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Dallas, TX
June 8, 2010, 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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Charts Point To Weaker Stocks Ahead
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What's Hot Today: |  |
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U.S. stock index futures were pointing to a higher open for Tuesday.
Asian markets rose, while Europe was again lower. The Euro remained
above 1.19 to the dollar.
News For Thought
BOA to repay Countrywide customers "excessive" financing fees on
home loans. According to The New York Times: "People struggling
to keep their homes as the housing market collapsed faced additional
hurdles if their mortgages were serviced by Countrywide Financial Corp.
— inflated fees for property inspections, appraisals, and even lawn mowing,
the Federal Trade Commission said. Now Bank of America, which bought
the Calabasas lender in 2008, has agreed to refund those overcharges
— in some cases amounting to thousands of dollars — as part of a $108-million
settlement announced Monday."
Government warns Medicare HMOs not to raise premiums. According
to Reuters: "Health insurance companies that offer alternative Medicare plans
for seniors must keep their costs in check or risk being denied the ability to
market them next year, the top U.S. health official warned in letters released
on Monday. Health Secretary Kathleen Sebelius, in a letter to the chief executives
of WellPoint Inc (WLP.N) and Cigna Corp (CI.N), among others, told companies
the federal government would deny their bid to sell such insurance plans, called
Medicare Advantage, "if they appear to include excessive increases." The Obama
administration's warning comes amid growing pressure on health insurance companies
to keep premium and co-payment costs low as U.S. officials work to enact new
healthcare reforms passed in to law earlier this year."
When you can't compete with Wal-Mart. fuel the opposition by hiring consultants
to orchestrate the opposition. According to The Wall Street Journal: "As
Wal-Mart Stores Inc. has grown into the largest grocery seller in the U.S., similar
battles have played out in hundreds of towns like Mundelein. Local activists
and union groups have been the public face of much of the resistance. But in
scores of cases, large supermarket chains including Supervalu Inc., Safeway Inc.
and Ahold NV have retained Saint Consulting to block Wal-Mart, according to hundreds
of pages of Saint documents reviewed by The Wall Street Journal and interviews
with former employees." In fact, according to The Journal: 'Saint has jokingly
called its staff the "Wal-Mart killers." P. Michael Saint, the company's founder,
declines to discuss specific clients or campaigns. When read a partial list of
the company's supermarket clients, he responds that "if those names are true,
I would say I was proud that some of the largest, most sophisticated companies
were so pleased with our success and discretion that they hired us over the years."' |
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Charts Point To Weaker Stocks Ahead
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Gold And U.S. Dollar Benefit From Rising Doubts About Future
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After two days of getting clobbered the stock market may
bounce back, at least for a while. But as time passes, and more people
look around, it looks as if the path of least resistance remains to the
down side.
It's time to take make the charting rounds as Friday and Monday made some things
happen in the financial markets which are worth noting.
Chart Courtesy of StockCharts.com
The S & P 500 (SPX) did two things in the last few days. And both of them
were bad. First, the index failed to rally above its 200-day moving average,
remaining in bear market territory. Second, on Monday the index made a new low
for this move, perpetuating the lower low, lower high picture, which is very
negative.
Chart Courtesy of StockCharts.com
The Russell 2000 Index (RUT) of small stocks, for its own part, joined the S & P
500 below its 200-day moving average, joining the rest of the major indexes in
long term bear territory. This is significant because small stocks, when they
rise, are a sign that investors are betting on growth. Second, the rising dollar
should be helping small stocks. It isn't, which makes the decline in small stocks
more significant, suggesting that investors don't want to own stocks of any size
right now.
Chart Courtesy of StockCharts.com
The market's breadth stinks. Both the NYSE advance decline line (NYAD) and the
Nasdaq advance decline line (NAAD) are in down trends. The Nasdaq's is in worse
shape than the NYSE's. That's because that's a more definitive picture of pure
stocks as the NYSE a-d line also features bond funds and more preferred stocks.
The bottom line is that more stocks are falling than rising everywhere and that
the odds of finding a winner on the up side are getting slimmer by the day.
Chart Courtesy of StockCharts.com
Finally, let's look at where money is going, both gold and the dollar. Those
are signs that investors are looking for safety.
Chart Courtesy of StockCharts.com
The fact that both gold and the dollar made new highs on the same day should
not be ignored. That means that investors are hedging their bets against everything
including a fall in prices for both gold and the dollar if something extraordinary
happens.
Chart Courtesy of StockCharts.com
Conclusion
The market's message is grim. Money is flowing out of stocks and into dollars
and gold, the onely perceived storehouses of some value at this point. Commodities,
except for gold and the metals are diving. Global currencies, except the dollar
are weakening. And ther is no sign that the major source of trouble, the European
economy is going to right itself any time soon.
Investors are also focusing on what's coming in the next 6-12 months; a U.S.
election, rising taxes in the U.S., and more uncertainty as the U.S. midterm
election will set the tone for the 2012 Presidential election.
Aside from those things, we have the usual factors at play; the Middle East,
China's long term expansion plans, and the global economy. Mexico's drug war,
global terrorism, the inevitable fraud drama that will pop up somewhere as some
Ponzi scheme or credit default swap nonsense comes to light, etc.
It's not exactly a good time to be making big bets. This is about the return
of your money, not the return on your money.
We'll be on Twitter
some time today before the market closes with some updated comments.
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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DB Agriculture ETF (NYSE: DBA) Breaks To New Low
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The DB Agriculture
ETF (NYSE: DBA) slipped to a new low on Monday.
Chart Courtesy of StockCharts.com
Summer is usually the time when agricultural commodities
rally. But not this year, as the ags are making new lows
on a regular basis.
This year, the weather has been good enough to get a good supply of crops already
out on the stalk, and there is no expectation of major shortages. The demand
for corn to be used in ethanol seems to have waned, putting things back to normal
in some way. And when you add a weak economy to the picture, supplies of grain
are expected to be more than adequate, keeping prices down.
To be sure, things could change with the weather, which is why the weak global
economy remains a significant factor in lower ag prices.
The fact that gold and the dollar are rallying as the ags make new lows suggest
that for now investors are not interested in taking too many risks on something
that can be affected by a factor as fickle as the weather.
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