year, according to the report
-- which said that the central bank has warned of potential risks of mounting
overdue credit-card debt. Accounts overdue by six months or more made up 3.4%
of China's total credit-card debt outstanding at the end of the third quarter,
a 0.3% increase over the prior period, the report said."
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The Angry Nation
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Polls Suggest Washington Disconnect Is More Than Pols May Know
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The anger and unhappiness within those who work for a living
seems to be growing at an alarming pace.
Today, in this scribe's other life, the medical office, a 71 year old female
point blank told us that she didn't want to wait beyond late December to have
a procedure because she was afraid that if she waited until January "no one would
pay for it." Her son who was sitting next to her then asked us, referring to
health care: "This thing is going to be bad, isn't it?"
Another fellow was a bit perturbed when we noted that he would have to pay for
a portion of his procedure up front since his insurer wasn't going to cover the
cost. When we discussed the rationale behind his insurer's decision, the gentleman
just shook his head and said: "it's just one big money game, isn't it?"
At least two other people told us that they had recently lost relatives. In fact,
we've noticed that over the last few weeks, more and more patients are losing
loved ones, of all ages.
And beyond the losses of loved ones, lots of patients that see us are having
a hard time making ends meet, and having trouble paying their bills, even if
they have insurance coverage.
In other words, there is lots of pain out there, personal as well as professional.
And this pain seems to be making its way into public opinion.
According to a recent poll from Rasmussen Reports.com: "Seventy-one percent (71%)
of voters nationwide say they’re at least somewhat angry about the current policies
of the federal government. That figure includes 46% who are Very Angry," while "only
27% are not angry about the government's policies, including 10% who are Not
at All Angry."
The poll says that men are angrier than women. But in our experience, women are
more frightened than men, although maybe the men are just hiding it better.
Now here's what's interesting. According to Rasmussen, the anger is growing,
as illustrated by the fact that "71% who are angry at federal government policies
today is up five percentage points since September. Even more stunning, the 46%
who are Very Angry is up 10 percentage points from September."
We've not kept statistics about this phenomenon, but in a back of the napkin
kind of way, we can see that in some of our conversations with patients.
Predictably, those in the political class haven't tapped into this anger, while
the populist majority clearly has.
Finally, consider these two facts: "The latest numbers show that only nine percent
(9%) of voters trust the judgment of America’s political leaders more than the
judgment of the American people. Seventy-four percent (74%) place more trust
in the wisdom of the crowd. Seventy-one percent (71%) believe the federal government
has become a special interest group that looks out primarily for its own interests.
Sixty-eight percent (68%) believe that government and big business work together
in ways that hurt consumers and investors."
Conclusion
There are two major facts at play here. One, that we can't really explain is
the number of deaths in the patient population that we see. Certainly, we see
lots of folks who smoke cigarettes, are diabetic and otherwise chronically ill.
Many of them have had significant other health problems including cardiac and
vascular disease.
Many of them, though, are poor, and although they have access to medical care,
many can't or won't cover some of the expenses required to treat their illnesses.
Many of them will not buy their medications, and of those that do, some will
skip dosages to make their medication last longer. Few will stop buying their
cigarrettes, and some will buy their cigarrettes instead of their medication.
The second thought is that, as with those polled by Rasmussen, many of our patients
are starting to associate their problems with President Obama and both parties
in Congress. And in many cases, their anger is quite open.
What does any of this have to do with investments? For one thing, a significant
portion of consumers, especially consumers of prescription drugs and medical
services, can't afford them anymore. With drug prices on the rise, preemptively,
in order to mitigate the losses from the upcoming cuts, it's just a matter of
time before sales of even generic drugs are affected.
Second, as insurance premiums rise, no matter what the CBO says, even fewer people
will be insured. And that means that emergency rooms will be more, not less crowded
in the future.
Finally, physicians are likely to move more and more of their practice toward
affluent neighborhoods, and offer more cash services, a practice that may actually
lower prices.
The bottom line is that we seem to be in the early stages of a significant shift
in consumer and political demographics in the health care sector. And Washington
hasn't even passed the health care reform act. How's that for a pre-emptive market
response?
Know when to sell and how to make money when the market falls. Get
a detailed trading plan in your pocket. Read Dr. Duarte's All NEW Books "Market Timing For Dummies." and "Trading Futures For Dummies." The Trading Manuals for
All Seasons. Also Available As Kindle Books. |
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Market Moves - Stock Of The Day
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3-M's (NYSE: MMM) Steady Action Suggests Money Still Likes Blue Chips
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The small stocks
in the Russell 2000 ETF (NYSE: IWM) are still lagging while
blue chips such as 3-M are near their recent highs.
Chart Courtesy of StockCharts.com
It's a market of stocks, not a stock market. The old cliche'
refers to a market in which some stocks do well while others
don't. And currently, money is moving into the blue chip
stocks and mostly ignoring the small stocks.
On the surface you could say that quality attracts money while the preceptions
that small stocks are riskier is keeping money away from them.
But if you turn that around, it may be worse than it seems. When you look at
the market from a technical standpoint, you want to see all stocks move in the
same direction. In this case that's higher.
When money chases a few stocks, it's often a sign that trouble lies ahead.
So if you look at things from a short term standpoint, this is the start of a
new month. That means that the trend is likely to be toward higher prices, at
least for the next day or so, especially if you're in the right stocks, perhaps
such as 3-M.
But if you look at the longer term, you should be more cautious, as money is
being increasingly selective. What would change our mind? A nice rally in the
small stocks would. Otherwise, this is a very selective trading market.
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Technical
Look at the Market |
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Did We Just Witness A One Day Selloff?
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The S & P
500 stopped falling on Monday, although it remained below
1100, the key chart point that has so far defined whether
the rally can move higher. The current action suggests
that some traders are still interested in trying to move
stock prices higher.
The key is that once again the 20-day moving average has provided support for
the S & P 500. That means that unless things fall apart, we could have another
shot at 1100.
So the real question is whether this market is worth trading at all. And the
answer lies in how well you may have done for the year. If you've done well,
you can consider taking the rest of the year off, barring some really aggressive
up side action starting in the next few days.
This is still a good time to reassess any positions that aren't working, especially
as the market's advance has become narrower over the last few weeks.
Raising cash, along with sector and individual stock selection are still the
most important aspect of trading this market. With an employment report due out
on Friday, anything is possible.
Chart Courtesy of StockCharts.com
Chart Courtesy of StockCharts.com
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