Taking a look at the weekly chart of the Dow and the S&P, it becomes evident why the averages haven't been able to break through this current range to new, higher highs.
The congestion and resistance at 17,900-18,000 on the Dow, and 2090-2120 on the S&P are as plain as a bright summer day, and thus, what had been considered a Fed-driven market has now become a chartist's nightmare.
Unless there's some good reason for the averages to go higher - and currently there isn't - there's only one way for stocks to go, and that direction would not be in the best interest of most investors, fund managers or pension hopefuls.
Naturally, the market continues to look to the Fed for comfort and trading rationale, but it is becoming more and more difficult for the monetary magicians in the Eccles Building to conjure up increasingly complicated arguments to support an economy (US and global) that, for all intents and purposes, looks to be standing on a foundation built of sand.
In other words, the market is about to go somewhere shortly, and bets are good that it will not be much higher. Earnings have begun to trickle in for the first quarter, and expectations are for another sequential decline in overall top-and-bottom line growth.
Then again, Janet Yellen is god, right?
With the Dollar/Yen carry trade nearing extinction (109.7450), perhaps one should consider a world in which there are no winning trades, such as is the fate of many so-called "home-gamers."
With volatility being wrung out of markets on a regular basis through HFT, that is a consideration that must be taken seriously.
Fraud is on sale, but it cannot be had cheaply.
S&P 500 Futures: 2,059.25, +20.50 (1.01%)
Dow Futures: 17,623.00, +96.00 (0.55%)
NASDAQ Futures: 4,532.00, +62.50 (1.40%)
Crude Oil 37.76 +5.21% Gold 1,224.00 -0.46% EUR/USD 1.1399 +0.04% 10-Yr Bond 1.75 +1.62% Corn 358.00 +0.35% Copper 2.14 +0.21% Silver 15.06 -0.34% Natural Gas 1.90 -2.66% Russell 2000 1,108.81 +1.18% VIX 14.09 -8.63% BATS 1000 20,682.61 0.00% GBP/USD 1.4131 +0.08% USD/JPY 109.7450 -0.01%
Showing posts with label currency trading. Show all posts
Showing posts with label currency trading. Show all posts
Wednesday, April 6, 2016
Monday, January 8, 2007
In a Give and Take Environment, the Takers Will Rule
Entering the first full week of trading on the major US markets, investors are swamped with signals running the gamut from bullish to bearish to bust, putting the direction of the market unreliably up in the air.
It's not a pretty picture, but hardly one which the behemoth American economy cannot endure. The usual drivers of investment - Fear and Greed - have been seen shuffling about Wall Street with notable hangovers, especially Greed, which ended 2006 with a six-month long 17% buying binge on the DJIA.
Fear, which had been praying quietly at home for most of the 2nd half of last year, binged through the holidays on news of slow retail sales and the continued run-down in the construction industry.
So the two of them are planning a partnership of sorts for the early months of 2007 - lubrication for the skids - to keep everyone somewhat afloat on the money and credit mothership.
Greed says there are bargains out there and you don't want to miss out. Fear says your mortgage is tapping you out and you should retreat from the speculative market.
That's where the partnership stands, with both boys tossing signals of varying strengths of Doom, Gloom, Boom, Bust and Bonanza. And of course, it's January, so market watchers and witches of all stripes and hats will trot out the ancient adage - how goes January, so goes the year.
It's enough to drive a rational investor batty, the operative word being rational, begging the question: what's a reasonable strategy in an up and down market?
One word: allocation. One more: hedge. Um, forget it, here's a plan. If you've got more than 75% invested (25% cash), you're normal, but right now, overexposed. If you've been at that percentage for the past six months, you probably have some hefty profits and now would be a good time to relieve yourself of them before the market does it for you.
Converting some - not all - of your profitable investments to cash within the next few weeks makes sense. If the market sells off, you can buy back in at lower prices. If it continues rising, you still have the cash which should be invested in either CDs or if your appetite for risk is still unsated, dollars.
That's right. The greenback is likely to rise over the short term against the Yen, Pound and Euro due to three distinct forces: 1) Some expression of fiscal restraint and responsibility by the newly-installed Democratic majority in Congress; 2) The US economy will perform its peers in 2007 as their slowdown will be more painful than ours, and 3) Lower inflation and slightly tighter credit after years of excess.
My plan calls for shifting as much as 50% of the whole out of stocks and into a mix of fixed investments or currency trades. Since the chances for a meaningful correct some time soon are very good and getting better every day, you should take some of the profits, pare some losses and wait until January has an imprint - either up or down - before making any major strategic investment moves.
Keeping track of the market - just the Dow, since that's the one that counts for gauging purposes - we've had three days up and one down (Friday, Jan. 5), though the losses on that one day more than outdid the cumulative gains thus far. The Dow is down roughly 40 points in 2007, but it's far too early to discern direction. It's likely that the index won't give us a reading that we can use as an indicator until the 24th or 25th, but let's keep a sharp eye on it.
It's not a pretty picture, but hardly one which the behemoth American economy cannot endure. The usual drivers of investment - Fear and Greed - have been seen shuffling about Wall Street with notable hangovers, especially Greed, which ended 2006 with a six-month long 17% buying binge on the DJIA.
Fear, which had been praying quietly at home for most of the 2nd half of last year, binged through the holidays on news of slow retail sales and the continued run-down in the construction industry.
So the two of them are planning a partnership of sorts for the early months of 2007 - lubrication for the skids - to keep everyone somewhat afloat on the money and credit mothership.
Greed says there are bargains out there and you don't want to miss out. Fear says your mortgage is tapping you out and you should retreat from the speculative market.
That's where the partnership stands, with both boys tossing signals of varying strengths of Doom, Gloom, Boom, Bust and Bonanza. And of course, it's January, so market watchers and witches of all stripes and hats will trot out the ancient adage - how goes January, so goes the year.
It's enough to drive a rational investor batty, the operative word being rational, begging the question: what's a reasonable strategy in an up and down market?
One word: allocation. One more: hedge. Um, forget it, here's a plan. If you've got more than 75% invested (25% cash), you're normal, but right now, overexposed. If you've been at that percentage for the past six months, you probably have some hefty profits and now would be a good time to relieve yourself of them before the market does it for you.
Converting some - not all - of your profitable investments to cash within the next few weeks makes sense. If the market sells off, you can buy back in at lower prices. If it continues rising, you still have the cash which should be invested in either CDs or if your appetite for risk is still unsated, dollars.
That's right. The greenback is likely to rise over the short term against the Yen, Pound and Euro due to three distinct forces: 1) Some expression of fiscal restraint and responsibility by the newly-installed Democratic majority in Congress; 2) The US economy will perform its peers in 2007 as their slowdown will be more painful than ours, and 3) Lower inflation and slightly tighter credit after years of excess.
My plan calls for shifting as much as 50% of the whole out of stocks and into a mix of fixed investments or currency trades. Since the chances for a meaningful correct some time soon are very good and getting better every day, you should take some of the profits, pare some losses and wait until January has an imprint - either up or down - before making any major strategic investment moves.
Keeping track of the market - just the Dow, since that's the one that counts for gauging purposes - we've had three days up and one down (Friday, Jan. 5), though the losses on that one day more than outdid the cumulative gains thus far. The Dow is down roughly 40 points in 2007, but it's far too early to discern direction. It's likely that the index won't give us a reading that we can use as an indicator until the 24th or 25th, but let's keep a sharp eye on it.
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