Bankruptcy lawyers in Texas have been busy recently. Past cycles have shown a surge of Chapter 11 Bankruptcy Reorganizations as early indicator of the end of tough economic times.
Makes sense though; Reorganization happens when someone wants to preserve an asset, but credit is tight.
So, it is just a data point, but if it was a football game, my guess is that we'd be in the third quarter. What do you think?
Is The Bear Still Lurking?
Great market action for bulls recently. If this has been a head-fake, it certainly was a convincing one.
The major US Equity Indices are all moving up to their 2008 highs – into their 200-day moving averages.
There has been a prolonged rally off the March lows, so you are going to hear lots of bearish predictors. It makes sense from the standpoint of price, time and logic.
Right?
For example:
But, you have to trade what the market brings you. And the market has digested bad news well recently. More importantly, we know that markets don’t have to trade logically. So keep your eyes open and respond intelligently.
Here are some of the things I read this week.
Hulbert sees several bullish indicators; here are two: Fosback’s Recession Buy Indicator and
Best Market-Timers Now Bullish.
Is The Bear Still Lurking?
Great market action for bulls recently. If this has been a head-fake, it certainly was a convincing one.
The major US Equity Indices are all moving up to their 2008 highs – into their 200-day moving averages.
There has been a prolonged rally off the March lows, so you are going to hear lots of bearish predictors. It makes sense from the standpoint of price, time and logic.
Right?
For example:
But, you have to trade what the market brings you. And the market has digested bad news well recently. More importantly, we know that markets don’t have to trade logically. So keep your eyes open and respond intelligently.
Here are some of the things I read this week.
Hulbert sees several bullish indicators; here are two: Fosback’s Recession Buy Indicator and
Best Market-Timers Now Bullish.
If it wasn’t so close to the truth, this would be funny.
At least someone wants US Dollars.
In a cautionary tale about what happens when
inflation gets out of control, there were riots in Somalia recently over rising
costs, counterfeit money and local traders refusing to accept local notes (demanding
US dollars instead).
While the scale is different, human responses to fear and greed
are universal.
Whack! What Happened to Real Estate?
Fear hits a little closer to home. Recently, the US housing market has taken a pretty big hit. Apparently, California has been hit harder than most other parts of the country. Here is an LA Times article making that abundantly clear.
It made me check the value of my house. Here is a site that makes that easy; it is called Zillow. Certainly worth the click.
All this led me to an interesting photo essay about crashes, stagflation and bear markets from US News World Report.
This photo shows a bankrupt investor attempting to sell his luxury roadster for $100 cash on the streets of New York, October 30, 1929.
Hopefully, by listening to the whispers of history, we won’t have to repeat it.
The Bad News:
The Good News:
Somehow the market is finding a way to rise. It is often tough to remember, yet price is the primary indicator; and it is going up. That is a good sign, especially during periods of apparent bad news.
This was another solid week for the major Indices, with virtually every index taking out their respective downtrend-lines for the week. Barron’s called it the best finish of 2008.
The S&P 500 finally closed above the 1400 level for the first time since early January. If it holds, that upside breakout moved the S&P 500 out of a three-month trading range into an intermediate recovery. The next major test likely will take place at its 200-day moving average and a trendline drawn over its October/December highs.
Here is a similar chart of the NASDAQ.
Please answer the poll below.
The Bad News:
The Good News:
Somehow the market is finding a way to rise. It is often tough to remember, yet price is the primary indicator; and it is going up. That is a good sign, especially during periods of apparent bad news.
This was another solid week for the major Indices, with virtually every index taking out their respective downtrend-lines for the week. Barron’s called it the best finish of 2008.
The S&P 500 finally closed above the 1400 level for the first time since early January. If it holds, that upside breakout moved the S&P 500 out of a three-month trading range into an intermediate recovery. The next major test likely will take place at its 200-day moving average and a trendline drawn over its October/December highs.
Here is a similar chart of the NASDAQ.
Please answer the poll below.
Funny thing happened to me in Canada this week as I got off the plane and exchanged some money. I gave them $140 US – and they gave me $126 Canadian. Huh? That’s Loonie.
As the Fed hints it may stop easing and the dollar may be bottoming, an article on Bloomberg notes that "futures traders are betting for the first time since December 2005 that the dollar will gain against the euro."
Funny thing happened to me in Canada this week as I got off the plane and exchanged some money. I gave them $140 US – and they gave me $126 Canadian. Huh? That’s Loonie.
As the Fed hints it may stop easing and the dollar may be bottoming, an article on Bloomberg notes that "futures traders are betting for the first time since December 2005 that the dollar will gain against the euro."
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.