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Dallas, TX
December 11, 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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Shifting Political Sands Add New Layer Of Potential Surprise For New Year
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What's Hot Today: |
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U.S. stock index futures were pointing to a higher open
on Friday. 1100 on the S & P 500 remains the key.
Today's Economic Calendar:
- Retail Sales 8:30 AM ET
- Import and Export Prices 8:30 AM ET
- Consumer Sentiment 9:55 AM ET
- Business Inventories 10:00 AM ET
News For Thought
Major Change May Be Ahead At White House. It's often said that the
office transforms the man, when referring to the President of the United
States. And some of the recent events suggest that Mr. Obama, clearly a
liberal, is starting to feel some of the weight of the office.
Aside from giving in on his wish for a public health care option, he gave a fairly
robust speech about war while accepting his Nobel Peace Prize. And now the leak
machine is starting to hint that the president's patience is running out on Iran.
According to The Wall Street Journal, citing Gen. James Jones, the National Security
Advisor: "If Iran doesn't show it's serious about addressing international concerns
that it is pursuing nuclear weapons, the action will shift in January to imposing
sanctions at the United Nations Security Council. The effort to pass a sanctions
resolution will take perhaps a month. And steps to penalize Iran may not stop
there."
If this trend continues, it's likely that Mr. Obama will actually move toward
the middle, at least some, in the next few months, especially as the mid-term
elections near. Of course, it's pretty easy to move toward the middle if you
pass your crowning achievement, the health care "reform" package. Still, it's
amazing to see what presidents often do when their approval ratings fall below
50%.
And, yes, higher taxes are coming. You bet.
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Shifting Political Sands Add New Layer Of Potential Surprise For New Year
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At The Political Crossroads Is Obama About To Pull A Clinton?
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The polls keep getting worse for President obama, yet the
Main Street and mainstream media news usually get it wrong at key turning
points. So is President Obama's luck about to change. If it does, then the
markets will have a new up leg to consider factoring in.
The poll numbers in the mainstream polling houses are getting worse. But Rasmnussen's
numbers are flattening out for Mr. Obama. That's important, as Rasmussen Reports.com's
polling numbers are usually months ahead of the likes of Gallup and other pollsters
commonly quoted by the mainstream media. The reason is that Gallup polls Americans,
while Rasmussen polls likely voters. Issues affect those who pay the bills sooner
than the rest of the population.
Rasmussen's presidential approval poll has been between 46 and 50% for the last
two months, despite rising clamor about health care, Afghanistan, and rising
unemployment. Gallup just hit its lowest number, 47% within the last two weeks,
while other polls have hit recent lows within the same time frame. This suggests
that maybe, Mr. Obama has hit bottom.
And here's why that's important. The stock market has been rallying for months
as the low dollar has at least improved the profit picture for large multinational
corporations. The low dollar has been a product of the expectations for high
deficits in the U.S. as well as the generally weak economy, and the perception
that the White House has been weak.
Now, new poll results, highlighted by the Drudge Report, suggest that former
President Bush has the support of 44% of participants compared to Mr. Obama leading
the pollsters, Pubic Policy Polling to conclude that the results are "an indication
that voters are increasingly placing the blame on Obama for the country's difficulties
instead of giving him space because of the tough situation he inherited. The
closeness in the Obama/Bush numbers also has implications for the 2010 elections.
Using the Bush card may not be particularly effective for Democrats anymore."
You can argue the poll results back and forth, but there is clearly a shift in
the air, which the mainstream has yet to home in on, which is why it's important
to keep an eye on the direction of policy initiatives and the rhetoric from the
White House in the next few weeks. If history is any indication, Mr. Obama, like
his Democrat predecessor, President Clinton, will move toward the center. To
be sure, Clinton was much further to the right than Obama to start with, so any
shift from Obama would likely be a lot less toward the center. Nevertheless,
if he is to survive to a second term, and more important, keep his Congressional
majority, Mr. Obama has to move toward the center, even in only rhetorically.
Already there are some signs that he is trying to make some movement. In recent
days the White House has been talking more about jobs and using the Clinton techniques
of "targeted" tax cuts, albeit in a limited fashion. The trial balloons about
using TARP money to deliver a "bailout" of sorts to small business is also getting
airplay. And the president's speech in front of the Nobel Prize bunch was actually
a fairly adult set of pronouncements, suggesting that some degree of reality
may actually be setting in.
If you use Clinton as the guide then you need some kind of ecnomic miracle to
spur growth. And Clinton had the Internet. Mr. Obama has had "Cash for Clunkers" and
Goldman Sachs and AIG bonus scandals. That means that the current president needs
to find something that will rev things up enough to let him finish his agenda,
which is to raise taxes. When Clinton raised taxes it didn't really hurt too
many people since they were making big bucks on dot.com stocks. But Obama doesn't
have the dot.com stocks. In fact all he's got is the big stocks in the Dow Industrials
making money from the low dollar. There's no glamour in that, and that means
that the public isn't involved.
So what Obama needs, and what he's looking for, is that big new trend that can
make the stock market soar for everybody. He needs that dartboard market from
the 90s to come back. And what could bring it back is the smart grid.
This could be the next big thing, or it may not be. Yet, it's green enough to
make even the lefties get excited. And it is likely to get big money types to
throw money into it. It could include applications at the largest industrial
levels, and it could actually bring a new little box into every home, sort of
like cable in its infancy. That's growth potential for chip companies, device
companies, and software and Internet companies.
According to CNET.com home energy information displays, the little boxes to tell
you how much energy you are using and how much you can give back to the grid, "are
poised to enter people's kitchens and living rooms in large numbers over the
next few years." CNET further reports that "there will be 28.1 million users
of energy displays by 2015. About half of the users will have actual devices,
while more than 11 million will access that information from Web-based dashboards
and 2.6 million from mobile phones, according to Pike Research."
Who makes the devices? Who's providing the chips? And how much money are they
likely to make? It's pretty nebulous right now. Google and Microsoft are involved.
And the real big player, at the moment is IBM (NYSE: IBM), whose shares are getting
interesting at current levels.
The real question, though, is wether the smart grid, when combined with a potential
move to the center by the White House can turn into the next huge run for stocks.
Conclusion
Clinton got lucky. He had Alan Greenspan and Bob Rubin at the peak of their powers
behind him and the dot.com boom to provide the wind to his sails. Obama has a
lot less pragmatism and political smarts, more problems to deal with, and a much
weaker supporting cast.
But he does have the potential for a new big trend that could give his presidency
the economic impetus that could make him a two term president, if he knows how
to harness the power in the smart grid.
In our opinion, the president is likely to have hit bottom. He is now trying
to move toward reality and the political center, which for him would still be
left, just not to the extreme where he's been.
If he can find the economic issue that will lead to the next boom and manage
it correctly, he'll get his second term. The question is whether he can seize
the moment.
And that's probably what the financial markets are trying to figure out right
now, more than anything else. Does this guy have it within him to pull this off.
We'll see.
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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Is IBM (NYSE: IBM) The Smart Grid Holy Grail?
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IBM (NYSE:
IBM) made a quiet new high on December 10 as the buzz over
its smart grid positioning starts to build.
Chart Courtesy of StockCharts.com
The smart grid may be where two important "greens" meet,
the green of environmentalism, and the green of big bucks.
And somewhere along that green road, IBM may have a lot
of toll booths. That's why the stock has been so strong
of late.
Investors are starting to get that gleam in their eyes not seen since the early
days of the "dot.com" boom days, as the potential for the next big thing is starting
to grow.
To be sure, we've heard this kind of talk before. At some point in the "dot.com" boom
days, we were supposed to have our appliances monitored for energy efficiency
and functioning level on the web and companies were going to make money doing
the monitoring. That never really panned out.
But the smart grid has a broader appeal as its promise of energy efficiency gives
everyone at any level of the political and economic spectrum something to feel
good about. And IBM is the early leader, at least at the industrial level, as
it has multiple projects under way already.
When this thing takes hold, it's supposed to transfer electricity from areas
that have a surplus to areas that need it. The bottom line is to lower energy
usage and to decrease costs by increasing efficiency. If this works, then the
world will be a nicer place and our energy resources will last longer.
O.K., that's a lot to ask for, and it may never pan out at that level. But, on
an investment level, it's starting to get a buzz. The potential for spreading
is also there, as more stuff will have to be built, such as power lines, more
computers and related technology. And that means more jobs for engineers and
construction types.
Someone's going to have to manage those new server farms too, which means technical
and even janitorial jobs. The issue, though, is where are those jobs going to
be created. IBM is building several technology centers at the moment. Many of
them are related to their cloud computing initiatives. The problem is that the
new centers are in India, New Zealand, and Asia.
That means that the smart grid may be more profitable, at least at the grass
roots level, for other countries, instead of the U.S. Nevertheless, IBM is getting
a 5-star rating.
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Technical
Look at the Market |
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Above 1100 But Not By Much - SPY ETF Remains at 4-stars
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The S & P
500 failed to close too convincingly above 1100 on 12-10,
again leaving the bulls scratching their heads.
So heading into Friday, it's the same old story and the same question: can the
S & P 500 finally close well enough above 1100 to move this market higher
as the year closes?
Much of what's going on now is technical and depends to a large degree on which
way the majority of traders that are still working at this time of the year decide
to go. If they decide to go with the season, the trend is up. If they decide
to go with the economic news, then things may be volatile.
The bottom line is that it pays to be careful.
We are adapting our star based rating system to the S & P SPDR ETF (NYSE:
SPY). In this section a 5-star rating for SPY is a signal that down side risk
is very low and that the chances of a further rise in prices are greater than
those of a fall. A 4-star rating Means that the risk is less attractive but that
the odds of a rise in SPY still outweigh the risks of a fall.
A 3-stars rating on SPY suggests that the odds of a rise and a fall are even.
2-stars and 1-stars suggest that down side risk is on the rise.
In no way is this star rating system intended as a series of buy and sell recommendations.
The system is intended as a guide to the general trend of the market and the
S & P SPDR ETF.
Star ratings can change rapidly based on the market's action. Followers of the
ratings should review them on a daily basis.
Star Ratings for S & P SPDR ETF (NYSE: SPY)
S & P SPDR ETF (NYSE: SPY), 4 stars on 12-1-09 - closing price 110.84. Closing
price on 12-10-09 110.64. Short term support is at 109.57. Resistance is at 111.74.
A move above 111.74 would raise the rating to 5-stars. A move below 109 would
drop the rating to 3-stars.
Chart Courtesy of StockCharts.com
Chart Courtesy of StockCharts.com
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