Market is very volatile this week. This year, I feel that it won't be easy to earn from stocks. Focus on dividend stocks instead.
Upcoming Market movers:
THURSDAY: Weekly jobless claims; durable-goods orders; Bernanke Senate testimony; Fed's Pinalto, Bullard speak; Apple shareholder meeting; Buffett lunch; health-care summit; seven-year auction; financial-industry compensation hearing; Earnings from Kohl's, Liberty Media and Gap
FRIDAY: 2nd read on Q4 GDP; consumer sentiment; existing-home sales; Fed's Kocherlakota speaks; Madoff hearing; Earnings from Berkshire Hathaway
Thursday, February 25, 2010
Sunday, February 21, 2010
Will Feb close positive?
Last week was certainly a bullish week as DOW has been closing positive. It was certainly a nice bull with nice economic reports and positive earnings. Money was back into the market. Friday was a surprise day as the Fed announced a rise in interest rate from 0.5% to 0.75% after the bell on Thursday which sent Asian markets tumbling. A knee jerk reaction I would say. Thanks to the surprise which the Fed gave, it certainly lead to more instability to the market. Looking at the charts, Friday ended as a doji. Seems like bulls are going to end soon for Feb.
Friday, February 19, 2010
Fed Raises Discount Rate to 0.75% From 0.50%
Market mover for the day. Dollar was very bullish last night even though the news was released after close!
Published: Thursday, 18 Feb 2010 | 6:00 PM ET Text Size By: CNBC.com with Reuters
The Federal Reserve said on Thursday it raised the interest rate it charges banks for emergency loans but insisted that its first rate move since December 2008 would not raise borrowing costs for consumers or companies.
The Fed cast its decision to raise the discount rate to 0.75 percent from 0.5 percent as a response to improved financial market conditions that warrant less of a helping hand from the U.S. central bank.
RELATED LINKS
Current DateTime: 02:16:00 18 Feb 2010
LinksList Documentid: 35465850
Where the Biggest Investors Are Putting MoneyBernanke Faces Challenges
It went to pains to draw the distinction between the discount rate and its target for overnight interbank rates, its main monetary policy tool, which remains unchanged near zero percent as a fragile U.S. economic recovery struggles to gain traction.
"Like the closure of a number of extraordinary credit programs earlier this month, these changes are intended as a further normalization of the Federal Reserve's lending facilities," the Fed said in a statement.
"The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy," it said.
Market watchers were shocked by the announcement, which came after markets closed Thursday.
“I'm shocked. Completely shocked,” Todd Schoenberger, managing director of LandColt Trading said of the Fed’s move to raise the discount rate. “It makes me wonder if the CPI number coming out tomorrow is going to be just absolutely horrible—maybe they got wind of something,” he said.
Schoenberger expects the Fed to raise the federal-funds rate, the rate banks charge each other, at its next meeting March 17-18. He, like many traders, didn't expect the Fed to make a move until the second half of this year.
The analyst expects stocks to pull back from the Dow Jones Industrial Average's recent three-day winning streak as a result of the Fed move.
"Expect a dramatic selloff at the open tomorrow morning," Schoenberger told CNBC.
The increase in the discount rate “does not mean that the Fed is ready to hike [the fed-funds rate] or has a set time for such a move. But it does mean that the Fed is preparing the way,” said Robert Brusca, chief economist at FAO Economics. “This is very much a move to prepare markets and to test markets to see if they are ready to absorb a rate increase by putting the Fed’s lending vehicles back in a normal configuration,” he said.
'Bullish for the Dollar'
The U.S. dollar reached its highest point against the euro since May of 2009 after the Fed's announcement Thursday.
“I think it’s very bullish for the dollar,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “It cements the U.S.’s safe-haven status for foreign investors,” he explained.
Gold prices fell as a result of the news.
U.S. light, sweet crude futures surrendered some of their earlier gains to move near $78 late Thursday, after settling $1.73 higher at $79.06 a barrel.
Pimco Founder and Co-Chief Investment Officer Bill Gross said he sees the Fed's action as part of a much larger pullback from the government's economic stimulus strategy.
"This move is more of a classical monetary policy maneuver ... as opposed to the beginning of an interest rate increase or any tightening from the standpoint of interest rates, and I think that’s what's critical for bond investor," Gross said.
The Fed also said that as of March 18 the maximum maturity for primary credit loans will be shortened to overnight. It also said it was raising the minimum bid rate for its term auction facility program from 0.25 percent to 0.50 percent and that the final TAF auction will be on March 8.
The TAF program allows depository institutions to bid on loans from the Fed using a wide range of securities and assets as collateral. It was introduced in December 2007 as a way to introduce liquidity for financial institutions amid credit market concerns about the quality of securities being used as collateral.
Published: Thursday, 18 Feb 2010 | 6:00 PM ET Text Size By: CNBC.com with Reuters
The Federal Reserve said on Thursday it raised the interest rate it charges banks for emergency loans but insisted that its first rate move since December 2008 would not raise borrowing costs for consumers or companies.
The Fed cast its decision to raise the discount rate to 0.75 percent from 0.5 percent as a response to improved financial market conditions that warrant less of a helping hand from the U.S. central bank.
RELATED LINKS
Current DateTime: 02:16:00 18 Feb 2010
LinksList Documentid: 35465850
Where the Biggest Investors Are Putting MoneyBernanke Faces Challenges
It went to pains to draw the distinction between the discount rate and its target for overnight interbank rates, its main monetary policy tool, which remains unchanged near zero percent as a fragile U.S. economic recovery struggles to gain traction.
"Like the closure of a number of extraordinary credit programs earlier this month, these changes are intended as a further normalization of the Federal Reserve's lending facilities," the Fed said in a statement.
"The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy," it said.
Market watchers were shocked by the announcement, which came after markets closed Thursday.
“I'm shocked. Completely shocked,” Todd Schoenberger, managing director of LandColt Trading said of the Fed’s move to raise the discount rate. “It makes me wonder if the CPI number coming out tomorrow is going to be just absolutely horrible—maybe they got wind of something,” he said.
Schoenberger expects the Fed to raise the federal-funds rate, the rate banks charge each other, at its next meeting March 17-18. He, like many traders, didn't expect the Fed to make a move until the second half of this year.
The analyst expects stocks to pull back from the Dow Jones Industrial Average's recent three-day winning streak as a result of the Fed move.
"Expect a dramatic selloff at the open tomorrow morning," Schoenberger told CNBC.
The increase in the discount rate “does not mean that the Fed is ready to hike [the fed-funds rate] or has a set time for such a move. But it does mean that the Fed is preparing the way,” said Robert Brusca, chief economist at FAO Economics. “This is very much a move to prepare markets and to test markets to see if they are ready to absorb a rate increase by putting the Fed’s lending vehicles back in a normal configuration,” he said.
'Bullish for the Dollar'
The U.S. dollar reached its highest point against the euro since May of 2009 after the Fed's announcement Thursday.
“I think it’s very bullish for the dollar,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “It cements the U.S.’s safe-haven status for foreign investors,” he explained.
Gold prices fell as a result of the news.
U.S. light, sweet crude futures surrendered some of their earlier gains to move near $78 late Thursday, after settling $1.73 higher at $79.06 a barrel.
Pimco Founder and Co-Chief Investment Officer Bill Gross said he sees the Fed's action as part of a much larger pullback from the government's economic stimulus strategy.
"This move is more of a classical monetary policy maneuver ... as opposed to the beginning of an interest rate increase or any tightening from the standpoint of interest rates, and I think that’s what's critical for bond investor," Gross said.
The Fed also said that as of March 18 the maximum maturity for primary credit loans will be shortened to overnight. It also said it was raising the minimum bid rate for its term auction facility program from 0.25 percent to 0.50 percent and that the final TAF auction will be on March 8.
The TAF program allows depository institutions to bid on loans from the Fed using a wide range of securities and assets as collateral. It was introduced in December 2007 as a way to introduce liquidity for financial institutions amid credit market concerns about the quality of securities being used as collateral.
Wednesday, February 17, 2010
Nice one
This is a very nice bull. If it can break the resistance later then we can expect another bull run.
Sunday, February 14, 2010
Happy Chinese New Year
Happy Chinese New Year to all readers! Wish everyone a wonderful time! Gong Xi Gong Xi!
Friday, February 12, 2010
Last min Rally
Last night started down and was pretty much hanging in there. After that there was a rally in the end breaking out the 100 MA. A nice rally since it was able to break out of the 100 MA. Now it remains to be seen that the breakout is sustainable. These few days were very volatile, as I said many of the outcomes at the end are all surprises. At Singapore side, stocks are not moving much, indicating money are on the sidelines.
Thursday, February 11, 2010
Why I chose the US market
Some of you were wondering why I chose to analyse the US market instead of analysing the Singapore stock index. First thing is that US has the biggest financial movement among the world. The world depends on US. That's why the standard currency is the dollar. Singapore is too small to make any contribution. In fact, if you look at the markets well enough, every movement of every Hang Seng, STI, Nikki, KOSPI, Taiwan, Europe are following the US call. US down, whole world goes down, US up, whole world goes up.
I chose the DOW because it is easier to look at the trend using DOW. The first thing everyone looks is the DOW. After the DOW, S&P500 will be the next to look at. In actual fact, I depended on the S&P500 futures to allow me to guess the direction of the day with live streaming. Then after that I used the DOW to analyse the psychology of the market using candlesticks. These are very technical terms to someone who doesn't know what a stock market is. Not only technical terms, one has to look at the news and macroeconomics as these are the movers of stocks.
So by knowing the direction of the US market, one can apply the knowledge to across all types of markets.
I chose the DOW because it is easier to look at the trend using DOW. The first thing everyone looks is the DOW. After the DOW, S&P500 will be the next to look at. In actual fact, I depended on the S&P500 futures to allow me to guess the direction of the day with live streaming. Then after that I used the DOW to analyse the psychology of the market using candlesticks. These are very technical terms to someone who doesn't know what a stock market is. Not only technical terms, one has to look at the news and macroeconomics as these are the movers of stocks.
So by knowing the direction of the US market, one can apply the knowledge to across all types of markets.
Tuesday, February 9, 2010
Rebound gone wrong
The DOW failed to have a rebound, instead it went down in the 2nd session. Here's the story: DOW opened lower and went down and then later went up and everything looks bullish but at 1400 hrs(America) it just went down again to -103 pts. Really baffling. What I can say right now is the market now has no direction. It does not know whether to go up or down. What I can say now is be cautious, we still have about 500 pts to go down to 200 MA. Slowly buy if you have the excess cash on dips on good companies with good earnings, dividends and outlooks especially Asia side. This is for long term.
Monday, February 8, 2010
Hammer (5 Feb 10)
Well Market went into a big selldown last Friday as Europe side is showing very bad credit crisis on a few countries such as Greece, then it rebounded at the last min forming a hammer. Boy it sure tested the 150 MA (Yellow) before rebounding up! This ugly Hammer now signifies a possible rebound or consolidation again. I'm kind of certain that this rebound was the panic covering of shorts.
Friday, February 5, 2010
Guess who's back
The bears are back, and back with a vengeance. Last night DOW dropped a crazy 268 pts breaking the 50 MA line. So we are confirm heading towards 9600 pts, but first it will have to break the 150 MA at about 9800 pts.
Thursday, February 4, 2010
The story of credit
A very nice story by Conrad:
Back in 1992, having Gold Cards from AMEX, MC and VISA was a big deal. This was because you REALLY had to qualify for it by having an obscene income that was validated by your income tax statement. The qualifying factor for Gold was an income above S$48.000 annually in a time when average pay was $2,500.
When you pulled out those cards to pay for something, it told people that you had arrived. It was a badge of wealth. You would get looks of envy, jealousy and respect. In those days, membership had its privileges and they were proud to sign for it.
In those days, the only person frowning at your card was the sales person who had to execute the transaction with a franking machine and a whole lot more extra work because they preferred the easier transaction; cash.
The gold card - everybody wanted it, few could have it.
Fast forward >>> 2010.
Today, those who don’t have credit cards carry cash. This is a time when having such liberties is a big deal. This is because you REALLY have it and can pay for anything and still have a handsome balance in your bank. The qualifying factor for Cash is to physically have it and have it in abundance.
When you pull out cash to pay for something today, it tells people that you have arrived. It is a sign of REAL wealth. You will get looks of surprise, envy, jealousy and respect. Today, membership is a liability and it gets embarrassing and stressful to have to sign for anything.
Today, the only person frowning at your cash is the sales person who has to count the change with a brain which is a serious challenge because they prefer the easier transaction; credit cards.
Cold hard cash - everybody wants it, few really have enough of it.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
20 years ago, loans were a heaven-sent for people who needed it for basic things like homes, business and education. Rates were affordable as loans were designed to help the ordinary middle class family to achieve progress in their lives.
Banks did not like dealing in loans as they were a liability and took a lot of work to qualify a borrower. They took risks to lend out this money but default rates were low relative to today’s rate of defaults. Not that many people became bankrupts as a result of bad debts as few could qualify for those loans and you could only get one loan at a time from any one bank.
Back then, it was shameful to let anyone know you had to take a loan.
Fast forward >>> 2010.
Today, loans are a necessary evil as people need it for extravagant things like clubbing, cars and condominiums. Rates are ridiculously high as loans are designed to help the banks achieve progress in their bottom lines.
Banks love dealing in loans as they are a great and steady income source and it is easy to qualify a borrower. They take small risks to bet against the borrower as default rates are higher relative to the rate of defaults 20 years ago. Many more people become bankrupts today as a result of bad debts as few actually qualify for these loans and are often over leveraged.
Today, it is commonly accepted and stylish for everyone to know that you are over-extended on your loans.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In 1988, people saved like mad to buy a VCR, a Sony Walkman and the Motorola Tai-Kor-Tai.
Month on month, little by little, the savings grew and soon, that person was wearing a badge of wealth by flaunting those precious, hard-earned discretionary products.
Fast forward >>> 2010.
Today, people rush out to buy state-of-the-art Blue-Ray players and laptops, iPods and smart phones which costs more than half of their monthly income, if not all of it.
Month by month, bit by bit, the credit card debt grows and soon, that person is wearing a frown of stress from increasing interest payments by flaunting those extravagant and sometimes, unnecessary spoils.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Back in the 80s, buying a car was really difficult. Car loans were hard to get. You needed 30% of the entire sale as a down payment and loans were to be repaid as quickly as possible. Finance companies would happily repossess your car if you failed to meet your payments.
Roads then were kept free of traffic jams with the use of deterrent systems such as car pooling, CBD charges and high road tax charges. Cars were also made less affordable with the introduction of COEs by car size. Only those who really needed a car and could afford maintaining one would buy one. And they could sell it quite easily for a good second-hand price to a ready market.
Fast forward >>> 2010.
Today, buying a car is really easy. Car loans are easy to get. You don’t need the 30% down payment anymore and loans can be stretched out over 10 years. Finance companies hate to repossess your car because they can’t sell it high enough to recoup their losses, if they are able to sell it at all.
Roads today are heavy with traffic as cars become more affordable and the ERP is a big money machine while barely keeping traffic volume in check. Anyone can own a car or two cars without being able to afford maintaining it. And these owners who can’t afford to top up their loans, won’t be able to sell off the liability when they can’t afford it. And the market is not interested in second-hand cars when new ones are so affordable.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In the 70s and 80s, housing loans were for people who genuinely needed a place to stay and own. They could afford the down payment and had to qualify for the loan with a respectable annual income. Their income dictated the size of the home loan and thus, the size of the home they lived in. Government loan rates were made affordable so that everyone could own a home.
Fast forward >>> 2010.
Today, housing loans are for people who want to own more than they can afford. They only need to afford the down payment because they don’t need to pay up the rest of the loan by the time they flip the property for a quick gain. Their income is not an issue relative to the size and number of loans and thus, the size and number of the properties they flip. The government now qualifies buyers and shoves the over-qualified buyers to private banks to get their loans. (See second story.)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In the 80s and 90s, trading and investing was only for the wealthy who could afford it and were part of an exclusive community. Anyone else wanting a piece of that action paid a hefty price for the privilege.
You needed to have cash to invest. There was no other way. No money, no talk - this was something straight out of the stock market then.
Fast forward >>> 2010.
Today, trading and investing is for anyone and everyone even if you can’t afford it and don’t have connections. The wealthy investors still get rich today as the poorer masses pay a hefty price for their ignorance.
You don’t need to have cash to invest today. Contra trading is the way. But like something else straight out of the market - when it is time to pay up, no money, no walk … RUN!
Read the whole article here.
Back in 1992, having Gold Cards from AMEX, MC and VISA was a big deal. This was because you REALLY had to qualify for it by having an obscene income that was validated by your income tax statement. The qualifying factor for Gold was an income above S$48.000 annually in a time when average pay was $2,500.
When you pulled out those cards to pay for something, it told people that you had arrived. It was a badge of wealth. You would get looks of envy, jealousy and respect. In those days, membership had its privileges and they were proud to sign for it.
In those days, the only person frowning at your card was the sales person who had to execute the transaction with a franking machine and a whole lot more extra work because they preferred the easier transaction; cash.
The gold card - everybody wanted it, few could have it.
Fast forward >>> 2010.
Today, those who don’t have credit cards carry cash. This is a time when having such liberties is a big deal. This is because you REALLY have it and can pay for anything and still have a handsome balance in your bank. The qualifying factor for Cash is to physically have it and have it in abundance.
When you pull out cash to pay for something today, it tells people that you have arrived. It is a sign of REAL wealth. You will get looks of surprise, envy, jealousy and respect. Today, membership is a liability and it gets embarrassing and stressful to have to sign for anything.
Today, the only person frowning at your cash is the sales person who has to count the change with a brain which is a serious challenge because they prefer the easier transaction; credit cards.
Cold hard cash - everybody wants it, few really have enough of it.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
20 years ago, loans were a heaven-sent for people who needed it for basic things like homes, business and education. Rates were affordable as loans were designed to help the ordinary middle class family to achieve progress in their lives.
Banks did not like dealing in loans as they were a liability and took a lot of work to qualify a borrower. They took risks to lend out this money but default rates were low relative to today’s rate of defaults. Not that many people became bankrupts as a result of bad debts as few could qualify for those loans and you could only get one loan at a time from any one bank.
Back then, it was shameful to let anyone know you had to take a loan.
Fast forward >>> 2010.
Today, loans are a necessary evil as people need it for extravagant things like clubbing, cars and condominiums. Rates are ridiculously high as loans are designed to help the banks achieve progress in their bottom lines.
Banks love dealing in loans as they are a great and steady income source and it is easy to qualify a borrower. They take small risks to bet against the borrower as default rates are higher relative to the rate of defaults 20 years ago. Many more people become bankrupts today as a result of bad debts as few actually qualify for these loans and are often over leveraged.
Today, it is commonly accepted and stylish for everyone to know that you are over-extended on your loans.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In 1988, people saved like mad to buy a VCR, a Sony Walkman and the Motorola Tai-Kor-Tai.
Month on month, little by little, the savings grew and soon, that person was wearing a badge of wealth by flaunting those precious, hard-earned discretionary products.
Fast forward >>> 2010.
Today, people rush out to buy state-of-the-art Blue-Ray players and laptops, iPods and smart phones which costs more than half of their monthly income, if not all of it.
Month by month, bit by bit, the credit card debt grows and soon, that person is wearing a frown of stress from increasing interest payments by flaunting those extravagant and sometimes, unnecessary spoils.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Back in the 80s, buying a car was really difficult. Car loans were hard to get. You needed 30% of the entire sale as a down payment and loans were to be repaid as quickly as possible. Finance companies would happily repossess your car if you failed to meet your payments.
Roads then were kept free of traffic jams with the use of deterrent systems such as car pooling, CBD charges and high road tax charges. Cars were also made less affordable with the introduction of COEs by car size. Only those who really needed a car and could afford maintaining one would buy one. And they could sell it quite easily for a good second-hand price to a ready market.
Fast forward >>> 2010.
Today, buying a car is really easy. Car loans are easy to get. You don’t need the 30% down payment anymore and loans can be stretched out over 10 years. Finance companies hate to repossess your car because they can’t sell it high enough to recoup their losses, if they are able to sell it at all.
Roads today are heavy with traffic as cars become more affordable and the ERP is a big money machine while barely keeping traffic volume in check. Anyone can own a car or two cars without being able to afford maintaining it. And these owners who can’t afford to top up their loans, won’t be able to sell off the liability when they can’t afford it. And the market is not interested in second-hand cars when new ones are so affordable.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In the 70s and 80s, housing loans were for people who genuinely needed a place to stay and own. They could afford the down payment and had to qualify for the loan with a respectable annual income. Their income dictated the size of the home loan and thus, the size of the home they lived in. Government loan rates were made affordable so that everyone could own a home.
Fast forward >>> 2010.
Today, housing loans are for people who want to own more than they can afford. They only need to afford the down payment because they don’t need to pay up the rest of the loan by the time they flip the property for a quick gain. Their income is not an issue relative to the size and number of loans and thus, the size and number of the properties they flip. The government now qualifies buyers and shoves the over-qualified buyers to private banks to get their loans. (See second story.)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In the 80s and 90s, trading and investing was only for the wealthy who could afford it and were part of an exclusive community. Anyone else wanting a piece of that action paid a hefty price for the privilege.
You needed to have cash to invest. There was no other way. No money, no talk - this was something straight out of the stock market then.
Fast forward >>> 2010.
Today, trading and investing is for anyone and everyone even if you can’t afford it and don’t have connections. The wealthy investors still get rich today as the poorer masses pay a hefty price for their ignorance.
You don’t need to have cash to invest today. Contra trading is the way. But like something else straight out of the market - when it is time to pay up, no money, no walk … RUN!
Read the whole article here.
Wednesday, February 3, 2010
2 Days of Rally For Feb
Dow closed green a second day at 111 pts. This could be a nice reversal. However Feb was said to be the worst performing month. So cautious is the word. It's a good time to buy for some stocks now as they are much cheaper than before. Charts are giving me a buy signal based on my rules. S&P500 Futures are showing very green all day until now which is moderately green. Tonight there will be a release of employment report which will determine the early sentiment, which I think may disappoint. Could be a pause for the bulls and hopefully bears are not out again.
Tuesday, February 2, 2010
DOW kicks of Febuary with three-digit gain
Wow I was wrong last night! The DOW went up to 118 pts with earnings beating expectations by Exxonmobile and better Manufacturing report (ISM). So we got our reversal. I suppose tonight will either be flat (Futures are not showing well) or green (continuation of rally). This might be a small rally for a week(?) before going down again. I'm staying conservative.
Monday, February 1, 2010
Gravestone
Friday was a very exciting but bad rollercoaster ride. The night opened up positive with US GDP higher than expected along with better consumers and Chicago PMI. DOW moves up to a high of 100 pts before slowly sliding off and closed off negative forming something like a gravestone or inverted hammer. This means that the people are not very confident about things are going in the US with Jobless rate at high. The negative closing for Friday might signify that January had failed to close positive indicating the rest of the year isn't that good (The January Effect).Right now DOW is just hovering at the 100 MA. With the inverted hammer, it could mean another possible reversal or consolidation. Hard to say is if it will be up or down tonight. We will need a confirmation. Since the reversal has failed us for a few times last week, I will say down or flat tonight.
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