My OperaInvestment Bankers Fail To Lead Wall Street Higher
Thursday, November 15, 2007 2:25:05 AM
Early in the day it looked like the investment bankers were taking the market up but then the markets turned bearish
Michael Mackenzie wrote in FT.Com that Bear Stearns BSC was leading the investment bankers on a bullish charge on Wall Street, and that financials were likely to dictate trading today.
Yesterday investment banks and financial services rebounded sharply as Goldman Sachs (GS) said it did not expect to incur significant write downs in the fourth quarter for subprime losses. Bear Stearns said it planned to take $1 Billion in write downs and was "pretty positive" about its investment banking business.
Less than an hour before the opening bell, the futures market was calling stocks higher: the Nasdaq and S&P were trading well above fair value, indicating a positive start.
And today, in early morning tading, the investment bankers Goldman Sachs (GS), Lehman Brothers (LEH), Merrill Lynch (MER), and Citicorp (C) along with the financial were up.
Tim Knight covered the action in his article Bounce, Day Two asking a very much needed question: "How high will it go"?
And, then he provides the answer in his article As God Intended: the stock markets moved up to their Fibonacci retracements and turned and closed lower. In other words, levels that were once support are now levels of resistance: a bear market is fully in place.
Take for example his chart of the oil service stocks; today's action perfectly touched to and then dropped from a prior level of support; also observable is a head and shoulders formation that began on September 18th and ended November 9th, signaling an end to upward price movement for OIH.
On can use bear market investment vehicles to protect one's wealth from the bear markets
These include the ProShares inverse ETFs:
QID Inverse Nasdaq
DXD 200% Inverse Dow 30
SDS 200% Inverse S&P
TWM 200% Inverse Russell 2000
SKF 200% Inverse Financial
SSG 200% Inverse Semiconductor
EEV 200% Inverse Emerging Markets
Also available are the Horizons BetaPro inverse ETFs
HGD.TOis traded on the Toronoto Stock Exchange and is 200% inverse S&P/TSX Global Gold Index.
HXD.TOis traded on the Toronto Stock Exchange and is 200% inverse S&P/TSX60 Index.
And there is the Rydex inverse government long bond fund RYJCX Inverse U.S Government Long Bond TLT.
Here is Jack Chan's chart of TLT which shows investment demand has been rising October 11, 2007: two day's after the CDO bust investors grew bullishly convinced that the Fed is on a strong and unveering course to lower interest rates; but look at the recent trading: there is a massive lollipop hanging man candlestick signaling a soon coming end to the upward activity; and then consolidation in a sideways move to support.
There is going to be a price drop in bonds soon. The investment mania will cease: the marketplace will declare a defacto interest rate hike associated with the risk associated in owning US debt, i.e. a military attack on Iran; or there will come a gradually increasing belief that the Fed will reverse course, and raise interest rates due to inflation fears, or a hefty rise in gold will temp investors to go long gold, and short the long term US Government bonds.
The disadvantage of using the bear market vehicles is that all one is left with is dollar denominated investments that are continually depreciating.
The other wealth protection strategy is to transfer one's retirement resources to the gold ETF GLD and to transfer one's investment wealth to the secure and easily traded BullionVault.com.
The logic for gold is it trades inversely with the U.S. Dollar which is in continual decline.
For extra investment return, one can use margin on one's gold based retirement account to purchase the 200% inverse emerging market ETF EEV so that one's investment will have double zoom: up not only on gold, but up on the inverse action of the emerging markets going down.
Gold and gold stocks traded up with oil today.
Gold traded higher with rebounding oil.
Gold stocks were up higher than gold, on a percentage basis; but gold stocks got shook loose from the price of gold on Monday, November 12, 2007; and have never recovered fully since, as is seen in the 5-day Yahoo Finance Chart of gold stocks relative to gold. Said another way, gold stocks have detached from the price of gold.
When a really strong down day comes to the stock market, watch for the gold shares to be pulled further away from the price of gold; just as they were pulled lower late in the day by the bearish stock market.
I really want to draw clear the distinction between gold and gold stocks: it was on November 12, 2007 that Chartist Jack Chan gave his sell recommendation to the precious metal stocks[/URL] while retaining a recommendation for gold.
One can visually see the benefit from owning gold over gold stocks in today's Jack Chan charts. The difference is as stark as day and night.
The chart of gold shows stable with a doji candlestick indicating that neigher bulls nor bears got the upper hand today.
While the chart of gold stocks shows bearish with much the same action as desribed by Tim Knight in his report: gold stocks hit support and turned lower; that which was once support is now resistance; and look at the lollipop hanging man candlestick in today's trading: it portends lower prices soon.
Additional Reading
Bull Sean Hannon remarks it was an Ugly Close to a Rocky Day
Images
The reason that this bull looks a little wobbly
is that he's getting mauled by this bear.
Michael Mackenzie wrote in FT.Com that Bear Stearns BSC was leading the investment bankers on a bullish charge on Wall Street, and that financials were likely to dictate trading today.
Yesterday investment banks and financial services rebounded sharply as Goldman Sachs (GS) said it did not expect to incur significant write downs in the fourth quarter for subprime losses. Bear Stearns said it planned to take $1 Billion in write downs and was "pretty positive" about its investment banking business.
Less than an hour before the opening bell, the futures market was calling stocks higher: the Nasdaq and S&P were trading well above fair value, indicating a positive start.
And today, in early morning tading, the investment bankers Goldman Sachs (GS), Lehman Brothers (LEH), Merrill Lynch (MER), and Citicorp (C) along with the financial were up.
Tim Knight covered the action in his article Bounce, Day Two asking a very much needed question: "How high will it go"?
And, then he provides the answer in his article As God Intended: the stock markets moved up to their Fibonacci retracements and turned and closed lower. In other words, levels that were once support are now levels of resistance: a bear market is fully in place.
Take for example his chart of the oil service stocks; today's action perfectly touched to and then dropped from a prior level of support; also observable is a head and shoulders formation that began on September 18th and ended November 9th, signaling an end to upward price movement for OIH.
On can use bear market investment vehicles to protect one's wealth from the bear markets
These include the ProShares inverse ETFs:
QID Inverse Nasdaq
DXD 200% Inverse Dow 30
SDS 200% Inverse S&P
TWM 200% Inverse Russell 2000
SKF 200% Inverse Financial
SSG 200% Inverse Semiconductor
EEV 200% Inverse Emerging Markets
Also available are the Horizons BetaPro inverse ETFs
HGD.TOis traded on the Toronoto Stock Exchange and is 200% inverse S&P/TSX Global Gold Index.
HXD.TOis traded on the Toronto Stock Exchange and is 200% inverse S&P/TSX60 Index.
And there is the Rydex inverse government long bond fund RYJCX Inverse U.S Government Long Bond TLT.
Here is Jack Chan's chart of TLT which shows investment demand has been rising October 11, 2007: two day's after the CDO bust investors grew bullishly convinced that the Fed is on a strong and unveering course to lower interest rates; but look at the recent trading: there is a massive lollipop hanging man candlestick signaling a soon coming end to the upward activity; and then consolidation in a sideways move to support.
There is going to be a price drop in bonds soon. The investment mania will cease: the marketplace will declare a defacto interest rate hike associated with the risk associated in owning US debt, i.e. a military attack on Iran; or there will come a gradually increasing belief that the Fed will reverse course, and raise interest rates due to inflation fears, or a hefty rise in gold will temp investors to go long gold, and short the long term US Government bonds.
The disadvantage of using the bear market vehicles is that all one is left with is dollar denominated investments that are continually depreciating.
The other wealth protection strategy is to transfer one's retirement resources to the gold ETF GLD and to transfer one's investment wealth to the secure and easily traded BullionVault.com.
The logic for gold is it trades inversely with the U.S. Dollar which is in continual decline.
For extra investment return, one can use margin on one's gold based retirement account to purchase the 200% inverse emerging market ETF EEV so that one's investment will have double zoom: up not only on gold, but up on the inverse action of the emerging markets going down.
Gold and gold stocks traded up with oil today.
Gold traded higher with rebounding oil.
Gold stocks were up higher than gold, on a percentage basis; but gold stocks got shook loose from the price of gold on Monday, November 12, 2007; and have never recovered fully since, as is seen in the 5-day Yahoo Finance Chart of gold stocks relative to gold. Said another way, gold stocks have detached from the price of gold.
When a really strong down day comes to the stock market, watch for the gold shares to be pulled further away from the price of gold; just as they were pulled lower late in the day by the bearish stock market.
I really want to draw clear the distinction between gold and gold stocks: it was on November 12, 2007 that Chartist Jack Chan gave his sell recommendation to the precious metal stocks[/URL] while retaining a recommendation for gold.
One can visually see the benefit from owning gold over gold stocks in today's Jack Chan charts. The difference is as stark as day and night.
The chart of gold shows stable with a doji candlestick indicating that neigher bulls nor bears got the upper hand today.
While the chart of gold stocks shows bearish with much the same action as desribed by Tim Knight in his report: gold stocks hit support and turned lower; that which was once support is now resistance; and look at the lollipop hanging man candlestick in today's trading: it portends lower prices soon.
Additional Reading
Bull Sean Hannon remarks it was an Ugly Close to a Rocky Day
Images
The reason that this bull looks a little wobbly
is that he's getting mauled by this bear.
