Another indecisive day, but reading the lines I see some hopeful signs for the long side argument. Our slow and moderate momentum has basically flattened out. Given the volatility that we have seen in recent weeks where the market and our indicators jumped around, this is a good sign that suggests base building to me.
Our fast momentum continued down today, but is definitely in oversold territory now. When that snaps back we should see a general move to the long side in our momentum indicators. Its the beginning of a new quarter and now that the end of quarter window dressing in done by the mutual funds, you may see some signs of money moving into some new areas - like techs.
In the sector watch, we did not pick any new sector into positive TradeWind territory. We did lose one into the negative territory - SLV, which is a reflection of the on-going correction in the precious metals.
Monday, March 31, 2008
Sunday, March 30, 2008
TradeWinds for Friday March 28th
Friday's market action was again discouraging, but not fatal to our building long momentum. The day started out good and then just faded as the day went on on moderate volume. A little bunch at the end kept it to a respectable lose.
Our slow momentum indicator has flattened out deep in the neutral zone. A market bound now should make it turn back to the upside. Our fast momentum indicator suggest we may get that bounce soon, as it has quickly moved from short term over bought to over sold, without doing much damage to the moderate and long indicators.
Trading strategies that favor a neutral or trading range market is probably the best way to go for the near terms until Miss Market can carry our slow momentum indicator through the neutral zone into positive TradeWind territory.
No sectors moved into the wind-at-the back TradeWinds zone. Financials (XLF) slipped from neutral into negative TradeWinds, but just barely. You can expect the financials to continue to be volatile as the the whole credit thing is sorted out.
Check out our Top 25 lists and last week's TradeWinds Black Box results.
Our slow momentum indicator has flattened out deep in the neutral zone. A market bound now should make it turn back to the upside. Our fast momentum indicator suggest we may get that bounce soon, as it has quickly moved from short term over bought to over sold, without doing much damage to the moderate and long indicators.
Trading strategies that favor a neutral or trading range market is probably the best way to go for the near terms until Miss Market can carry our slow momentum indicator through the neutral zone into positive TradeWind territory.
No sectors moved into the wind-at-the back TradeWinds zone. Financials (XLF) slipped from neutral into negative TradeWinds, but just barely. You can expect the financials to continue to be volatile as the the whole credit thing is sorted out.
Check out our Top 25 lists and last week's TradeWinds Black Box results.
Thursday, March 27, 2008
tradewinds for Thursday, March 27th
Thursday action was a little discouraging, but not disappointing. Its not surprising to see the market down and our momentum indexes pretty much held up nicely. Short term momentum is recharging which is a good sign that we have taken down moderate and slow momentum. What was discouraging was the tech stock action late in the day. It looked like techs were going to shake off the Oracle earning news, but it fell apart late in the day. Now we are faced with tomorrow being a critical day to sustain our momentum indicators.
No new sectors moved out of the neutral zone into the TradeWind zone, but the neutral zone continued to grow as Midcaps (MDY) and agriculture (MOO) joined the crowd.
No new sectors moved out of the neutral zone into the TradeWind zone, but the neutral zone continued to grow as Midcaps (MDY) and agriculture (MOO) joined the crowd.
Tuesday, March 25, 2008
TradeWinds for Wednesday, March 26th
Tuesday's market was pretty ho-hum. Just what we like to see after a big run up. In fact don't be surprised to see a bit more of this as the market digests its big gains and starts to build some support as the indexes are perched above their 50 day moving averages. This will be very welcome change from the gut wrenching roller coaster of the past weeks.
Our momentum indicators are all looking healthy. Our fast momentum may be getting a touch frothy, so don't be surprised to see a down day in the market to work off some of the excess. For now, the path of least resistance is up, so plan your trades accordingly.
Techs continue to lead the way, however as a sector they are still getting healthy and are not yet in the positive momentum zone. Today we saw four sectors move from neutral to positive TradeWinds - real estate (IYR), Transportation (IYT), Biotechs (BBH) and consumer staples (XLP).
Check out other stocks and ETF's that are moving in our Top 25 Lists and TradeWinds Black Box.
Our momentum indicators are all looking healthy. Our fast momentum may be getting a touch frothy, so don't be surprised to see a down day in the market to work off some of the excess. For now, the path of least resistance is up, so plan your trades accordingly.
Techs continue to lead the way, however as a sector they are still getting healthy and are not yet in the positive momentum zone. Today we saw four sectors move from neutral to positive TradeWinds - real estate (IYR), Transportation (IYT), Biotechs (BBH) and consumer staples (XLP).
Check out other stocks and ETF's that are moving in our Top 25 Lists and TradeWinds Black Box.
Monday, March 24, 2008
TradeWinds for Tuesday March 25th
I have to admit we are feeling pretty good about our recent calls after today's action. We have been reporting for some time now that we saw the tech stocks getting ready to move. I didn't expect it to happen so soon after our Thursday call, nor with such power, but Miss Market has her ways.
All the major tech indicators moved 3 or more percent today. On top of that, all of the major indexes punched through their 50 day moving averages, another good sign. Our momentum indicators, of course reflect this action. Our slow momentum indicator jumped back into the neutral zone with a reading of -4.05. That is the highest it has been in a while. All the indexes are now pushing the neutral zone on our slow momentum reading. We have been here before, but this time we are a bit stronger and have a big base that has been built since late January. We still need to move out of the neutral zone before we can put away the bear rug and pull out our bull horns. I think we will do it this time, but stay tuned for it to actually happen before placing big bets.
I am not a prognosticator of the economy in general, so the moves we are discussing do not necessarily mean there is or isn't going to be a recession, or that earnings will be good, or inflation is under control etc. We just read aggregated momentum and give a sense of where the market is headed regardless of what all the background noise is about the economy and politics. Its hard enough to read the market, without having to figure out which pundit is lying, or which economic indicator is more important than the next. I believe if you study Miss Market long enough, all the other pieces will fall in place.
Lots of excitement is going on with our TradeWinds Top 25 lists and Black Box, so check them out.
All the major tech indicators moved 3 or more percent today. On top of that, all of the major indexes punched through their 50 day moving averages, another good sign. Our momentum indicators, of course reflect this action. Our slow momentum indicator jumped back into the neutral zone with a reading of -4.05. That is the highest it has been in a while. All the indexes are now pushing the neutral zone on our slow momentum reading. We have been here before, but this time we are a bit stronger and have a big base that has been built since late January. We still need to move out of the neutral zone before we can put away the bear rug and pull out our bull horns. I think we will do it this time, but stay tuned for it to actually happen before placing big bets.
I am not a prognosticator of the economy in general, so the moves we are discussing do not necessarily mean there is or isn't going to be a recession, or that earnings will be good, or inflation is under control etc. We just read aggregated momentum and give a sense of where the market is headed regardless of what all the background noise is about the economy and politics. Its hard enough to read the market, without having to figure out which pundit is lying, or which economic indicator is more important than the next. I believe if you study Miss Market long enough, all the other pieces will fall in place.
Lots of excitement is going on with our TradeWinds Top 25 lists and Black Box, so check them out.
TradeWinds Recent Calls
Time for a little shameless self-promotion - after all this is a blog and I would like to generate some more traffic.
In our note looking ahead to today's market we pointed out how the QQQQ was making a nice base and we felt it was time to get back into tech stocks. I said, "This chart tells me that a strong base has been put in place and that we are ready to make a move to the long side. Tell your family and friends that you heard it here first - tech stocks are back in play." That call was spot on as the market has roared today, being led by the techs as well as the financials. I think we will continue to see the techs take over the market leadership. Financials are going to recover too, but their roads will likely be a bit more rocky.
And speaking of financials. Following the Bear, Stearn deal with JP Morgan, I had this to say, "This moves .... gives time for the market to stablilize and for confidence in Bear to be restored. Once that happens, new buyers for Bear will appear, or JPM will have to raise their bid dramatically....". Well, as you know today, JPM raised their price on Bear from $2 to $10 or 500% - I would call that dramatic.
If you like what you are hearing on this blog, please let me know, and for sure, please refer this site to your friends. Thanks for your readership.
In our note looking ahead to today's market we pointed out how the QQQQ was making a nice base and we felt it was time to get back into tech stocks. I said, "This chart tells me that a strong base has been put in place and that we are ready to make a move to the long side. Tell your family and friends that you heard it here first - tech stocks are back in play." That call was spot on as the market has roared today, being led by the techs as well as the financials. I think we will continue to see the techs take over the market leadership. Financials are going to recover too, but their roads will likely be a bit more rocky.
And speaking of financials. Following the Bear, Stearn deal with JP Morgan, I had this to say, "This moves .... gives time for the market to stablilize and for confidence in Bear to be restored. Once that happens, new buyers for Bear will appear, or JPM will have to raise their bid dramatically....". Well, as you know today, JPM raised their price on Bear from $2 to $10 or 500% - I would call that dramatic.
If you like what you are hearing on this blog, please let me know, and for sure, please refer this site to your friends. Thanks for your readership.
Saturday, March 22, 2008
Tradewinds for Monday March 24th
OK, we got the nice bounce back on Thursday that we needed to add some confirmation to the big move on Tuesday. The result is that all of our momentum indicators took a turn up, although for our long term indicator, it was the barest of moves, but still positive.
I have been watching the behavior of the tech stocks for some time, looking for signs that they are ready to resume some market leadership. I think that time is now. Check out of Top 25 Long list and you will see the big techs moving back into play.
Take a look at the chart below for QQQQ (click on the chart for a better view). Our long momentum indicator is based on the True Strength Indicator (TSI). You can see that this indicator bottomed in late January and has been steadily working its way back to zero (-5 to +5 is the neutral zone, over 5 is positive momentum). This chart tells me that a strong base has been put in place and that we are ready to make a move to the long side. Tell your family and friends that you heard it here first - tech stocks are back in play.
I have been watching the behavior of the tech stocks for some time, looking for signs that they are ready to resume some market leadership. I think that time is now. Check out of Top 25 Long list and you will see the big techs moving back into play.
Take a look at the chart below for QQQQ (click on the chart for a better view). Our long momentum indicator is based on the True Strength Indicator (TSI). You can see that this indicator bottomed in late January and has been steadily working its way back to zero (-5 to +5 is the neutral zone, over 5 is positive momentum). This chart tells me that a strong base has been put in place and that we are ready to make a move to the long side. Tell your family and friends that you heard it here first - tech stocks are back in play.
Thursday, March 20, 2008
TradeWinds for Thursday March 20th
This manic, depressive market is making me, well, depressed. There is really nothing you can do as a trader but to sit back and watch what happens, until such time as Miss Market makes up her minds as to what she wants to do.
Our momentum indicators are being whipsawed, although they are staying slightly to the positive side. Should we ever get a rallying with a confirming rally we will quickly move into good shape with our indicators. But you can't trade on that.
I suspect what may be happening is that there is a lot of cashing in on the commodities to take profits, but also to prepare for a rotation to other sectors once we start getting some first quarter earnings reports. I am also of the belief that a "bottom" is in for now and that there will being growing confidence in the Feds actions to step in strongly in the credit crisis. That coupled with the interest rate cuts will eventually set the stage for a nice rally.
We might be stuck in this rut for a couple more weeks before earnings reports begin. Thats okay, I am going to watch some basketball.
Go Bruins!
Our momentum indicators are being whipsawed, although they are staying slightly to the positive side. Should we ever get a rallying with a confirming rally we will quickly move into good shape with our indicators. But you can't trade on that.
I suspect what may be happening is that there is a lot of cashing in on the commodities to take profits, but also to prepare for a rotation to other sectors once we start getting some first quarter earnings reports. I am also of the belief that a "bottom" is in for now and that there will being growing confidence in the Feds actions to step in strongly in the credit crisis. That coupled with the interest rate cuts will eventually set the stage for a nice rally.
We might be stuck in this rut for a couple more weeks before earnings reports begin. Thats okay, I am going to watch some basketball.
Go Bruins!
Tuesday, March 18, 2008
TradeWinds for Wednesday, March 19th
Its a good thing that I have been wearing a neck brace as a result of all the wild swings in the market. Today it came in very helpful. If you believe the financial writings of today, yesterday we were on the verge of financial Armageddon. But Bernanke and Paulson came to rescue at the last minute, and today you throw a little rate cut on top of that and you have a lot to celebrate. Up goes the market.
Now I do believe that the whole Bear Sterns affair was very serious and if it was allowed to fall into bankruptcy we would all be a lot poorer today. I think there is a lot to still play out there, but the last couple of days have shown a couple of very positive things for the future. One, the Fed has made it clear its not going to let this credit thing get out of control; and two, interest rates are way down, which only means good news down the road for the market.
If the market is now confident that no matter what else emerges from the sub-prime closet, the Fed is ready to deal with it, as I think it will soon be, then I also believe we are about to be off to the long side race in the market in general.
The boom in the market today turned all our momentum indicators back to the long side and our all important slow momentum indicator is back in neutral waters. Once again, follow through is the thing to watch for here. Some time in the next several trading days we need another thrust upwards to give us the confirmation that we all leaving the market bottom behind. That will be the time to jump big time back into the market.
Check out our Top 25 Lists to see what looking good and bad, along with an update on our TradeWinds Black Box returns.
Now I do believe that the whole Bear Sterns affair was very serious and if it was allowed to fall into bankruptcy we would all be a lot poorer today. I think there is a lot to still play out there, but the last couple of days have shown a couple of very positive things for the future. One, the Fed has made it clear its not going to let this credit thing get out of control; and two, interest rates are way down, which only means good news down the road for the market.
If the market is now confident that no matter what else emerges from the sub-prime closet, the Fed is ready to deal with it, as I think it will soon be, then I also believe we are about to be off to the long side race in the market in general.
The boom in the market today turned all our momentum indicators back to the long side and our all important slow momentum indicator is back in neutral waters. Once again, follow through is the thing to watch for here. Some time in the next several trading days we need another thrust upwards to give us the confirmation that we all leaving the market bottom behind. That will be the time to jump big time back into the market.
Check out our Top 25 Lists to see what looking good and bad, along with an update on our TradeWinds Black Box returns.
Monday, March 17, 2008
TradeWinds for Tuesday March 18th
The good news for today was that there was not the feared massive sell-off that was suggested in the pre-market, and in the end the Dow even finished on the plus side. Also, we have seen the market fight off several attempts to send it below its support around the January/March lows. That's another good sign.
Our momentum indicators got pushed down of course. But looking under the covers I see that the market looks to me to be somewhat oversold. If it can shake the credit blues, along with the growing evidence that a bottom is in place, we may see a very nice pop before too long. Now, don't go and bet on that in this environment, because you never know whether another shoe is going to drop. We need to get some nice confirmation of any move upward before doing that.
So the advice is to remain neutral until something definitive happens one way or the other, with my hunch being that it will be to the long side.
Check out our Top 25 lists and our TradeWinds Black Box results for today.
Our momentum indicators got pushed down of course. But looking under the covers I see that the market looks to me to be somewhat oversold. If it can shake the credit blues, along with the growing evidence that a bottom is in place, we may see a very nice pop before too long. Now, don't go and bet on that in this environment, because you never know whether another shoe is going to drop. We need to get some nice confirmation of any move upward before doing that.
So the advice is to remain neutral until something definitive happens one way or the other, with my hunch being that it will be to the long side.
Check out our Top 25 lists and our TradeWinds Black Box results for today.
TradeWinds Editorial - Bear Sterns and Government Sponsored Receivership
I believe in the adage that if something is too good to be true, it probably isn't. Could JP Morgan really buy Bear Sterns for $2 a share or something less than $300 million dollars? Give me a break. In their conference call JP executives talked about how satisfied they were with Bears risk management and they saw they business being accretive to income and earnings. On top of all that the fear risk of Bear owns is being covered by the Fed. What a deal, but its a deal I don't expect to go through.
Shareholders are already beginning to smell a rat or an opportunity. They are not going to be inclined to giving away their investment for something like 2 cents on the dollar for many of them, so you are already hearing noise about the shareholders about turning down the deal. Heck, what do they to lose by doing so?
What this whole deal really amounts to is government sponsored receivership. Nobody wanted Bear to go into real bankruptcy. Psychologically that would be a killer to the market and plus they would have to start dumping assets. This moves prevents that and gives time for the market to stablilize and for confidence in Bear to be restored. Once that happens, new buyers for Bear will appear, or JPM will have to raise their bid dramatically, or perhaps Bear will even be able to avoid a takeover all together. The last scenario is not likely, as somehow, JPM needs to be rewarded for doing the Fed's dirty work.
I don't really have a strong opinion for or against the move, I just want this credit crisis to get over with so we can get back to a regular market. If this moves does the trick, it could be seen a a brilliant stroke by Bernake and Paulson. Time will tell.
Shareholders are already beginning to smell a rat or an opportunity. They are not going to be inclined to giving away their investment for something like 2 cents on the dollar for many of them, so you are already hearing noise about the shareholders about turning down the deal. Heck, what do they to lose by doing so?
What this whole deal really amounts to is government sponsored receivership. Nobody wanted Bear to go into real bankruptcy. Psychologically that would be a killer to the market and plus they would have to start dumping assets. This moves prevents that and gives time for the market to stablilize and for confidence in Bear to be restored. Once that happens, new buyers for Bear will appear, or JPM will have to raise their bid dramatically, or perhaps Bear will even be able to avoid a takeover all together. The last scenario is not likely, as somehow, JPM needs to be rewarded for doing the Fed's dirty work.
I don't really have a strong opinion for or against the move, I just want this credit crisis to get over with so we can get back to a regular market. If this moves does the trick, it could be seen a a brilliant stroke by Bernake and Paulson. Time will tell.
Sunday, March 16, 2008
Tradewinds for Monday March 17th
The whole sub-prime stuff is really starting to annoy me. The vast majority of companies out there are doing just fine and are looking forward to the benefits of a reduced interest rate environment. The market is aching to reward them as you could see in the pre-market on Friday. The inflation numbers gave encouragement that the Fed would have the leeway to lower rates and it looked like we would have a nice follow through to Thursday's action. Then along came the Bear story to once again spoil it for the rest of us.
Personally I think they should just let Bear Sterns sink, I don't think the affect on the market would have been any worse than Friday's bail out news. Let the people who made foolish decisions take their medicine, or force them to get together with their fellow conspirators, the greedy home buyers who thought they could get a nice home without having the money to pay for it, and come up with a solution. We offered them a solution, if they want our advice.
This remains a market thats hard to read or trade in, so unless you are very adept, it probably best to just watch a while longer. Once the financial mess gets cleared up a bit more, we should see a nice market rally. Our momentum indicators will tell you when that is happening. For the slow or long momentum indicator, we are still in neutral territory, telling us the market is fighting to get back on the long side, but its not there yet. The moderate momentum indicator was unaffected by the action on Friday and continued a nice move up, while slow momentum got bent downwards.
The coming week should be interesting with the Fed meeting and options expiration coming. Check out our Top 25 lists and our new TradeWinds Black Box picks.
Personally I think they should just let Bear Sterns sink, I don't think the affect on the market would have been any worse than Friday's bail out news. Let the people who made foolish decisions take their medicine, or force them to get together with their fellow conspirators, the greedy home buyers who thought they could get a nice home without having the money to pay for it, and come up with a solution. We offered them a solution, if they want our advice.
This remains a market thats hard to read or trade in, so unless you are very adept, it probably best to just watch a while longer. Once the financial mess gets cleared up a bit more, we should see a nice market rally. Our momentum indicators will tell you when that is happening. For the slow or long momentum indicator, we are still in neutral territory, telling us the market is fighting to get back on the long side, but its not there yet. The moderate momentum indicator was unaffected by the action on Friday and continued a nice move up, while slow momentum got bent downwards.
The coming week should be interesting with the Fed meeting and options expiration coming. Check out our Top 25 lists and our new TradeWinds Black Box picks.
Thursday, March 13, 2008
A TradeWinds Exclusive - An Interview with Miss Market
This afternoon, TradeWinds had the opportunity to sit down with Miss Market for an exclusive interview in her home.
TradeWinds: Good afternoon, Miss Market, thank you for giving this opportunity for a chat.
Miss Market: You are most welcome, and I hope you did not mind the bumpy ride in getting here.
TradeWinds: Well, it did make my stomach a little quesy, but I will be okay. Tell us, Miss Market, how are you these days?
Miss Market: Oh dear, I have been feeling a little ragged around the edges. I have had so many ups and downs of late I just don't know which way I am supposed to go when I get up in the morning.
TradeWinds: Perhaps you should see a doctor. Surely they could prescribe some type of pill to cure what ails you.
Miss Market: No, no doctors, hospitals or drugs. Haven't you heard? Soon Hillary or Obama will be taking over, and all those medical types will be reformed right out of business. No doctor will can help me right now.
TradeWinds: Surely, Miss Market, there must be something that can be done.
Miss Market: Well, one thing that does give me some support is that I have been drinking a lot of these oil-based energy stocks. They aren't all that yummy but they do give me some pep.
TradeWinds: We have also heard that the witch doctor has come by to see you.
Miss Market: Yes, indeed, Witch Doctor Ben came by the other day. He made me drink some strange liquidity concoction that he had come up. He swore that it would break my spell. I have to admit that first morning a just jumped out of bed and ran around the house all day. But by the next day all that energy was gone and I was back on the toilet. I don't know if it will do me any good.
TradeWinds: Miss Market, I know that you have lots of friends that must be sending you all sorts of well wishes. Can you tell us about some of them.
Miss Market: You are so right. Every day I day I hear from so many people that want me to be up and about that day. Of course, there are some rude people, who I must say are mostly short, who wish I would just stay down and out every day. I have received some special gifts from my old friends in Washington. They have been so kind. They have send all sorts of flowers and such. But I have to tell you, sometimes they send all these different kinds of plants and flowers that just get my allergies going and just make be feel worse. Some times I wish they would just leave me alone. And indeed, they sent me this most curious package. When I opened it, it said that this was going to be something that would stimulate me. I was quite embarrassed and wanted nothing to do with it. I gave it my friend Mr. Retail, as I think he can make some use for it as he has been lonely for sometime.
TradeWinds: Miss Market, I can't help but notice that your house is looking a little run down.
Miss Market: Indeed, yes it is. A couple of years ago, I had people coming in every day fixing the house up, doing this and doing that and they never charged me a dime. I keep wondering how it was they could survive doing that. Well one day, they just stopped showing up and it was just too much for me to keep up with all that they did and now it has fallen into disrepair, I don't know how long it will take for me to clean it up. It was so nice while they were doing it, although I found it odd that they were blowing bubbles around the house all day long.
TradeWinds: Well Miss Market, while the house may need a little work, I do see that you are wearing some fine jewelry these days.
Miss Market: I do hope that you like my gold and silver. It is so pretty. Its this precious metal along with my oil energy drinks that keep me going these days.
TradeWinds: Miss Market, do you think you will ever get out of this funk?
Miss Market: Oh certainly I will. I have had these before. They do seem to come and go. You can can count on me feeling better again someday. This is just PMCS.
TradeWinds: What is PMCS?
Miss Market: Oh, we don't like to talk about that too much, its Pre Market Cycle Syndrome. That when I get real cranky before I decide to change my ways.
TradeWinds: Miss Market, I thank you so much for your time today. Since you are a Market, I know you only do interviews for a fee. How would you like to be paid today?
Miss Market: Euros.
TradeWinds: Good afternoon, Miss Market, thank you for giving this opportunity for a chat.
Miss Market: You are most welcome, and I hope you did not mind the bumpy ride in getting here.
TradeWinds: Well, it did make my stomach a little quesy, but I will be okay. Tell us, Miss Market, how are you these days?
Miss Market: Oh dear, I have been feeling a little ragged around the edges. I have had so many ups and downs of late I just don't know which way I am supposed to go when I get up in the morning.
TradeWinds: Perhaps you should see a doctor. Surely they could prescribe some type of pill to cure what ails you.
Miss Market: No, no doctors, hospitals or drugs. Haven't you heard? Soon Hillary or Obama will be taking over, and all those medical types will be reformed right out of business. No doctor will can help me right now.
TradeWinds: Surely, Miss Market, there must be something that can be done.
Miss Market: Well, one thing that does give me some support is that I have been drinking a lot of these oil-based energy stocks. They aren't all that yummy but they do give me some pep.
TradeWinds: We have also heard that the witch doctor has come by to see you.
Miss Market: Yes, indeed, Witch Doctor Ben came by the other day. He made me drink some strange liquidity concoction that he had come up. He swore that it would break my spell. I have to admit that first morning a just jumped out of bed and ran around the house all day. But by the next day all that energy was gone and I was back on the toilet. I don't know if it will do me any good.
TradeWinds: Miss Market, I know that you have lots of friends that must be sending you all sorts of well wishes. Can you tell us about some of them.
Miss Market: You are so right. Every day I day I hear from so many people that want me to be up and about that day. Of course, there are some rude people, who I must say are mostly short, who wish I would just stay down and out every day. I have received some special gifts from my old friends in Washington. They have been so kind. They have send all sorts of flowers and such. But I have to tell you, sometimes they send all these different kinds of plants and flowers that just get my allergies going and just make be feel worse. Some times I wish they would just leave me alone. And indeed, they sent me this most curious package. When I opened it, it said that this was going to be something that would stimulate me. I was quite embarrassed and wanted nothing to do with it. I gave it my friend Mr. Retail, as I think he can make some use for it as he has been lonely for sometime.
TradeWinds: Miss Market, I can't help but notice that your house is looking a little run down.
Miss Market: Indeed, yes it is. A couple of years ago, I had people coming in every day fixing the house up, doing this and doing that and they never charged me a dime. I keep wondering how it was they could survive doing that. Well one day, they just stopped showing up and it was just too much for me to keep up with all that they did and now it has fallen into disrepair, I don't know how long it will take for me to clean it up. It was so nice while they were doing it, although I found it odd that they were blowing bubbles around the house all day long.
TradeWinds: Well Miss Market, while the house may need a little work, I do see that you are wearing some fine jewelry these days.
Miss Market: I do hope that you like my gold and silver. It is so pretty. Its this precious metal along with my oil energy drinks that keep me going these days.
TradeWinds: Miss Market, do you think you will ever get out of this funk?
Miss Market: Oh certainly I will. I have had these before. They do seem to come and go. You can can count on me feeling better again someday. This is just PMCS.
TradeWinds: What is PMCS?
Miss Market: Oh, we don't like to talk about that too much, its Pre Market Cycle Syndrome. That when I get real cranky before I decide to change my ways.
TradeWinds: Miss Market, I thank you so much for your time today. Since you are a Market, I know you only do interviews for a fee. How would you like to be paid today?
Miss Market: Euros.
TradeWinds for Friday March 14th
The TradeWinds for Friday are beginning to look somewhat favorable. After a brief dip out of the neutral zone for our slow momentum indicator, its now heading nicely through the neutral zone. Once again we don't want it to spend too much time there, because the real wind at the back momentum comes when we go over plus five on our slow momentum reading. (I know my charts are showing a little funky right now, Google is working on it.).
I don't need to tell anyone that there are still uncertain economic times out there, but it was very nice to see that the sharp downward momentum we had at the beginning of the week has been reversed by the Feds actions, and it appears to be holding. We still need a few more days to speak with certainty, but I am feeling some confidence.
While the market continues to be dominated by the oil related and precious metal related stocks, I am sensing an undercurrent of foundation building by groups like the tech stocks and even the financials, suggesting that they may have seen their worst days. That is a gut feeling, so don't trade on it.
You can trade on this, if our slow momentum indicator trades through into plus five territory, go long. If it fails a second time to make it out of the neutral zone, it going to mean new lows are coming. That's the signal I am going to watch for.
Now check out our Top 25 lists and TradeWinds Black Box results.
I don't need to tell anyone that there are still uncertain economic times out there, but it was very nice to see that the sharp downward momentum we had at the beginning of the week has been reversed by the Feds actions, and it appears to be holding. We still need a few more days to speak with certainty, but I am feeling some confidence.
While the market continues to be dominated by the oil related and precious metal related stocks, I am sensing an undercurrent of foundation building by groups like the tech stocks and even the financials, suggesting that they may have seen their worst days. That is a gut feeling, so don't trade on it.
You can trade on this, if our slow momentum indicator trades through into plus five territory, go long. If it fails a second time to make it out of the neutral zone, it going to mean new lows are coming. That's the signal I am going to watch for.
Now check out our Top 25 lists and TradeWinds Black Box results.
Wednesday, March 12, 2008
TradeWinds for Thursday March 13th
It didn't surprise me to see the markets end down today. After yesterday, that would have been a pretty good bet. I was disappointed to see the slow build up in the morning then moving up over a hundred on the Dow and then collapsing. That doesn't give me the warm and fuzzies that the moves by the Fed on Tuesday are going to be a game changer.
Even though all three momentum indicators that we tout are now headed north again, I am going to remain very cautious. Its probably going to take until sometime next week to really tell if the market likes the Fed action or not. If it does and momentum is building like it is today, then things set up quite nicely. Then again, we could be in the toilet by Friday.
Advice for Thursday is to watch very closely. You never know when those big buy programs are going to kick in, or for that matter the big sell programs. As the little guy we are watching for signs of how the goliaths are battling it out and which one is winning - the Long Dude or the Short Dude. If the market likes the changes that the Fed has introduced it could jump at anytime over the next few days, and just the opposite, of course. So watch closely, and Don't Ask Why.
Even though all three momentum indicators that we tout are now headed north again, I am going to remain very cautious. Its probably going to take until sometime next week to really tell if the market likes the Fed action or not. If it does and momentum is building like it is today, then things set up quite nicely. Then again, we could be in the toilet by Friday.
Advice for Thursday is to watch very closely. You never know when those big buy programs are going to kick in, or for that matter the big sell programs. As the little guy we are watching for signs of how the goliaths are battling it out and which one is winning - the Long Dude or the Short Dude. If the market likes the changes that the Fed has introduced it could jump at anytime over the next few days, and just the opposite, of course. So watch closely, and Don't Ask Why.
Tuesday, March 11, 2008
Tradewinds for Wednesday March 12th
Oh, Miss Market how you torment me so! Does anyone have a model out there that could have predicted today's action? Ours certainly didn't. But we are all about trend and momentum, and one day does not make a trend. It was a sweet day, but we need about four more of them just to get even for the year so lets not get too excited. The next few days will be important to see if trends are reversing.
Looking to tomorrow, the good thing is that our slow/long term momentum was abruptly arrested and pushed back into the neutral zone by the force of a huge reversal in our fast momentum indicator. We saw the fast momentum sawtooth a few days ago before the latest down draft. It will be very important to see that momentum indicator keeping moving upward to solidify a new case for the longs. Don't get too excited just yet, until proven otherwise, this is a market more likely to go down than up. Lets get all three momentum indicators pulling to north before we jump back into the long side heavily. I know I said yesterday to act when two turned north, but I wasn't expecting this dramatic action.
Now check out our Top 25 Lists and TradeWinds Blackbox update to find out how today's action shook things up.
Looking to tomorrow, the good thing is that our slow/long term momentum was abruptly arrested and pushed back into the neutral zone by the force of a huge reversal in our fast momentum indicator. We saw the fast momentum sawtooth a few days ago before the latest down draft. It will be very important to see that momentum indicator keeping moving upward to solidify a new case for the longs. Don't get too excited just yet, until proven otherwise, this is a market more likely to go down than up. Lets get all three momentum indicators pulling to north before we jump back into the long side heavily. I know I said yesterday to act when two turned north, but I wasn't expecting this dramatic action.
Now check out our Top 25 Lists and TradeWinds Blackbox update to find out how today's action shook things up.
Monday, March 10, 2008
Tradewinds for Tuesday March 11th
If you are a fan of the long side, which most of us are, there was very little good news to be found today. Our momentum indicators are chanting in unison and the chorus is DOWN. Right now I would not put any faith in a support level as we are barreling down hill at a nice clip. If you are into shorting, now is your time.
The kernels of good news is to be found in that, at least for the near term, the market is over sold. Volume is not crazy which suggests that the selling is nearing exhaustion. We also see signs of life in the semiconductor sector (SMH, INTC), so that may be an indicator of better times to come.
Don't make any bets to the long side until you see at least two of our momentum indicators take a turn for the better. You can take solace in the fact that the market will not go to zero and that some day we will be surpassing the levels we are at today. Your challenge is to figure out how to profit from that when it happens. Keep watching our site, we will try to give you a little help.
The kernels of good news is to be found in that, at least for the near term, the market is over sold. Volume is not crazy which suggests that the selling is nearing exhaustion. We also see signs of life in the semiconductor sector (SMH, INTC), so that may be an indicator of better times to come.
Don't make any bets to the long side until you see at least two of our momentum indicators take a turn for the better. You can take solace in the fact that the market will not go to zero and that some day we will be surpassing the levels we are at today. Your challenge is to figure out how to profit from that when it happens. Keep watching our site, we will try to give you a little help.
Saturday, March 8, 2008
TradeWinds for Monday March 10th
If you are a fan of the long side, there are arguments to be made in your favor. Our momentum indicators are about to totally erase their budding long side momentum that we saw forming up to this week. We can cling to the hope that our slow or long term momentum is still in the neutral zone, but it won't be for long unless things turn around quickly.
Tech was a glimmer of hope today. Semiconductors (SMH) were up and QQQQ was only down .24% after being down much more during the session. All the headlines are screaming about the housing and financial crisis, yet the Financials ETF (XLF) were just down a fraction, and real estate related ETFs (XHB, IYR) were some of the few equities on the plus side.
The wild swings we are having do suggest that we are at some kind of a turning point. If you are a Bull, which most of are wired to be, you are hoping this is bottom formation that you have been craving for so long. Pessimism is running very heavy out there, which the contrarians just love. However, don't bet the farm until you are sure that is happening. Our momentum charts will tell you when that is happening.
I have never been very good at playing the short side, so when things are going sour like they are today, I tend to just take some days off.
Check out our Top 25 Lists and TradeWinds Black Box Results for last week.
Tech was a glimmer of hope today. Semiconductors (SMH) were up and QQQQ was only down .24% after being down much more during the session. All the headlines are screaming about the housing and financial crisis, yet the Financials ETF (XLF) were just down a fraction, and real estate related ETFs (XHB, IYR) were some of the few equities on the plus side.
The wild swings we are having do suggest that we are at some kind of a turning point. If you are a Bull, which most of are wired to be, you are hoping this is bottom formation that you have been craving for so long. Pessimism is running very heavy out there, which the contrarians just love. However, don't bet the farm until you are sure that is happening. Our momentum charts will tell you when that is happening.
I have never been very good at playing the short side, so when things are going sour like they are today, I tend to just take some days off.
Check out our Top 25 Lists and TradeWinds Black Box Results for last week.
Thursday, March 6, 2008
TradeWinds for Friday March 7th
It going to be pretty hard to find much to say to support the long side argument after today. Right now the only thing I can point to is that we have not violated the bottom of the range, volume has not been overwhelming and our long term momentum remains in the neutral range.
I have to admit the momentum indicators took some serious damage to the budding long side argument that we have been tracking. The fact that our fast momentum took a dive today instead of following through on it bounce yesterday, gives me serious concern. If you are holding for the long argument, tomorrow better at least be a push, if not the reverse of today's action. Otherwise, the January lows will be in play.
Tech was a big disappointment today. Early in the session it was holding up well, even in the green when every thing else was heading down, then it just collapsed as the day went on.
If you are inclined to the short side, now is the time to start making your picks. But I will caution, that we are still range bound until proven otherwise, but the Bears showed some muscle today.
Check out our TradeWinds Top 25 Lists and Black Box update for more information.
I have to admit the momentum indicators took some serious damage to the budding long side argument that we have been tracking. The fact that our fast momentum took a dive today instead of following through on it bounce yesterday, gives me serious concern. If you are holding for the long argument, tomorrow better at least be a push, if not the reverse of today's action. Otherwise, the January lows will be in play.
Tech was a big disappointment today. Early in the session it was holding up well, even in the green when every thing else was heading down, then it just collapsed as the day went on.
If you are inclined to the short side, now is the time to start making your picks. But I will caution, that we are still range bound until proven otherwise, but the Bears showed some muscle today.
Check out our TradeWinds Top 25 Lists and Black Box update for more information.
Wednesday, March 5, 2008
TradeWinds for Thursday March 6th
If there was a text book written about what we are watching, then I would say that today and the last several days went according to the text book. We dropped hard from the resistance at the top of our range, which is also around the major indexes 50 day moving average, and precisely at that point our momentum indicators hit their refueling point and headed down. Our fast momentum indicator dove first and now is the first to turn back up as the the indexes have bounced off the bottom of the range.
I am reasonably confident (note, you can never be more than reasonably confident when judging the markets), that we are not headed back to the top of the range and to see if we can punch through. If we reach that point with our slow momentum beginning its turn up, then my confidence will go up a tick. So long as the slow momentum remains in the neutral range, we are just re-charging. With the resurgence of Tech stocks in the last couple of days, it gives me even more comfort that the Bulls are about to become range busters. The Bull is not free off the range yet, so don't get overly aggressive.
For some trading ideas, check out our TradeWinds Top 25 lists and the update on our TradeWind Black Box.
I am reasonably confident (note, you can never be more than reasonably confident when judging the markets), that we are not headed back to the top of the range and to see if we can punch through. If we reach that point with our slow momentum beginning its turn up, then my confidence will go up a tick. So long as the slow momentum remains in the neutral range, we are just re-charging. With the resurgence of Tech stocks in the last couple of days, it gives me even more comfort that the Bulls are about to become range busters. The Bull is not free off the range yet, so don't get overly aggressive.
For some trading ideas, check out our TradeWinds Top 25 lists and the update on our TradeWind Black Box.
Tuesday, March 4, 2008
TradeWinds for Wednesday March 5th
The Range War continue. At one point today, it looked like the Bears had taken control, but just like that the Bulls once again mounted a late day surge to keep everything in flux.
Techs were particularly strong late in the day, so don't believe the headlines that the late day move was due to a bail out plan for Ambac or some such thing. Tech stocks could care less about that. I personally feel that there is a floor or bottom being build from which to launch the next assault on the market's 50 day moving averages. Our key long term or slow momentum indicator is still solidly in the neutral range and our fast momentum indicator looks like it is bottoming and getting getting to take a move to the long side. Volume was again tepid until the last hour or so when the Techs caught fire, thats another good sign.
How long will Miss Market keep us in suspense? Will tomorrow be the day we say good-bye to the Range? Listen closely and she will tell us.
Techs were particularly strong late in the day, so don't believe the headlines that the late day move was due to a bail out plan for Ambac or some such thing. Tech stocks could care less about that. I personally feel that there is a floor or bottom being build from which to launch the next assault on the market's 50 day moving averages. Our key long term or slow momentum indicator is still solidly in the neutral range and our fast momentum indicator looks like it is bottoming and getting getting to take a move to the long side. Volume was again tepid until the last hour or so when the Techs caught fire, thats another good sign.
How long will Miss Market keep us in suspense? Will tomorrow be the day we say good-bye to the Range? Listen closely and she will tell us.
Answering Ben's Call - A solution for the Mortgage Crisis
Ben Bernanke said today that we need new and creative thinking to fix the mortgage crisis. Well, I am a trader and investor and I am tired of this whole sub-prime fiasco messing up the rest of the market, so here is my outline for fixing this mess, using Mr. Bernanke's suggestions as a guideline. We need to have an adjustable principal mortage, similar to the adjustable rate mortgage. Here is how it would work.
1. The home owner would have an option to get a one time principal adjustment to their mortage. This would be available to anyone, but obviously only those that have seen a signficant decrease in market value would opt for this. There can be rules controlling what the minimum and maximum adjustment can be. The principal of the mortgage would be reset by basically deducting the difference between the original sale price of the house and the current appraised value from the current principal balance. The loan payment would then be reset based upon the new value, years remaining in the loan and whatever the interest of the loan is.
2. The principal would be adjusted a second time when the house is either sold or the mortgage is paid off. This second adjustment of principal could not be lower than the first, nor higher than the original principal of the loan. This prevents the home owner from profiting from the one time drop in the principal of the loan.
As an example, say you bought a house for $300,000 and financed the whole price. The market value is now $200,000. You opted for the one time principal reduction and your loan is reset to $200,000 and your mortgage payment drops accordingly. Five years from now, you sell the house for $225,000. Your mortgage pay off to the bank would be adjust to being $225,000 less the principal that you had paid down. If you sell the house for $325,000, your mortgage pay off is $300,000 less any paid down principal.
Lets say you do the one time reduction to $200,000 and then pay off that loan. At that time an appraisal would be done and you would either have to pay or execute a new loan for the difference. Lets say the market value is now $250,000, then you would have to have another loan for $50,000 and keeping on paying.
I don't know what all the tax ramifications are, nor how to actually execute this for existing loans given how they are packaged and sold. But it seems to me to be a better solution for banks than just letting people walk away from their house or be foreclosed on, and then write off the loss. There are losses to be taken still, but at least you still have the property occupied and people paying the loan and the potential of recouping the principal that you wrote off.
1. The home owner would have an option to get a one time principal adjustment to their mortage. This would be available to anyone, but obviously only those that have seen a signficant decrease in market value would opt for this. There can be rules controlling what the minimum and maximum adjustment can be. The principal of the mortgage would be reset by basically deducting the difference between the original sale price of the house and the current appraised value from the current principal balance. The loan payment would then be reset based upon the new value, years remaining in the loan and whatever the interest of the loan is.
2. The principal would be adjusted a second time when the house is either sold or the mortgage is paid off. This second adjustment of principal could not be lower than the first, nor higher than the original principal of the loan. This prevents the home owner from profiting from the one time drop in the principal of the loan.
As an example, say you bought a house for $300,000 and financed the whole price. The market value is now $200,000. You opted for the one time principal reduction and your loan is reset to $200,000 and your mortgage payment drops accordingly. Five years from now, you sell the house for $225,000. Your mortgage pay off to the bank would be adjust to being $225,000 less the principal that you had paid down. If you sell the house for $325,000, your mortgage pay off is $300,000 less any paid down principal.
Lets say you do the one time reduction to $200,000 and then pay off that loan. At that time an appraisal would be done and you would either have to pay or execute a new loan for the difference. Lets say the market value is now $250,000, then you would have to have another loan for $50,000 and keeping on paying.
I don't know what all the tax ramifications are, nor how to actually execute this for existing loans given how they are packaged and sold. But it seems to me to be a better solution for banks than just letting people walk away from their house or be foreclosed on, and then write off the loss. There are losses to be taken still, but at least you still have the property occupied and people paying the loan and the potential of recouping the principal that you wrote off.
Monday, March 3, 2008
Tradewinds for Tuesday March 4th
Home, home on the range ..... range bound that is. Last Thursday and Friday we saw the indexes get hurtled back from the current range resistance which was around their 50 day moving averages. They were body slammed down to their support levels in the range, from which they bounced nicely at the end of the day. While we are always fascinated by what the market does, we are particularly interested to see how it behaves in these ranges. Will the market continue on its way up to the resistance levels, or was today the dead cat bounce from which it rolls over and gives up the support?
Every market day brings another question. Nevertheless we were encouraged to see the end of day bounce. Our momentum indicators continued their downward direction, but our all important slow momentum indicator remained in the neutral range. Fast momentum has zoomed downward and we expect to see a turn on that indicator soon which should give fuel to the slow and moderate indicators.
It was also encouraging to see that there was no panic after the big down day on Friday. Volume was below what it has been lately, so I don't see any big move for the exits. Right now I am still reading this to be a correction to the run up to the 50 day moving averages and we are reloading for another run. Tomorrow may change that story, so we will be listening to Miss Market.
Don't forget to check out our Top 25 lists and updates to our TradeWinds Black Box.
Every market day brings another question. Nevertheless we were encouraged to see the end of day bounce. Our momentum indicators continued their downward direction, but our all important slow momentum indicator remained in the neutral range. Fast momentum has zoomed downward and we expect to see a turn on that indicator soon which should give fuel to the slow and moderate indicators.
It was also encouraging to see that there was no panic after the big down day on Friday. Volume was below what it has been lately, so I don't see any big move for the exits. Right now I am still reading this to be a correction to the run up to the 50 day moving averages and we are reloading for another run. Tomorrow may change that story, so we will be listening to Miss Market.
Don't forget to check out our Top 25 lists and updates to our TradeWinds Black Box.
Saturday, March 1, 2008
Tradewinds for Monday March 3rd
I go away for one day and all heck breaks lose on the market. We said earlier this week when our long side momentum got firmly established that we expected to see some correction. This was a bit more than I would like to see, but then when there is a lot of volatility in the market this is what you get. Lets see how much damage was done to our long side momentum trend.
In looking at our momentum charts we see that our slow or long term momentum continued upwards after Thursday market and then took a turn down. The good thing is that it is still solidly in the neutral range, and near the positive momentum mark of +5. Moderate momentum also continued up on Thursday before taking its down turn. It had reached a fairly high water mark or oversold area on Thursday, so again, Friday was not abnormal for that reading. Our fast momentum actually started to roll over early in the week signaling the coming correction. It has plunged two days, telling us it is quickly reloading for another move to the long side. The fast momentum needs to reload quickly from here to prevent the slow and moderate momentum to pick up an downside mo.
In summary here are the good things to take away after Friday. Of the 85 equities we track, 44 have positive momentum, 18 are neutral and 23 have downside momentum. Our long term momentum is still in the neutral range. I didn't see any serious volume numbers to raise concerns.
Its not a good idea to get aggressive either short or long after a day like Friday. We need to see what Miss Market is going to tell us about where she wants to go next. I am sure there will be some talk whether this is the Friday that sets up the catastrophic Monday - maybe, but I don't think so. At this point its best to sit back and watch for a couple of days. I am of two minds right now. I am going to protect my open positions, but I am going to watch for a market snap back. If that doesn't happen in the next few days, I will pull out my short pants.
Don't forget to check out our Top 25 ETF and Stock Recommendations and an update on our TradeWinds Black Box.
In looking at our momentum charts we see that our slow or long term momentum continued upwards after Thursday market and then took a turn down. The good thing is that it is still solidly in the neutral range, and near the positive momentum mark of +5. Moderate momentum also continued up on Thursday before taking its down turn. It had reached a fairly high water mark or oversold area on Thursday, so again, Friday was not abnormal for that reading. Our fast momentum actually started to roll over early in the week signaling the coming correction. It has plunged two days, telling us it is quickly reloading for another move to the long side. The fast momentum needs to reload quickly from here to prevent the slow and moderate momentum to pick up an downside mo.
In summary here are the good things to take away after Friday. Of the 85 equities we track, 44 have positive momentum, 18 are neutral and 23 have downside momentum. Our long term momentum is still in the neutral range. I didn't see any serious volume numbers to raise concerns.
Its not a good idea to get aggressive either short or long after a day like Friday. We need to see what Miss Market is going to tell us about where she wants to go next. I am sure there will be some talk whether this is the Friday that sets up the catastrophic Monday - maybe, but I don't think so. At this point its best to sit back and watch for a couple of days. I am of two minds right now. I am going to protect my open positions, but I am going to watch for a market snap back. If that doesn't happen in the next few days, I will pull out my short pants.
Don't forget to check out our Top 25 ETF and Stock Recommendations and an update on our TradeWinds Black Box.
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