Market is very unpredictable

[Stas1976]

Early disappointments from Dow Jones industrial Alcoa and Lucent unnerved the market. (http://biz.yahoo.com/ap/060711/wall_street.html?.v=9)

Alcoa profit is up 62%. BUT(!!!)

Alcoa's revenue rose to $7.96 billion from $6.69 billion a year earlier, but analysts were looking for $8.02 billion. Shares tumbled in the after-hours session and were recently down 3.7% in premarket trading. (http://www.thestreet.com/_tsclsii/markets/marketstory/10296002.html)

I am a technician so not a big deal to check the numbers. The difference between real and estimated revenue grow is -0.74%. This is about nothing. And market is down because of this ? Bears have nothing else to worry about.

[optimus25]

News regarding the terrorist attack in India has also been a negative for the market. Losses increased as news about the incident began to circulate on cnbc.

[Stas1976]

Bearish market anyway. It uses any excuse to set market down.
Tomorrow market move will be probably explained by the fact that some unstated cow passed away in Oklahoma.

[madcowdisease]

Stas, this bull market is old relatively speaking. With that being said it has been propped up by strong earnings from many companies for the past year that has kept it going.

If you take this away you are left with an aging bull market, extremely high oil prices, inflation, rising interest rates on a global level (still historically moderate in the USA), a declining housing bubble an therefore loss of equity for many Americans, an unpopular President and a more unpopular war, threats and manifestations of terrorism, geopolitical tensions, and a burgeoning national debt.

Sorry to be a pessimist but it stands reasonable to believe that if I am cognizant of all of the above there are thousands on Wall St. whom are aware of the same situation and don't feel safe bidding up this market.

Obviously you have just read where I stand; I think this market deserves to go lower. It is a stock picker's market and I wouldn't hold anything for too long, only trades.

[Stas1976]

What you said is correct but there are some thing you don't mention.
1. Economy grow in the BRIC and consumer boom in these countries that stimulate global companies sales.
2. Sinking USD must stimulate people desire trade their dollars in something less affected by inflation for example commodity stocks (that are down these days all around).

So my impression that people do irrationally. Instead of hedging their risks by investing in commodities that are in strong demand due to the BRIC they buy US dollar that is loosing buying power. It looks very irrational to me.

I will do everything possible to get rid of US dollars. My stock investments are in gold/copper only. I will buy russian rubles next to diversify a little bit. My cash dollar investment are yelding 15% and all held outside US.

[David Briggs]

I actually had a positive day today, because I am heavily in CEF TLT and XLE.

I have also been building a position ON MARGIN in RSP, and could really benefit from a rally right now to give me 1-2 points in that position. Every day I am holding that position costs me margin interest. Being right and on time is always the key to profitable margin trading. To hear some of the sentiment here on this thread, I am about to lose my butt. And still I keep buying!

[Stas1976]

I actually had a positive day today, because I am heavily in CEF TLT and XLE.

I have also been building a position ON MARGIN in RSP, and could really benefit from a rally right now to give me 1-2 points in that position. Every day I am holding that position costs me margin interest. Being right and on time is always the key to profitable margin trading. To hear some of the sentiment here on this thread, I am about to lose my butt. And still I keep buying!

Crammer said today that it is time to sell FCX. It went down last time he said to buy it. I barely managed to recover the loss at that time.
Now he says that it is time to sell. Probably I should hold it for a while waiting for oposite trend. Gold/copper prices are consistently up.

[optimus25]

As a long term investor, its difficult for me to make any excuses to buy because I too think the market will go lower. Even with positive earnings some companies are still taking hits to the downside. Stock picking has become very difficult.

I don't mind putting money in floating funds rates as the Fed probably has an interest rate hike next month. Check out JFR, it pays a pretty nice monthly interest.

I'm still long on best of breed dividend payers. I want the market to take them down though so that I can buy more.

[Stas1976]

Global population is up to 6.5 bn. It was 6 bn not a long time ago. (http://www.thestreet.com/_tscnav/video/executiveinterviews/10296227.html)3 bn of these 6 are living in countries where GDP is growing 6% a year. Commodities boom should not be over. Gold price rate historicaly was 15/1 to oil price. Today is about 9/1. Gold is cheap comparing to oil. Russia as an oil rich country is going to hedge against dollar using gold. US trade deficit is increasing - so it a sign that dollar will continue to sink. I will stay with commodities.

[optimus25]

IAU is a great way to play gold. Bought last week and looking to sell soon to make a quick profit.

[optimus25]

BTW. I notice that consumer discretionary stocks are down big today. Retailers are specifically taking a big hit. The market is anticipating a slowdown in spending. Some of these stocks are going to see insane valuations to the downside IMO.

[Svenwulf]

Actually both the US trade deficit and budget deficits had some good news in the last 24 or so. I continue to feel that a bottom is desperately being put on the dollar. Perhaps at the expense of the economy. Long term i think this fails, but at least until elections betting a weak dollar is a looser in my eye. As far as historic comparisons of gold and oil, i think Stas' main point about how developing countries are increasing in pop% tells us oil will continue to trade at a premium to gold. Also i feel oil enjoys the "fear" premium much more than precious metals.

I think more important to these factors, is the global draining of $$ from markets. China has a triple play as i have discussed previously, japan gonna hike on friday, US set to hang the consumer out to dry, and even most of europe is hiking recently. I think decreased liquidity equals increased sensitivity to negative news. Looking like goldie locks could be in serious trouble, imo.

[optimus25]

Good points sven. Global monetary policies spell trouble for the stock market. The rate hikes globally though won't be reflected until next year. IMO.

[Stas1976]

Slowdown in spending. Hmm. It should happen and it is good for economy. I dont belive in positive effect of the trade deficit. Sooner or later US should narrow it by decreasing the spending or increasing share of the domestic products (what is not likely due the unfavorable US economical policies, very high corporate taxes, absence of letigation caps, expensive and overregulated healthcare etc). So the only choice is limit the spending. But it does not mean that dollar will not weaken.
The only thing that can cancel the gold rally IMHO is end of IRAQ war. Returning to the budget surplus can immediately strengthen the dollar.

[Svenwulf]

I agree the retailers are going to be great values, but i am trying to figure if this is a short term trade off the brunswick garbage, or if i should wait until the damage really comes in (as someone very correctly pointed out, will come after this holiday shopping season.)

[Svenwulf]

Not to sound like a total USA homer, i remember seeing this documentary about a little tv tube maker i think in tenesse, that sued china in wto court for unfair trade practices (& won.) If our politicians were serious about protecting our economy and our standard of living, I feel they would insist on holding china to the tenants of belonging to the WTO. But either due to political contributions, or just plain ignorance, they refuse to even protect what little remains. To simplify, imagine if developing nations not only had to pay royalties, but penalties, for their pirated intellectual properties?

[Stas1976]

had to pay royalties, but penalties, for their pirated intellectual properties
100% agree.

But how can you comment this
http://stas.jsn-server2.com/lj/corporate_tax.jpg

Numbers were changed since book was published. Thanks for Bush tax cut. But still USA at the end of the list. (http://www.pgaol.msu.edu/2005_federal_income_tax_rates.html)

[Svenwulf]

Agreed Stas, the us taxes itself heavily, and i would argue penalizes itself perhaps more than any other nation. For whatever good bush has done with the tax cuts, i feel he has damaged our global reputation and citizen "faith" many times fold. Watching warren buffet discuss hiring managers, he said (paraphrased) We (berkshire) can afford to loose money, we can not afford to loose reputation.

Basically i hope the us can retain its "proprietary competitive advantage" that has let it tax itself so heavily and still thrive. I feel that involves some form of defense, and not perhaps just lowering taxes and reduction of consumer spending. Do not interpert this to mean protectionist tariffs; they are counter productive. But serious social reinvestment, continued nuturing of entrepeneurs and creative capital and the basic freedom and security our society provides, i feel, still are enough to keep our standard of living very high. Damn i sound like kudlow!

Now who do i want to short this afternoon? HAHAHA!