Capitalogix

Market Commentary from April 25th

We've talked about the "line in the sand" (where the bulls and bears are battling at the 1400 level in the S&P 500 index). Well, at the end of this week, we're still at the same place.

The emotional momentum of last week has faded some, however the market held up nicely in the face of additional bad news this week. From my perspective, that's a positive sign.

I expect a bunch of smaller traders to short the 1400 level into Tuesday's Fed meeting.  It seems like a safe trade.  So, while a "correction" downward wouldn't surprise me here; I am not bearish.  In fact, I think a move above that level would trigger a rash of buying (both organic and short-covering) ... and is thus more likely.

What is a Dollar Worth?

The Fed meets this week to discuss the manic-depressive nature of our economy. If you are a glass-half-full type of person you could worry about both Recession and Inflation.

From a trader's perspective, though, the markets have been trading much better.

On a related note, I heard lots of talk among traders this week about the Dollar potentially putting in a bottom. We'll see.

While I was researching this, I found a site that makes it easy to calculate the affect of inflation. Click the following link to see
What Is A Dollar Worth?

There is a fill-in-the-blank calculator that lets you figure-out things like: if you bought a house for $ 54,000 in 1973, then it would cost $262,000 in 2008 dollars. Check it out.

A Brief Look at Ideas Worth Spreading

I enjoy the TED website, whose tag-line is "ideas worth spreading." They host one of the "cool" conferences for thinkers and doers. Recently, they opened their content vault and offer a wide range of free videos on technology, business, science, culture, and global issues.

This video is of a presentation by Jill Bolte Taylor. She shares a powerful story about how our brains define us and connect us to the world and to one another.

Jill is a neuro-scientist who had an opportunity few brain scientists would wish for: One morning, she realized she was having a massive stroke. As it happened -- as she felt her brain functions slip away one by one, speech, movement, understanding -- she studied and remembered every moment.

I found it interesting and inspiring, and hope you do too.

Market Commentary from April 18th

This week I'm going to use an optical illusion to help make a point about the publics' perception of what is happening in the markets.

Instead of Bulls and Bears, perhaps the market is like a frog or a horse. 

It simply depends on your perspective. 

As you look at the picture on the right, you'll see a frog sitting on the edge of a pond. 

However, if you turn the picture (or your head), you'll see a horse that is poking his head out of the stable.

Things are not always as they seem on first glance.

Markets At The Crossroads:  Decision Time:

As it stands, the Markets have been acting quite well.  They continue to rally, even when there is bad news in the marketplace.  From a technical point of view, though, we are at a crossroads. 

I prepared the following chart to show the arguments for both the bull and the bear cases.  It is a daily chart of the S&P 500.  The market's downtrend line, since October, is marked in blue.  The red horizontal line shows that this is the fourth time we've hit this area since late January.

The question is whether we go up or down from here.

Like a serial cliff-hanger, we'll have to tune-in next week to see if anything gets resolved.

Is You Is ... Or Is You Ain't, My Baby?

During the weekend, I visited an art fair in downtown Fort Worth.  While walking through the exhibits, I came upon the performance stage and stopped to listen to a jazz and swing band play.  One of the songs stuck in my head.  It was originally done by Louis Jordan, and it is called  "Is You Is ... Or Is You Ain't?"

While thinking about how the Markets are at a crossroads, I hear the lyrics ask:

Is you is ... or is you ain't, my baby?
The way you're acting lately makes me doubt ...

When I got home, I kept singing the song.  A quick search found various versions, including this one.  From the Tom & Jerry cartoon.  Very nicely done.

That brought back memories of old TV Shows: Mister Ed, Courtship of Eddie's Father, Speed Racer, etc.  Well, I found a site that has over 5,000 TV tunes.  Click here to visit Television Tunes and bring back some memories.

Weekly Market Commentary from 4/11/08

This was a quiet week in the market. Until Friday, each day was a narrow range day with very little volume. For the first time in a while there seemed to be very little external influence on the market. Governments weren't overtly buying or selling to push an agenda. Giant funds weren't trying desperately to hedge positions or cover margin calls. Instead, it was just the normal fear and greed of market participants. It was the dance of the undecided.

There were attempts to move the market down, only to have the market close relatively unchanged. There also were moves to push the markets higher, only to come back down and close, again, relatively unchanged. To me, though, that was good news. All-in-all I thought it was a constructive week of base-building that will serve the market well in the weeks ahead.

On Thursday, I told one our portfolio managers that it would be very easy to see some selling so close to important overhead and down-trend resistance. Also I expected a re-test of the 50-day moving average.  From a chartist's standpoint, these are common-sense "Technical Analysis 101" comments and expectations.

Friday was interesting. It is earnings season and GE announced results that fell far short of expectations.  The markets sold off pretty hard.  And now investors are twitchy again.  Everywhere I turned pundits blamed the sell-off on GE and were predicting the next bear leg down.

This is why they say that "markets climb a wall of worry." Experienced traders know that it is not the news that matters, it is the reaction to the news.  In my opinion, GE simply stirred-up emotions that were already there.  A little selling and over-reaction were expected, even if GE's announcement wasn't.

A Sense of Security

Microsoft came out with a bunch of security updates this week. I thought I'd share a few of the tools I use to help keep our computers running smoothly and safely.

The first is a free tool that doesn't require any download or installation. It is called the Secunia Software Inspector, and it:

• Detects insecure versions of applications installed;
• Verifies that all Microsoft patches are applied; and
• Assists you in updating your system and applications.

It only takes a few seconds to run and works reliably and well. So, click this link to check your system.

Another tool I've really liked is called SuperAdBlocker. Yes it is a silly name; but it is a really nice product that stops ads and blocks spyware.  This is a great addition because it protects against things your antivirus and firewall don't.  It works with Internet Explorer and Firerfox.  And I've been impressed with the support and responsiveness of the company.  More importantly, I've been happy with what it is like to browse without a lot of junk this prevents from slowing you down or cluttering your screen. 

Two other tools worth checking are WindowsWasher and PCTools Spyware Doctor. 

A Post on "Choices"

I got this in an e-mail from a friend.  It is a variation of several I've seen before (Snopes discusses it here).  But it made me think; and it made me feel.  So I thought I'd pass it along. - HMG

What would you do?.... you make the choice. Don't look for a punch line, there isn't one. Read it anyway. My question is: Would you have made the same choice?

At a fund-raising dinner for a school that serves children with learning disabilities, the father of one of the students delivered a speech that would never be forgotten by all who attended. After extolling the school and its dedicated staff, he offered a question:

'When not interfered with by outside influences, everything nature does, is done with perfection. Yet my son, Shay, cannot learn things as other children do. He cannot understand things as other children do. Where is the natural order of things in my son?'

The audience was stilled by the query.

The father continued. 'I believe that when a child like Shay, who was mentally and physically disabled comes into the world, an opportunity to realize true human nature presents itself, and it comes in the way other people treat that child.'

Then he told the following story:

Shay and I had walked past a park where some boys Shay knew were playing baseball. Shay asked, 'Do you think they'll let me play?' I knew that most of the boys would not want someone like Shay on their team, but as a father I also understood that if my son were allowed to play, it would give him a much-needed sense of belonging and some confidence to be accepted by others in spite of his handicaps.

I approached one of the boys on the field and asked (not expecting much) if Shay could play. The boy looked around for guidance and said, 'We're losing by six runs and the game is in the eighth inning. I guess he can be on our team and we'll try to put him in to bat in the ninth inning.'

Shay struggled over to the team's bench and, with a broad smile, put on a team shirt. I watched with a small tear in my eye and warmth in my heart. The boys saw my joy at my son being accepted.

In the bottom of the eighth inning, Shay's team scored a few runs but was still behind by three.

In the top of the ninth inning, Shay put on a glove and played in the right field. Even though no hits came his way, he was obviously ecstatic just to be in the game and on the field, grinning from ear to ear as I waved to him from the stands.

In the bottom of the ninth inning, Shay's team scored again.

Now, with two outs and the bases loaded, the potential winning run was on base and Shay was scheduled to be next at bat.

At this juncture, do they let Shay bat and give away their chance to win the game?

Surprisingly, Shay was given the bat. Everyone knew that a hit was all but impossible because Shay didn't even know how to hold the bat properly, much less connect with the ball.

However, as Shay stepped up to the plate, the pitcher, recognizing that the other team was putting winning aside for this moment in Shay's life, moved in a few steps to lob the ball in softly so Shay could at least make contact.

The first pitch came and Shay swung clumsily and missed.

The pitcher again took a few steps forward to toss the ball softly towards Shay.

As the pitch came in, Shay swung at the ball and hit a slow ground ball right back to the pitcher.

The game would now be over.

The pitcher picked up the soft grounder and could have easily thrown the ball to the first baseman.

Shay would have been out and that would have been the end of the game.

Instead, the pitcher threw the ball right over the first baseman's head, out of reach of all team mates.

Everyone from the stands and both teams started yelling, 'Shay, run to first!

Run to first!'

Never in his life had Shay ever run that far, but he made it to first base.

He scampered down the baseline, wide-eyed and startled.

Everyone yelled, 'Run to second, run to second!'

Catching his breath, Shay awkwardly ran towards second, gleaming and struggling to make it to the base.

B y the time Shay rounded towards second base, the right fielder had the ball . the smallest guy on their team who now had his first chance to be the hero for his team.

He could have thrown the ball to the second-baseman for the tag, but he understood the pitcher's intentions so he, too, intentionally threw the ball high and far over the third-baseman's head.

Shay ran toward third base deliriously as the runners ahead of him circled the bases toward home.

All were screaming, 'Shay, Shay, Shay, all the Way Shay'

Shay reached third base because the opposing shortstop ran to help him by turning him in the direction of third base, and shouted, 'Run to third!

Shay, run to third!'

As Shay rounded third, the boys from both teams, and the spectators, were on their feet screaming, 'Shay, run home! Run home!'

Shay ran to home, stepped on the plate, and was cheered as the hero who hit the grand slam and won the game for his team.

'That day', said the father softly with tears now rolling down his face, 'the boys from both teams helped bring a piece of true love and humanity into this world'.

Shay didn't make it to another summer. He died that winter, having never forgotten being the hero and making me so happy, and coming home and seeing his Mother tearfully embrace her little hero of the day!

AND NOW A LITTLE FOOT NOTE TO THIS STORY:

A wise man once said every society is judged by how it treats it's least fortunate amongst them.

Thousands of jokes through the e-mail without a second thought, but when it comes to sending messages about life choices, people hesitate.

The crude, vulgar, and often obscene pass freely through cyberspace, but public discussion about decency is too often suppressed in our schools and workplaces.

If you're thinking about forwarding this message, chances are that you're probably sorting out the people in your address book who aren't the 'appropriate' ones to receive this type of message Well, the person who sent you this believes that we all can make a difference.

We all have thousands of opportunities every single day to help realize the 'natural order of things.'

So many seemingly trivial interactions between two people present us with a choice:

Do we pass along a little spark of love and humanity or do we pass up those opportunities and leave the world a little bit colder in the process?

The Greater Fool

I admit, I fell for the flying penguins story this week.

Here is a link is to a fun list of the 100 Best April Fool's Hoaxes. I enjoyed reading this and hope you do to.

Also check-out Snopes, which is an Urban Legend reference site.  And Truemors, which is a strangely  captivating site where people  post rumors.

Market Commentary from April 4th

A Wild Ride:

"Six 180-degree turns. Twelve drops. Sixteen changes of direction. Twenty-seven elevation changes. Those stats describe Coney Island's famous vertigo-inducing Cyclone roller coaster. But it could just as easily describe the hair-raising ride that Wall Street investors have been on this year."

I don't normally turn to USAToday for trading information, but they had a clever piece, with some interesting market stats, worth sharing.

Q1 brought some pretty frightening results.

• According to The Economist, the American market was down 9.9%, Europe dropped 9.2%, the MSCI World index was down 9.5%, and emerging markets lost 11.3%;
• March was the 5th month in a row that the S&P declined.
• Bespoke reports that the average stock in the S&P 500 is down 31 % from it's 52-week high;
• employers cut jobs for the third month in a row, as unempolyment becomes a bigger problem; and
• the Government announced it was undertaking a sweeping overhaul of the country's financial system.

The next chart is a simple daily view of the Dow.  Despite recent events, it shows that we're back up to resistance again.
Only, this time, the VIX is showing very little investor fear - and that scares me.  Tickersense had this chart.
However, since this comes so soon after mass panic, "lack of fear" may actually be a sign of strength.  That's kind of funny, a contrary indication of a contrary indicator.  Even Freud admits that sometimes a "cigar is just a cigar" ... So why is it so hard to interpret subsiding fear and rising prices as a positive?