WHERE TO NOW?
A lot of price indicators (oscillators, momentum indicators) IMHO are lagging and do not have much forecasting ability. I have excluded them for my charts.. price action is key with a VIX of 45..
BANK BILL PASSES SENATE---
Senate lawmakers on Thursday approved the most significant increase in the regulation of U.S. banks since the Great Depression, placing new restrictions on the nation's biggest banks, reining in the Federal Reserve and crafting a major new consumer-protection division for mortgage and credit-card products.
The Senate legislation includes a provision that would instruct bank regulators to study limiting the speculative activity of big banks and would follow the recommendations made by the agencies' report.
The proposed limit is dubbed the "Volcker Rule" after former Fed Chairman Paul Volcker, who chairs President Barack Obama's economic advisory panel. It would seek to prohibit big banks from making speculative investments in stocks, bonds and derivatives, limit their growth, and force big banks to divest hedge fund and private equity units.
STATE OF THE U.S EQUITY MARKET.
The big question: Is it the time to buy?... chances are, if your asking, so is everyone else.. and we all know what happens when everybody is thinking the same (if you don't understand what I'm talking about read up on 'contrarion investing')... but basically the markets are efficient and if everyone is bullish then the market will do the opposite creating maximum pain (read up on 'max pain with options'.)
The US economy works as long as the upticks in financial assets allow the wealthy to create service jobs for the not so wealthy and not so educated. So we need stocks going up at all costs under that model. However overhauling the financial industry and putting constraints on leverage is drastically bearish stock. Let's pause for a second: we are in the middle of debt deflation with horrible difficulties in the USD funding market. Putting limits on bank leverage will kill lending, and that is only going to make matters worse. Therefore we are fighting fire with fire, and I don't think there is a way to resolve this problem other than more debt deflation and asset devaluation. Stocks responded exactly along those lines to today's votes into the close and after hours with renewed selling pressure. It seems central banks are not only fighting a liquidity drought, they also have to fight the consequences of the political witch hunt against the financial system. Yes there are a lot of reforms needed, but I am just saying that you need to pick your poison. Here Washington has placed a higher priority on its vendetta against Wall Street as it has to the path our economy is on: buyers beware.
At Dow 9000 valuations are going to look VERY lucrative.
At Dow 10,000 you risk a drawdown of 10% IMHO. If you want to go long, sell the put.
If you can hold for 8-15 years.. jump in.. but the best entry point will be at Dow 9000 or close to that.
At least that's where I'm buying :)..
[not shown] we just cracked the 200day MA.. will we keep trading below it? if so this is a very bearish signal.
Short Term Trend:
- There is none.
- What I'm doing is shorting natural gas when it hits $4.30 and buying it when it hits $3.95-$4.00 (I keep a 5% stop).. so far this has been working out really well.. eventually natural gas will break out (my bias is to the down).. but until then play the bounces.
Long Term Trend:
- Bearish Conslidation is happening. We keep bouncing.. but have no fear.. $3.00-$3.20 is fair market value for July/August 2010.
- See Elliot Wave structure.. we are currently going to start wave 5 of this correction down very soon.This should be fun.. and it will likely coincide with Dow 9000.
- PLAY THE TREND.. Short HNU.TO.. Even if your wrong it decays 10-20% per year so you have no fear shorting it especially since all natural gas has done in the past 15 months is fall down.. so short HNU.TO every time it rallies 20-30%.. don't even think about going long HNU.TO unless you want to lose $ or have a stop.
