Sunday, December 14, 2008

Fed to press rates toward zero

WASHINGTON (Reuters) – The U.S. Federal Reserve is expected to drop interest rates close to zero on Tuesday, but anticipated remarks on unconventional methods to dispel a year-old recession are what will really matter.

Economists forecast a clear statement that the U.S. central bank will aggressively deploy so-called quantitative easing measures to shelter the economy from a steepening downturn, but do not expect details of what steps it will actually take.

Those words would accompany a decision by the Fed to lower its target for overnight rates by at least a half-percentage point, economists believe.

A half-point cut would take the bellwether federal funds rate to just 0.5 percent, the lowest on records dating to July 1954, as the central bank battles a recession many think will stretch well into next year.

The announcement is expected around 2:15 p.m. on Tuesday at the end of a two-day meeting. The gathering had initially been scheduled for a single day, but was extended so policy-makers could study options for unusual steps to spur the economy with little room left to lower borrowing costs.

"From here on out, monetary policy has to rely primarily on non-traditional tools, tools other than the funds rate, to try to stimulate the economy," said former Fed Governor Lyle Gramley, who expects the Fed to spell this out.
More >>
By Alister Bull Alister Bull – Sun Dec 14, 12:19 pm ET

Wednesday, December 10, 2008

World Bank: Global recession possible next year

World Bank says deep global recession possible in 2009 due to international banking crisis

WASHINGTON (AP) -- Economic growth prospects for both high income and developing countries have deteriorated substantially and the possibility of a very deep global recession cannot be ruled out, the World Bank said Tuesday.

The international banking crisis that erupted in September after more than a year of less acute financial turmoil has substantially reinforced the cyclical downturn that was already under way, the bank said in a report devoted to assessing economic prospects for 2009.

"Following the insolvency of a large number of banks and financial institutions in the United States, Europe and the developing world, financial conditions have become much tighter, capital flows to developing countries have dried up and huge amounts of market capitalization have evaporated," the bank said.

The bank predicted world economic growth will be 2.5 percent in 2008 and 0.9 percent in 2009. It said developing countries will likely grow 4.5 percent next year, down from 7.9 percent in 2007, while the economies of high income countries will shrink.

Even if the strong measures governments took to restore confidence in the international banking system work and credit begins to thaw, a number of developing countries are likely to face substantial strains, possibly including bank failures and currency crises, the bank said.

"In these very uncertain circumstances," the bank said, "policy makers must place a premium on reducing the likelihood of domestic turmoil by reacting swiftly and forcefully to emerging difficulties, including, if necessary, seeking assistance from the International Monetary Fund.'"

The IMF provides rescue packages to countries in financial crises while the bank, its sister institution, lends money or makes grants for development projects.

"People in the developing world have had to deal with two major external shocks ---- the upward spiral in food and fuel prices followed by the financial crisis, which has eased tensions in commodity markets but is testing banking systems and threatening job losses around the world," said Justin Lin, the bank's chief economist. "Urgent steps are needed to help reduce fallout from the crisis on the real economy and on the poorest."

In response to the crisis the bank said it was increasing its support for developing countries, through new spending commitments of up to $100 million over the next three years. The bank said its private sector arm, the International Finance Corp., would help by providing trade financing, helping banks recapitalize or aiding infrastructure projects facing financial distress.
By Harry Dunphy, Associated Press Writer, Wednesday December 10, 9:21 am ET

Sunday, December 7, 2008

Job Losses increase - future bleak

WASHINGTON (Reuters) – U.S. employers axed 533,000 jobs from payrolls in November, the most in 34 years, as the year-old recession hammered the economy and hardened calls for dramatic government action to restore growth.

The Labor Department said Friday the unemployment rate hit 6.7 percent last month, the highest since 1993, which adds up to 10.3 million Americans out of work, 2 million more than the population of New York City.

The jobless rate, which stood at 6.5 percent in October, would have been even higher but for people leaving the labor force in discouragement over their search for work.

A number of U.S. companies have announced jobs cuts this week, including General Motors Corp and asset manager Legg Mason Inc Friday, a day after phone giant AT&T said it was letting 12,000 workers go. Economists expect the unemployment rate to top 8 percent by late next year.

"You can't get much uglier than this. The economy has just collapsed, and has gone into a free fall," said Richard Yamarone, chief economist at Argus Research in New York.

The collapse of the U.S. housing market last year sparked a global credit crisis that has killed growth, panicked investors and destroyed some of the oldest names in banking.

Saturday, December 6, 2008

Automakers - 3 million Jobs Gone

Three million jobs could be at stake if one of the big three automakers fails, and the prospect of a bailout is looking bleak. Michelle Miller reports.
Three million jobs could be at stake if one of the big three automakers fails, and the prospect of a bailout is looking bleak. Michelle Miller reports.

Wednesday, December 3, 2008

Dennis Kucinich - Racketeering on Wall Street

Saturday, November 29, 2008

TED Spread - Indicator

The TED spread, or the difference between US Treasury bill and eurodollar interest rates, is an indicator of perceived credit risk in the general economy. US government Treasury bills are considered risk-free while eurodollar borrowing costs, measured by the London interbank offered rate (LIBOR), reflect the credit risk of lending to commercial banks.

When the TED spread increases it is a sign that lenders believe the risk of default on interbank loans is increasing. Interbank lenders therefore demand a higher rate of interest, or accept lower returns on safe investments such as T-bills. When the risk of banks defaults is considered to be decreasing, the TED spread decreases. The TED spread fluctuates over time but has often remained within the range of 10 and 50 basis points (0.1% and 0.5%), at least until 2007. A rising TED spread often presages a downturn in the U.S. stock market, as it indicates that liquidity is being withdrawn.

- Clive McKeef

Tuesday, November 25, 2008

Max Keiser: Economic and Currency Destruction

Max Keiser predicts the destruction of the American Economy and the American Dollar. The American Economy is a Ponzi scheme with George Bush and "Financial Terrorist" Henry Paulson doing a controlled demolition. The bailout is only for their friends, bankruptcy is for their enemies.

Saturday, November 22, 2008

US Cities Begging for help -

Wednesday, November 19, 2008

Great Depression 2 - Indicators

29 indicators of the coming Great Depression 2 BY 2011 -
* By Paul B. Farrell, MarketWatch

Every day there is more breaking news, proof Wall Street's greed is already back to "business as usual" and in denial, grabbing more and more from the new "Bailouts-R-Us" bonanza of free taxpayer cash and credits, like two-year-olds in a toy store at Christmas -- anything to boost earnings, profits and stock prices, and keep those bonuses and salaries flowing, anything to blow a new bubble.
Scan these 30 "leading indicators." Each problem has one or more possible solutions, but lacks unified political support. Time's running out. We're already at the edge. Add up the trillions in debt: Any collective solution will only compound our problems, because the cumulative debt will overwhelm us, make matters worse:
1)America's credit rating may soon be downgraded below AAA
2)Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"
3)Congress has no oversight of $700 billion, and Paulson's Wall Street Trojan Horse
4)King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets
5)Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses
this year
6)AIG bails big banks out of $150 billion in credit swaps, protects shareholders
before taxpayers
7)American Express joins Goldman, Morgan as bank holding firms, looking for Fed
8)Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to
9)State revenues down, taxes and debt up; hiring, spending, borrowing add even more
10)State, municipal, corporate pensions lost hundreds of billions on derivative
11)Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up
12)Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns
13)Fed also plans to provide billions to $3.6 trillion money-market fund industry
14)Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars
15)Washington manipulating data: War not $600 billion but estimates actually $3
16)Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion
Street write-offs
17)Commodities down, resource exporters and currencies dropping, triggering a global
18)Big three automakers near bankruptcy; unions, workers, retirees will suffer
19)Corporate bond market, both junk and top-rated, slumps more than 25%
20)Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall
21)Unemployment heading toward 8% plus; more 1930's photos of soup lines
22)Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists
23)China's sees GDP growth drop, crates $586 billion stimulus; deflation is now
global, hitting even Dubai
24)Despite global recession, U.S. trade deficit continues, now at $650 billion
25)The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded
26)Now 46 million uninsured as medical, drug costs explode
27)New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable
28)Outgoing leaders handicapping new administration with huge liabilities
29)The "antitaxes" message is a new bubble, a new version of the American dream offering a free lunch, no sacrifices, exposing us to more false promises.

Will the next meltdown, the third of the 21st Century, trigger a second Great Depression? Or will the 2007-08 crisis simply morph into a painful extension of today's mess to 2011 and beyond, with no new bull market, no economic recovery as our new president hopes?

Tuesday, November 18, 2008

Lou Dobbs - $700 Bil Bailout Fraud

Friday, November 14, 2008

USD Collapse

Monday, November 10, 2008

Failed US banks - Seized

SAN FRANCISCO (MarketWatch) -- The Federal Deposit Insurance Corp. and state regulators seized Los Angeles-based Security Pacific Bank late Friday -- one of two banks to fail that day and the 19th to fail so far this year. Pacific Western Bank, also based in Los Angeles, will assume all of the deposits of Security Pacific, the FDIC said in a statement.
The four branches of Security Pacific will reopen on Monday as branches of Pacific Western. Depositors of the failed bank will automatically become depositors of Pacific Western. Deposits will continue to be insured by the FDIC.
The FDIC estimates that the cost to the Deposit Insurance Fund will be $210 million. Pacific Western's acquisition of all deposits was the "least costly" resolution for the FDIC's Deposit Insurance Fund compared to alternatives, according to the statement. Security Pacific is the third bank to fail in California this year.

Houston-based Franklin Bank S.S.B. was closed by regulators Friday, the 18th bank failure this year amid the ongoing credit crisis. The Federal Deposit Insurance Corporation said in a statement that Franklin Bank (FBTX) had total assets of $5.1 billion as of Sept. 30 and $3.7 billion in total deposits.
El Campo, Texas-based Prosperity Bank will assume Franklin Bank's deposits for a premium of 1.7%, and Franklin's 46 offices will reopen as Prosperity branches, the FDIC said.
In addition, Prosperity Bank will purchase roughly $850 million of Franklin Bank's assets, according to the regulator.
The FDIC estimated that Franklin Bank's failure will cost its Deposit Insurance Fund between $1.4 billion and $1.6 billion. Shares of Franklin Bank slid more than 80% lower in after-hours trading, to $0.04 cents.

Saturday, November 8, 2008

$2000 Gold in 2009 - Peter Shiff

Thursday, November 6, 2008

Retail Sales - Expected Weak

According to America's Research Group; About 25% of Shoppers Say their Bank Has Cut Credit-Card Limits; Holiday Sales Account for as Much as 35% of Retailers' Annual Revenue.

Wednesday, November 5, 2008

BBC - Gold the safe haven

Aaron Smith, MD of Superfund Financial Singapore on the fall of stock markets around the world, bailout and nationalization. Gold is the safest way to preserve wealth and grow capital.

Tuesday, November 4, 2008

George Soros - Financial Crises, Economy

Monday, November 3, 2008

Factory sector weakens sharply in October

WASHINGTON (MarketWatch Oct 3rd) -- The nation's manufacturing firms reported the worst level of output in 26 years, further evidence that the economy is slumping sharply, according to a closely followed survey of top executives released Monday.
The Institute for Supply Management index fell to 38.9% from 43.5% in September, below the 41.5% expected by economists surveyed by MarketWatch.
The result is the lowest reading since September 1982. The indexes for production and new orders fell to their lowest level in 28 years.
"When you hit levels that are similar to the early 1980s recessions, you cannot be very optimistic about the near term," said Joel Naroff, president of Naroff Economic Advisors.
Readings below 50% in the ISM diffusion index indicate that more firms are contracting than growing. The ISM tracks the breadth of growth across firms, asking purchasing managers if business is better or worse this month than last month.
The ISM had fallen sharply to 43.5% in September from 49.9% in August. As a result, the two-month decline of 11.0 points is the largest such drop since May 1980.
The nation's economy, as measured by gross domestic product, declined at a 0.3% pace in the third quarter. The ISM report suggested that the current quarter will be much weaker.
The key for manufacturing, as always, is the strength of final demand. Consumers have been cutting back spending amid the housing market recession, rising unemployment and the credit crunch.
The key issue now is just how much of the plunge in activity reflects the shock of the market meltdown and how much will be sustained, said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
The ISM is at clearly at recessionary levels, consistent with a 0.7% drop in GDP.
"There is no doubt that this is a recession," said Norbert Ore, head of the ISM's survey committee.

Friday, October 31, 2008

US Dollar Strength/Gains

Dollar gains against rival currencies Friday October 31, 12:06 pm ET by Ben Rooney, staff writer
The U.S. dollar rose against its main trading partners Friday as investors took shelter in lower-yielding currencies at the end of a volatile month in global financial markets. The euro fell 1.4% to trade at $1.2725 from %1.2923 late Thursday in New York. Britain's pound was down 1.5% at $1.6196 from $1.6039. The dollar was up against the yen at ¥99.02 from ¥98.25. The greenback fell to an overnight low of ¥96.72 but regained ground after the country's central bank cut a key interest rate. In a widely anticipated move, the Bank of Japan lowered its benchmark interest rate. But wary investors in Japan were expecting a more aggressive cut and Japan's Nikkei index fell 5% despite the news.

Central banks worldwide stepped up efforts this week to forestall a global recession. The Federal Reserve cut its key interest rate Wednesday to 1% from 1.5% and announced plans to extend currency swaps to a number of central banks in emerging markets. European stocks were higher in afternoon trading following a rocky start. In the United States, shares were also trading higher despite dour economic data.

A report from the Commerce Department showed Friday that consumer spending declined 0.3% in September. That followed data released Thursday showing the nation's economy shrank in the third quarter. Currency strategists say Friday's trade could be volatile as money managers seek to balance portfolios at the end of one of the most difficult months in Wall Street's history.
"With equity markets down 15-20% over the past month and today the last day of October, today could see some ghoulish month-end rebalancing flows, making the session difficult to handicap," said Steve Malyon, currency analyst at Scotia Capital in Toronto.

Wednesday, October 29, 2008

Steve Forbes - Fed Intentionally caused crises

Tuesday, October 28, 2008

FOMC Meeting - Rate Cut Expected

WASHINGTON (Reuters) – The U.S. Federal Reserve began a two-day meeting on Tuesday that is widely expected to lead to a cut in interest rates of at least a half-percentage point to calm a global credit crisis threatening the economy.
A Fed official said the gathering got underway at about 2 p.m. EDT. The policy-setting Federal Open Market Committee is expected to announce its decision around 2:15 p.m. EDT on Wednesday. Ten out of 14 big bond firms polled by Reuters forecast the U.S. central bank will opt to lower the overnight federal funds rate target a half point to 1 percent. That would be the lowest since June 2004 when the Fed was fighting a perceived risk of deflation, a danger some fear is about to re-emerge.

Financial futures markets were even more gloomy, implying a 44 percent likelihood the Fed would lower borrowing costs by a dramatic three quarters of a point, which would take them to territory not visited since July 1958. Some market participants think the Fed may be on the way to cutting rates all the way to zero, as Japan was forced to do to counter deflation in the 1990s. A more-forceful three-quarter point cut would be insurance against a deflation risk.
However, other analysts said the lack of a clear deflationary threat at this stage may lead the Fed to opt for the more-incremental half-point move. More at Reuters.

U.S. Consumer Confidence plunges

WASHINGTON -- Wounded by the financial crisis, U.S. consumer confidence plunged in October, reaching an all-time low in the series' 41-year existence, the Conference Board reported Tuesday.

Despite falling gasoline prices, the October consumer confidence index fell to 38 from an upwardly revised September reading of 61.4. Expectations turned "significantly more pessimistic," with the percentage of consumers expecting business conditions to worsen over the next six months rising to 36.6% from 21%, and those expecting fewer jobs rising to 41.5% from 26.9%.

"Their earnings outlook, as well as inflation outlook, is also more pessimistic, and this news does not bode well for retailers who are already bracing for what is shaping up to be a very challenging holiday season," said Lynn Franco, director of the Conference Board Consumer Research Center.

The present situation index fell to 41.9 from 61.1. The expectations index reached a record low in October, hitting 35.5, compared with 61.5 in the prior month.
The full story can be found @

Monday, October 27, 2008

The Holiday Effect - Stock Markets

Over the past century, there have been nine holidays during which the Exchanges have traditionally been closed. Historical research shows that stock prices often behave in a specific manner in each of the two trading days preceding these holidays. By becoming aware of this behavior, both short-term traders and longer-term investors can benefit.

The general strategy is to purchase equities one or two days prior to a holiday. Short-term traders would look to sell just after the holiday while longer-term investors would wait until year end. Both strategies have proven to be profitable plays. The theory behind this effect is that traders are lightening up their holdings (selling) prior to the three day holiday in order to avoid any unexpected bad news. The selling pressure drives stock prices down, making those days a good opportunity for buying lower in the range.
Here is the average pre-holiday results for the last 50 years, based on the S&P 500 Index:

Holiday / Buy 2 days before, Buy 1 day before and sell at year end

Independence Day / 13.3% / 37.3%
Labor Day / 16.8% / 33.7%
Election Day / 17.9% / 4.6%
Thanksgiving / 4.3% / 1.1%
Christmas / -7.1% / 15.2%
New Year's / 31.1% / 19.6%

My source for this is Stockcharts - Chart School. Do your own research. For specific stock picks/ideas feel free to contact me at Good luck and Happy Trading

Saturday, October 25, 2008

Peter Shiff - US Dollar & Gold

Guarantee A Depression Ron Paul

Friday, October 24, 2008

Get OUT of the Stocks NOW -Jim Cramer

Most popular ETFs

Standard & Poor's 500 Index Depository Receipts (SPY:AMEX)
The first and still the biggest ETF, this inexpensive fund (pronounced Spiders) tracks the S & P 500 index, which is widely regarded as the standard for measuring large-capitalization U.S. stock market performance. Some selectivity by Standard & Poor's surrounds an otherwise methodical list of the 500 largest traded firms.

Nasdaq-100 Index Tracking Stock (QQQ:AMEX)
Tracks the Nasdaq-100 index, which includes 100 of the largest companies listed on The Nasdaq Stock Market based on market capitalization. It is widely perceived as a technology benchmark and includes computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies or investment companies.

This popular ETF Tracks the Dow Jones Industrial Average, a benchmark of 30 blue chip stocks selected by The Wall Street Journal. The index is highly subjective and rather antiquated in its formula but serves as a good barometer for very large old-line US companies.

iShares S & P 500 (IVV:AMEX)
Barclays' slightly less expensive version of the SPDR tracks the S&P 500 index, which is widely regarded as the standard for measuring large-capitalization U.S. stock market performance. Some selectivity by Standard & Poor's surrounds an otherwise methodical list of the 500 largest traded firms.

Standard & Poor's MidCap 400 SPDRs (MDY:AMEX)
Tracks the S & P MidCap 400 index, which measures the performance of the mid-size company segment of the U.S. market and complements the S&P 500 seamlessly.

iShares Russell 2000 (IWM:AMEX)
Tracks the Russell 2000 index, a popular benchmark for mid- and small-cap companies. The Russell 2000 Index represents the second tier of U.S. equities, or companies with market values between $20 million and $300 million, which account for approximately 8 to 9 percent of the total market. Russell's methodology leads to relatively high turnover.

The iShares MSCI EAFE Index Fund tracks the MSCI EAFE Index, the top non-US large capitalization index that includes all major economies (except US) and no emerging markets. A popular way to gain foreign exposure.

Total Stock Market VIPERs (VTI:AMEX)
The Vanguard Group's core portfolio ETF tracks the Wilshire 5000 broad market index, which is one of the broadest index for the U.S. equity market, measuring the performance of the vast majority of all U.S. headquartered public companies. Considered an excellent proxy to the US economy as a whole.

Thursday, October 23, 2008

Homeowner Forclosure Bailout

The federal government is working on a loan-guarantee plan that could help many homeowners escape foreclosure, a banking regulator told Congress Thursday. At the same time former Federal Reserve Chairman Alan Greenspan said the financial crisis will get worse before it gets better. Accused of contributing to the meltdown, but denying that it was his fault, Greenspan told a House panel the crisis left him -- an unabashed free-market advocate -- in a "state of shocked disbelief."

Some critics have blamed Greenspan for contributing to the problem by leaving interest rates too low for too long and for failing to regulate risky banking practices such as the issuance of subprime mortgage. But he put the blame on soaring mortgage foreclosures on overeager investors who did not properly take into account the threats that would be posed once home prices stopped surging upward.

Greenspan called the global financial crisis is a "once in a century credit tsunami" that policymakers did not anticipate. He said that he and others who believed lending institutions would do a good job of protecting their shareholders are in a "state of shocked disbelief." And Greenspan also blamed the problems on heavy demand for securities backed by subprime mortgages by investors who did not worry that the boom in home prices might come to a crashing halt.

Sheila Bair, chairman of the Federal Deposit Insurance Corp., told the Senate Banking Committee that the government can do more to help tens of thousands of home borrowers avert foreclosure. She suggested the government set standards for modifying mortgages into more affordable loans and providing loan guarantees to banks and other mortgage services that meet them.

"Loan guarantees could be used as an incentive for servicers to modify loans," Bair said. "By doing so, unaffordable loans could be converted into loans that are sustainable over the long term." The FDIC is working "closely and creatively" with the Treasury Department on such a plan, she said. (excerpts from M Crutsinger and M Gordon, AP Writers)

Wednesday, October 22, 2008

Ron Paul - The Truth about the Economy

Monday, October 20, 2008

Japanese Candlestick Charts

Candlestick charts provide the same information as a bar chart (open, high, low and close prices)
but does so in a clearer, easier to recognize style, in fact a visual depiction of price action during a single time period or series of time periods.

One candlestick itself can provide important information about the strength or weakness of the market during a given day or other time period, visually portraying where the close is relative to the open. Although one candle can be significant, depending upon its location on a chart, a candlestick pattern usually takes several candlesticks to produce chart formations that give the best signals.

Candlesticks may look identical but have an entirely different meaning after an uptrend than they do after a downtrend. Because they can be used in analysis in much the same way as bar charts, candlestick charts have quickly become a favorite of traders and analysts since being introduced to the West in 1990. Candlestick analysts have also added a little mystique to candlestick charts by giving various patterns clever names and providing more descriptive characteristics for these patterns than is the case in typical bar chart analysis.

Both types of charts, bar and candlestick, have their double tops, inside days, gaps and other formations. But candlestick analysis ascribes more meaning to the candlestick “bodies” – price action between the open and close – and to the “shadows” or “tails” – price action that takes place outside of the open-close range for a period.

Because of their popularity in recent years, you should become acquainted with the nuances and terms of candlestick charts if you aren’t already.

Exchange Traded Funds

Exchange Traded Funds (ETF's) are becoming more and more popular in the every day market. There are several ETF's available that trade millions of shares per day. The heavy volume translates to high liquidity, qualifying many of them as great Day Trade candidates. Some great examples of ETF's that qualify are QQQQ, DIA, SPY, QID, QLD, IWM, and many more! Of course, knowing when to trade and in which direction is the key to profitability.

We use 4 key rules to help maximize your ETF trading profits:
1) Careful Position Entry: When you initiate a trade based on a signal, the reasoning behind the
trade will be clear. We do not feel the need to have an open position at all times--every trade
will have a purpose and statistical probability of profit.
2) Strictly Limit Risk: Your day trading alerts on ETF's will be wrong sometimes. That is why
every day trade will have a well-defined stop loss that gets you out of the position as soon as
the trade is clearly moving in the wrong direction.
3) Let the winners ride: Scalpers and losing traders like to take profits quickly. We believe in
holding positions for as long as they still have a reasonable chance at even bigger profits. Once
an ETF trade has moved solidly into profitable range, we will often move our stop to our
entry price and hold the trade until it has PROVEN to us that it isn't going to breakout even
more. This will often result in a day trade that exceeds our original profit goals.
4) Scale In/Out: Initiate Trades with 1/4 of your intended position and Add-on in 1/4's as long
as the support holds. The same strategy is used as an trade exit - start selling your position as
it approaches target levels. This gives you an option to let a partial position "ride" while locking
in profits on the balance.

Tuesday, October 14, 2008

Stock Market Morning Rally Fades

Stocks on Wall Street descended from their impressive early gains Tuesday to trade in and out of the red after the Treasury Department outlined a plan to invest some $250 billion in U.S. banks, with about $125 billion reportedly earmarked for the nine largest.
The Dow Jones Industrial Average, up more than 400 points earlier, was by Mid-day up just 34 points at 9421, and the S&P 500 was up 4 points to 1007. The Nasdaq was giving back 29 points to 1815.
On Monday, stocks snapped back from their eight-session October losing streak with massive gains. The Dow registered its largest-ever one-day point gain, rising 936 points, or 11%. The S&P 500 and the Nasdaq each jumped nearly 12%. The large gains came as central banks around the world collaborated on plans to inject capital into the global financial system.
Ahead of the new session, Treasury Secretary Henry Paulson said his agency would dedicate $250 billion of the $700 billion bailout package to buying equity positions in U.S. banks.

The government would buy preferred shares in Goldman Sachs (GS), Morgan Stanley (MS), JPMorgan Chase (JPM), Bank of America (BAC), Merrill Lynch (MER) , Citigroup (C), Wells Fargo (WFC), Bank of New York Mellon (BK) and State Street (SST), The Wall Street Journal reported. by Mike Taylor @ the

Saturday, October 11, 2008

"Run on the Banks" ?

Every day new headlines, It'll get worse before it gets better, seems to be the consensus. Historic proportions. Comparisons to the Great Depression.

What is a "Run on the Banks"? How would YOU know if it started or is going on?
If you pull extra cash out of your bank accounts ... is that a "Run on the Bank"?
If you pull ALL your money out that a run on a bank?
Does the amount withdrawn matter? eg. 50% of your money but more than 25,000
or 100% but it's less than 10,000.
What if you wait until your neighbor withdraws first and then you withdraw some yourself is that a Run on the Banks?

The wealthy diversify and protect themselves many different ways. They use different banks - domestic (FDIC insured) and international (currency risk hedge). They use different asset classes.... Gold, Silver, Art, Diamonds etc. Many have multiple revenue streams or relatively liquid assets and can weather out a storm lasting
3-5 YEARS. Can you?

Friday, October 10, 2008

Friday, October 3, 2008

Bail-Out Waiting Game

The Bail-Out Waiting Game continues. The equity markets want to rally, and the knee-jerk reaction just might be a short lived(1 week if we're lucky) rally. A major benefit of the 700 billion pkg is to inspire confidence in the capital markets.

Unfortunately, all I heard all week was the dire warnings from Pres. Bush, and the other "leaders", threatening economic chaos, doom, and no other plan behind the bail out. "this cannot fail...", "we must get this done..." does not inspire confidence.

Here goes the vote - on the 700 Billion dollar bill + 100 billion in additional "pork spending".
Knowing that the risk exposure is 50 - 100 Trillion, depending on who you ask. This bail-out Bill is - much to little and way to late, but it might buy this administration a couple months at best.

Thursday, October 2, 2008

Bush and the Bail-Out - Video

Economic Update

Stocks ended Wednesday with mild losses amid negative auto and manufacturing news after two volatile sessions. The Dow industrials ended 19 points lower, the Nasdaq Composite fell 12 points and the S&P 500 lost 3 points.

The Senate fairly easily approved a revised $700 billion U.S. plan to stabilize the financial industry, just two days after the House of Representatives rejected it. The House may now consider it on Friday, according to House Majority Leader Steny Hoyer.

The revamped Senate bill sticks to the core plan developed by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke to have the government buy and hold toxic mortgage assets, freeing up funds for banks to begin lending again. It gives Paulson the $700 billion in phases, with $250 billion up front, then $100 billion pending presidential approval and another $350 billion pending congressional approval.

Meanwhile, the Securities and Exchange Commission said it would extend the short-sale ban to as long as Oct. 17 - or up to three business days after the passage of the bailout plan-- but won't make it permanent.

Jobless claims remained at their highest level in seven years, the Labor Department reported Thursday, as people in the hurricane-hit states of Louisiana and Texas filed for benefits. For the week ended Sept. 27, seasonally adjusted first-time claims for unemployment benefits rose 1,000, to 497,000 - the highest level since late September 2001

The European Central as expected held interest rates at 4.25%. Jean-Claude Trichet, president of the ECB, acknowledged a deteriorating European economy while still warning that inflation risks remained.

The euro touched a one-year low vs. the dollar. Crude oil futures fell $1.99 to $96.54 a barrel.
Excerpts from Steve Goldstein, MarketWatch. Oct 02/08

Monday, September 29, 2008

Global Chaos

As I write this the Dow is down 320 points, with gold UP $27.00. The FED is announcing yet
another massive USD liquidity injection. US Problems have clearly become Global.

With the historic volatility that the markets have been experiencing, FEAR is in the eyes of our leaders both in Washington and Wall Street. The Dow Jones Industrial average had notched triple-digit moves each day and for many, the question was becoming whether the U.S. government's bailout efforts, which caused an impressive rally on Thursday and Friday, would be enough to fight off a long-term move lower. The fact that the major indexes were trading below the long-term resistance of their respective 200-day moving averages suggested that there was a lot of work that needed to be done in order for the downtrend to reverse any time soon.

Voltatility continued this past week, as more changes were seen within financial institutions across the U.S. Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) changed their charters to become commercial banks in an attempt to stabilize their capital positions. A huge purchase of equity in Goldman Sachs by Warren Buffet after this news helped push Goldman a bit higher. Washington Mutual (NYSE:WM), a large thrift bank in the U.S., was seized this past week and purchased from the Federal Deposit Insurance Corporation by J.P. Morgan Chase (NYSE:JPM). This just added to the fear that seems to be spreading to investors across the country about which bank will be next.

Charts (NYSE, Russell, Dow, Nasdaq) are all trading below the 50 & 200 DMAs, indicating more downside.

Monday, September 22, 2008

Markets Continue Spiral - Gold / Oil Spike

America's $47-trillion bubble of debt has burst. America's $180-trillion balloon of derivatives has popped. And all the president's men cannot put them back together again.

Last year, they tried three different mortgage work-out plans. This year, they tried a massive economic stimulus package. They resorted to a myriad of unprecedented lending facilities. They even bailed out Bear Stearns, Fannie Mae, Freddie Mac and AIG. Each attempt was more radical than the previous. And each attempt failed miserably.

Now, appearing before the American people at the White House Rose Garden, they've declared that they're going to try again, this time with an even bigger, more ambitious plan: A structure to buy up the bad debts of sinking banks ... a guarantee for money market funds ... a prohibition on certain short selling activities. And with all this, they say, they're finally going to "restore confidence" and "end the debt crisis." From the Money and Markets .com website

Economic Bailout - is not fooling anyone

The 700 billion dollar bailout is a brave attempt in calming the markets and restoring confidence. Unfortunately, I fear, that it is too little to late, and the markets are agreeing. The rallies of last week, it appears, were just a short squeeze, as traders and investors cover their short positions. Some non -financial listed companies are doing buybacks of their shares, but other than that, there is no real buying/investing, John Q Public is scared and very defensive.

Gold is up again this morning $897.40 + 25.60, Silver is also up sharply +.73 at $13.35. NYSE is down -167, and the Dow down $-220. (11:48am), OIL back to $110, if it breaks above that level and holds, we could easily see new highs $147 or more, let's not forget about Winter and the heating season staring. The US Dollar continues its downward trend

There are indications that 700 Billion is insufficient and that the real totals at risk are much higher. Very interesting article from the analysts at

Friday, September 19, 2008

Short Squeeze

A short squeeze is under way with the Dow up +400 points. This is primarily a result of the new SEC rules regarding the short sale of securities. Once the shorts are covered, the buying will dry up and another slide should start. I find it doubtful that this rally will hold more than a few days, but it will give hope, to some, over the weekend.

The U.S. Treasury, Federal Reserve and Securities and Exchange Commission said Friday that they were taking action to stem the loss of investor confidence in financial markets.

To shore up the mortgage market, Treasury is also expanding its mortgage backed securities purchase program. Mortgage finance giants Fannie Mae and Freddie Mac will also increase their purchases of the debt.

The Treasury Department said it's going to insure any publicly offered money-market fund, both retail and institutional, that pays a fee. "Concerns about the net asset value of money-market funds falling below $1 have exacerbated global financial-market turmoil and caused severe liquidity strains in world markets," said Treasury.

Thursday, September 18, 2008

Trailing Stops Work

Trailing Stop saves the day - captured about 1/2 the Profits from my P/L high. Got busy and missed the breakout higher but today getting in late still pays with exaggerated and strong directional momentum moves higher. I will continue to have a short bias and and use rallies to re-establish positions. Tighter stops on long positions and wider stop on shorts

A strategy I use when covering an open position is to cover by more then a 1:1 (short 1000/sh buy 1500, or long 1000/sh sell 1500 to effectively reverse your position) it could be costly in a sideways market, but lately the intra-day reversals have had great momentum.

US Dollar rallies and Gold $847 down $3.00 after being up $40, well off the highs of the day

Happy Trading

Markets Fading

Markets fading after a weak rally attempt, today. GOLD 874.60 +25.10.
Nyse 7494, Dow 10665, S&P 1157

I will be selling IWM, and keeping a eye on the SPYs and QQQQs, looking for a drift lower over lunch. As always I maintain a trailing stop on any position. No motivation for serious money to come back into the markets, no confidence. Just waiting for the next breaking news story.

Gold should be retesting $1000 level shortly, any move over $900 and a close above, would set that up nicely.

Lots of talk on the "street" regarding Money Market funds, are they in danger?

Another 40-50 billion might be needed to bailout (or what ever term they are using now)
the Auto industry, of interest here is that Michigan is a "battleground State" in this election,
so some type of support seems inevitable. GM approaching $10.00/shr

Wednesday, September 17, 2008

US Markets imploding

Day trading is the best way to trade these markets. Into cash overnight every night and ready for action every morning. Smaller positions with wider stops intra-day, to take into account the greater volatility. The SMA's cross get on board and ride the move.
With over 20+ years of trading these markets(equity and currency), this is the greatest
combination of negative factors resulting in the collapse of the US financial markets.

I am anticipating a one day, 2000+ pt loss on DOW in a final capitulation of the US capital markets combined with a $100+ dollar spike in GOLD.

ETFs are a great way to take advantage of trading an entire sector without specific stock risk.
XLF, XRT, GLD, SPY, QQQQ, and IWM are some of my favorites.

Happy Trading in these historic times and be careful out there

'by the people for the Corporation..."

Equity and currency traders love this market volatility. I wish I could train more people to trade. This is the biggest redistribution of wealth in our generation. But as the Financial Sector fat rats run for cover and point fingers at each other it's the American taxpayer who will ultimately be left paying/taking the hit.

"by the people FOR the people ...." is a joke as it has been all about the Corporation in America. Most economic systems stand up well when times are good . It is in times of trouble and turmoil that it's clearly spelled out: American Capitalism is FLAWED and Failing, apparently it works only when there is a market to exploit, ie. foreign labour, natural resources etc. and no real oversight, as has been the case for the last 150 years. Now it all comes Home to roost, unfortunately the US will drag many other countries into the quagmire.

"We're essentially continuing a system where profits are privatized and...losses socialized," said Nouriel Roubini, a professor at New York University's Stern School of Business, adding that auto makers, airlines and other struggling businesses would no doubt be asking for government help too.

Between the $29 billion the Fed pledged to swing the Bear Stearns sale to JPMorgan in March, $100 billion apiece to rescue mortgage finance firms Fannie Mae and Freddie Mac, up to $300 billion for the Federal Housing Authority, Tuesday's $85 billion loan to insurer AIG and various other rescue deals and loans, taxpayers are potentially on the hook for more than $900 billion.

Where does the average Joe Taxpayer go to get bailed out.?

Tuesday, September 16, 2008

Federal Open Market Committee Rates - Unchanged

Release Date: September 16, 2008

For immediate release
The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Strains in financial markets have increased significantly and labor markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending. Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.

The downside risks to growth and the upside risks to inflation are both of significant concern to the Committee. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Ms. Cumming voted as the alternate for Timothy F. Geithner.

Monday, September 15, 2008

Benefits of ETFs

What are the benefits of exchange traded funds trading as stocks?
The unique “exchange traded” structure offers several advantages to ETF investors:
1) buy and sell a basket of stocks at any time during the trading day
2) instantly get exposure to a portfolio of stocks or bonds
3) buy on margin
4) sell short, even on a downtick
5) no sales loads, although brokerage commissions will apply
6) lower fees
7) tax efficiencies

SeniorTrader -

Exchange Traded Funds

Investors can capitalize on the convenience and flexibility of ETFs to pursue a wide variety of investment strategies.

Core investment- Investors can use ETFs as a core investment for their Portfolio.
The purchase of shares in a single ETF can provide broad market exposure of a
portfolio of stocks or bonds for long-term holding that is easy to establish,
easy to track, inexpensive, and tax efficient.

Portfolio diversification- ETFs cover virtually every segment of the equity markets
and several segments of the U.S. bond market, providing an easy and convenient
way to adjust the investment mix of a core portfolio.

Hedging- Exchange traded funds can be purchased on margin and sold short (even on a
downtick), which has opened up risk management strategies for individual
investors that were once available only to large institutions. For example,
ETFs can be sold short to hedge a core stock portfolio or interest rate
fluctuations. This allows investors to keep their portfolio intact while
protecting it from market losses. In a declining stock market or rising
interest rate environment, profits from a short position can offset some of
the losses in a portfolio. (Investors are required to make arrangements to
borrow securities before selling short.) Listed options, available on some ETF
products, also offer opportunities for additional hedging or to increase
income. Investors should contact their broker regarding initial and
maintenance margin requirements.

Cash management- ETFs have often been used to “equitize” cash, providing a way for
investors to put cash to work in the market or maintain allocation targets
while determining where to invest for the longer term.

Rebalancing- Investors can adjust ETF positions at any time throughout the trading
day, without redemption fees or short-term restrictions. Again, usual
brokerage commissions will apply.

Tax loss strategy- An investor can sell a security that is underperforming and claim
a tax loss but retain exposure to its sector by investing in an ETF. Consult a
tax advisor about a tax loss strategy.

Lehman - Done & Merrill - Sold

12:05 pm : Stocks are sharply lower after Lehman Brothers (LEH 0.16, -3.49) filed for bankruptcy, Merrill Lynch (MER 20.71, +3.66) agreed to sell itself to Bank of America (BAC 28.33, -16.03) and reports indicate that AIG (AIG 4.32, -7.82) is desperate for capital.

At midday stocks are approaching opening lows, although they are not down as much as feared. Weakness is broad-based, with all ten economic sectors posting a loss.

Lehman Brothers filed Chapter 11 bankruptcy protection after no buyers were willing to save the troubled 158-year-old firm due to a lack of a government backstop. None of Lehman's broker-dealer subsidiaries will be included in the bankruptcy and will continue to operate. Lehman listed $613 billion in debt, which is the largest bankruptcy on record according to reports.

Merrill Lynch agreed to be sold to Bank of America in an all-stock deal for $29 per share, or $50 billion, a 70.6% premium to Friday's closing level. BofA said it was willing to pay the premium because the benefits were appealing and it still believes it is a compelling price, noting there was the possibility that others were interested. According to the Wall Street Journal, the move came after federal officials "strongly encouraged" the sale due to concern that the firm was approaching failure. Fed officials may have encouraged the deal, although BofA CEO Lewis said there was no “pressure” from regulators.
Finance.Yahoo 9/15/08 9:14am

Friday, September 12, 2008

Online Stock Trading

Online trading, or direct access equity trading (DAET), of financial instruments has became very popular in the last five years or so. Now almost all financial instruments are available to trade online including stocks, bonds, futures, options, ETFs, forex currencies and mutual funds. Online equity trading differs in many things from traditional trading practices and different strategies are needed for profiting from the market.

In traditional trading, stock trades are executed through a broker via phone or via any other communicating method. The broker assists the trader in the whole trading process; and collect and use information for making better trading decisions. In return of this service they charge commissions on traders, which is often very high. The whole process is usually very slow, taking hours to execute a single trade.
Long-term investors who do lesser number of trades are the main beneficiaries.

In online trading, stock trades are executed through an online trading platform (trading software) provided by the online broker. The broker, through their platform offers the trader access to market data, news, charts and alerts. Day traders who want real-time market data are provided level 1.5, level 2 or level 3 market access. All trading decisions are made by the trader himself with regard to the market
information he has. Often traders can trade more than one product, one market and/or one ECN with his single account and software. All trades are executed in (near) real-time. In return of their services online brokers charge trading commissions (which is often very low - discount commission schedules) and software usage fees.

Thursday, September 11, 2008

Forex - How to start

Market comment

Trading Basics

Trading Secrets Overload

There is so much Investment/Trading information on the Web - it seem everybody has the BIG SECRET TRADING STRATEGY - and they will share it with you for a few Dollars. A person can go broke just paying for courses, mentors, trading software, charts and that's before you even start.

Does any of it work more than 1/2 the time?

After 25 years in the markets, Forex and Equity, I have my favorite indicators which work for me. (TICK, Crossing SMA's, Bollinger Bands, etc.) But there is NO magic formula. I give new traders the basics, point them in the right direction, and let them figure out what combination works for them. The successful beginners, are hyper motivated, do extra research, have lots of questions.

The trick, I think, is identifying your style or trading personality as soon as possible and focusing only on the indicators and strategies that support that style.

Consistency in performance is the key to a career in Trading.

Wednesday, September 10, 2008


In my stock trading career I have been fortunate to have worked with some of the best. Having seen what they do and from my own experience I have compiled a “BEST OF BREED” for the most useful, informative, and potentially lucrative sites in the world when it comes to Trading the Markets. Over the years in my quest for market knowledge and in an effort to futher develop my trading career, I have paid thousandsfor many courses & studied innumerable books, relating to trading for a living including Technical analysis,Candlestick charting, psychology of trading, etc. and ranging from the beginners level to advanced arbitrage modeling. It can take years and does take thousands of dollars, buying and reading books, taking courses and going to seminars to learn to trade for a living.

Tuesday, September 9, 2008

Start of a Trading Career

20 YEARS that was FAST

October 21, 1987
THE MARKET TURMOIL: A NEW ORDER OF TRADING; Officials Halt Trading In Several Futures Pits
LEAD: In an unprecedented move, exchange officials temporarily halted trading today in several of Chicago's financial futures pits because large numbers of the stocks underlying the indexes had stopped trading on the New York Stock Exchange.
In an unprecedented move, exchange officials temporarily halted trading today in several of Chicago's financial futures pits because large numbers of the stocks underlying the indexes had stopped trading on the New York Stock Exchange.
About 11:15 this morning, officials at the Chicago Mercantile Exchange and the Chicago Board Options Exchange announced to their members that trading would stop in the Standard & Poor's 500 futures contract, on the Merc, and both the S.&P. 100 and 500 options contracts, on the C.B.O.E., until a higher percentage of stocks underlying the indexes began trading again in New York.
Trading of futures and options was also suspended on the American Stock Exchange, the Pacific Exchange, the New York Futures Exchange and the Kansas City Board of Trade.
Stock index futures are contracts that represent a bundle of underlying stocks and they are bought or sold according to a person's hunch on which way the actual index will move. They thus enable investors to speculate on broad market climbs and hedge against market tumbles. Usually, futures prices swing more dramatically than the underlying stock prices because traders try to anticipate market swings.
''Futures prices often overshoot the market on the way up or down,'' said Eugene M. Lerner, a Northwestern University finance professor. That may help explain the heavy trading volume and violent price swings that shook Chicago's futures pits in the last two days. And as a ''shadow market'' to the stock exchanges, events in the futures market, including today's trading halts, are often determined by the New York Stock Exchange.
By 12:05 P.M., all three contracts on the Merc and the C.B.O.E. had resumed trading. ''The halt does not bode ill for the markets in general,'' said Alger B. Chapman, chairman of the Chicago Board Options Exchange. ''It's strictly a technical requirement, and indeed may take a little pressure off the market.'' After the halts, the stock market staged a rally, and the Dow Jones industrial average closed up by 102.27 points, to 1,841.01.
As the stock market reversed itself, stock index futures followed. By the time trading was halted, the S.&P. 500 futures contract was down roughly 40 points. By the close, the contract for December delivery closed up 14.75, compared with an 80.75 drop Monday. About 786,205 contracts were traded on the exchange, nearly 100,000 more than were traded Monday.

Access to the Markets

With improving technology and connectivity - Direct access to the equity markets is faster and more reliable then ever. For the quick, nimble and disciplined trader, this directly translates into more trade opportunities, faster entry/exits, better fills, lower execution costs, less risk and greater profits.

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