Archive for the ‘Newsletter’ Category

Sunday, November 22nd, 2009

“Please sir, can I have some more?” Dickens said it well in Oliver Twist. This line comes to mind when viewing the corporate requests made to “Uncle Sam,” by the way, that is all of us who pay the IRS a portion our hard earned dollars, we are the “Uncle Sam” funding. Our corporate partners keep bellowing aloud, PLEASE SIR, can I HAVE some MORE……money, time, pay for me and the guys I work with. We need more money for: retention bonuses, after all, they did such a great job getting us into this mess, can’t wait to see how they get us out of it. We need to pay them more to keep them from leaving, maybe they will get it correct this time, or maybe we should pay them to leave. With that thought in mind, I have a great deal on bridge to Brooklyn, I have exactly what you are looking for, the Manhattan Bridge, only a couple of bucks, why we might get UNCLE SAM to pay for that for you.

By the way, “Thank you, sir, may I have another:” comes also from ANIMAL HOUSE in the scene where the frat brothers are paddling the pledges. Today, we have hedge funds buying up Alt A mortgages and reselling them to FHA? Yup that is our government hard at work. Well, at least we stopped buying $600 toilet seats and $800 hammers…..or did we….hummm.

We read an article in yesterday’s New York Times about a hospital down south, with extreme financial problems. (Hospital Falters as Refuge for Illegal Immigrants by Kevin Sack published November 20. 2009) Why? Because they treat illegal aliens who, after coming to this country illegally, (paying a coyote Pedro, to sneak them thru the border) get sick and Bam, we are paying for their dialysis and health care (tab of $50,000/year/patient). So here is the question, if the illegal aliens get sick and we fix their medical problems, why don’t we send them back home? At this point we know that they are illegal and in this country without documentation. We know that they are breaking the law and yet, we release them. The hospital in Atlanta that is taking care of this population is now trying to send these illegal immigrants back to their countries along with a stipend to help with their care pending the repatriation. We are sending a strange message to illegal immigrants, that here in the USA it is fine to break the law and not only will you receive free medical treatment, but we will send you back to your county with some cash in your pocket.

The Senate voted to open debate on health care. Here is a quote from an article written by David M. Herszenhorn and Robert Pear published November 21, 2009 by the New York Times. “And it would impose a requirement that nearly all Americans obtain insurance or pay monetary penalties for failing to do so.” Okay what about the illegal aliens killing the system. Oh, by the way, Medicare gets slashed, yeah but these people paid into the system while illegals never did. “Senators who support this bill have a lot of explaining to do,” Senator Mitch McConnell said. Senator McConnell continued: “Americans know that a vote to proceed on this bill, to get on this bill, is a vote for higher premiums, higher taxes and massive cuts to Medicare.”

For those of us who pay for health insurance, the health insurance companies are playing a new game. Don’t go to a hospital outpatient care center or risk huge co-pays. One never is alerted to the co-pay until the bill comes in the mail. To be forewarned is to be forearmed. If the procedures are done in the physician’s office you only pay the co-pay. We had an endoscopic exam recently and our co-pay should have been $30.00 but because it was done in the hospital, and we had to cough up $150 buck for the “out patient” procedure. Our stress test in the physician’s office, co-pay of $30, our stress test as an out-patient at the State University Hospital; $248.64. The scam is to send the patient to the hospital for the outpatient procedure and slam the insured with these enormous fees. If we were illegal…..bam…..our cost is zero, but alas we pay taxes and are legal so, we are stuck with these scams.

We are moving quickly into Christmas heavy hype selling season. How many sales can you find? The shoppers’ game is to find the cheapest price and snag it. We do it thru the internet, the store advertizing anything to get that cheap price.

Monday: October existing home sales are released at 10:00.

Tuesday: 3rd quarter GDP is released at 8:30, November consumer confidence is released at 10:00 and the S&P Case-Shiller index for September is released.

Wednesday: October durable goods, personal income/consumption are all released at 8:30; November Michigan Sentiment is released at 9:45-10:00, October new home sales and the FOMC minutes from its recent meeting.

Thursday: the European Central Bank issues its interest rate decision, the Bank of Japan released minutes of its last meeting.

Friday: early close for the markets to enable shopper’s time to increase their debt.

The US Dollar Index has been bouncing from the low of 74.75 seen on November 16. This bounce has produced higher lows for the past four trading sessions, however; only a higher high was seen in the Friday session. Although the US Dollar index poked above the downtrend line in the Friday session, it closed below that line. The downtrend line for the Monday session is 75.806. All the indicators that we follow herein are pointing higher. As we approach the end of the year, we should see some end of year adjustments and portfolio dressing. The top of the Bollinger band is at 76.808 and the lower edge is seen at 74.746. The 5-day moving average is at 75.351. We are below the Ichimoku clouds for all time-frames. The long wicked candle seen in the Friday session reminds us of the candle seen on November 3, 2009 which also was a very long wicked candle. On November 3rd it led to a continued retreat taking the US Dollar index to a low of 74.75, with a few bumps and jiggers along the way to that low. Should the candle see in the Friday session mimic or ape the candle of November 3rd, we can expect to see the 74.75 level removed. The next level of support will be found at 73.365, 72.805, 71.960 and 71.555.
Resistance levels will be found at 78.17, 79.010, and 79.695. The indicators on the weekly chart are turning higher. Still, we would not feel comfortable going long until or unless this index closed above 75.772 by the Friday session.

The S&P 500 futures chart looks as though this market will continue to retreat. All the indicators that we follow herein continue to issue a sell-signal from the overbought side of neutral. Further, there is plenty of room to the downside. The 5-day moving average is at 1097.05. The top of the Bollinger band is at 1123.39 and the lower edge is seen at 1024.85. On the positive side, so long as 1082.50 is not breeched, we will give the bulls some more room to reverse the recent behavior. Unfortunately, we believe that portfolio managers, whose bonus is keyed to profits booked, will be anxious to keep those profits and could suffer from an itchy sell finger. We certainly would be inclined to sell the issue now and buy a short-term call option so that should the issue rally, we will enjoy the appreciation but with most of our profits booked, we will have only the cost of the option at risk for the portfolio. That would be a way to stay long and cash in at the same time. True we could also buy a put to insure our investment. We would rather buy a call and take profits now to insure a hefty bonus. We are above the Ichimoku candles for the weekly and daily time-frames, but below the clouds for the monthly time-frame. The weekly chart has a doji candle and is about to issue a sell-signal. The weekly chart shows 1026 as an important level. So long as the market doesn’t breech this level on a weekly basis, the bulls will be in of the game.

The NASDAQ 100 futures contract broke important levels this week when it closed below 1768.50. Although the NASDAQ 100 is above the Ichimoku clouds for the daily and weekly time-frame, it is the clouds for the monthly time-frame. All the indicators that we follow, continue to issue a sell-signal with plenty room to the downside. The 5-day moving average is at 1784.97. The top of the Bollinger band is at 1835.66 and the lower edge is seen at 1647.56. This market looks in much worse shape than does the S&P 500. It will be very interesting to see how this market reacts in the last days of 2009. Remember, this market rallied before the S&P 500 did and now, it is retreating before the S&P 500. We must pay attention to these events. We remain cautious and will err on the bearish side of this one.

The Russell 2000 closed below the uptrend line in the Friday session. If this index closes below 574.50 we will be into some pain. All the indicators that we follow herein are issuing a uniform sell-signal with plenty of room to the downside. The 5-day moving average is at 590.28. The top of the Bollinger band is 606.25 and the lower edge is seen at 557.46. Should the Russell 2000 close below 574.50, we will open the door to the November lows. As we walk into the last month of the year, we will feel continued pressure to sell the losers and retain the winners. Insomuch as the Russell 2000 contains stocks that are small capitalization stock that don’t pay a dividend, these are candidates for end of year sales and tax loss sales. The Russell 2000 has underperformed the other indices. We are below the Ichimoku clouds for the daily time-frame but above the clouds for the weekly time-frame. We continue to believe that this index will be used as a source of funds into the end of this year.

Crude oil fell in the Friday session but managed to stay above the uptrend line which is now at76.14. The downtrend line is seen at 80.10. The 5-day moving average is at 78.15. The top of the Bollinger band is at 80.91 and the lower edge is seen at 76.14, the same number as the uptrend line. When we see number repeat, they become more important. We continue to see sell-signals in the indicators, but most are approaching oversold levels and losing steam to the downside. We are above the Ichimoku clouds for the daily and the monthly time-frame but are in the clouds for the weekly time-frame. Should the market close below 75.57, we would turn bearish with a view to74.96 and 73.16 as areas of support.

Everybody loves gold, so we are a bit concerned about the overwhelming flock of bulls flowing into the yellow metal trades. All the indicators that we follow herein are overbought. The 5-day moving average is at 1127.65. The top of the Bollinger band is at 1169.92 and the lower edge is seen at 1015.64. We are far above the Ichimoku clouds on the daily, weekly, and monthly time-frame. As a matter of fact, all time-frames look like a pole, which is never a good sign. The ascent has been too steep and we will see some consolidation.