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Liquidation effect can weigh on market for 3 days. Today’s market drop forces liquidation for traders overextended in margin accounts. They have 3 days to cover, meaning to sell. Many will wait to see if there is a bounce before selling at these levels. Professional buyers know this. They will wait to squeeze the desparate – 3 days.
Watch for S&P 1125 range. If breaks, more downward pressure. Few portfolio managers are going to put any down stocks on their books before quarter end. Seven days to go. A lot of damage can happen in the next week. WATCH THE TRADING RANGE.
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Is the GM deals part of Obama job act? GM moving electric car production and devopment to Shanghai. GM still owes govt for bailout. Govt. converted debt to GM stocks, still owns 26%. Govt trying to recoup by selling GM stock to you, the taxpayer. GM stock down 30% since its IPO. GM workers get $5K signing bonus for agreement to new union contract. Adds addtl $65K to early retirments. Where does the taxypayer stand in this? At bottom of totem pole, getting squashed.
GM moves to China, after the AFL-CIO tries to stop Boeing from opening a plant in S. Carolina. Unions are making our home base less competitive, and handing it over to foreigners.
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Disruptions are percolating around the world and in the U.S. Some of these can have economic impacts on certain countries, certain industries, and could trickle down to the average U.S. consumer if they escalate. These headwinds all have overlapping forces even though not obviously directly connected.
This issue of Edgy Economics maps the social, political, and economic interconnectivity of the commodity bubble, QE2, oil, Mid-East disruptions, and union battles. Edgy explores where to find information that might signal the economic effects on the U.S. market. The point is to look at weighing and timing the next couple months.
Investing today requires active engagement and broadened range of considerations for successful timing.
Edgy Economics Updates identifies behavioral and structural forces moving markets, drivers beyond common technical charting. The investors’ newsletter is published by an economic futurist, who discounts media noise and biased analysis to support business intelligence and trading strategies.
For more information, contact www.edgyeconomics.com.
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This week, the market moved up in response to the election results and the government’s aggressive attempts to stimulate the economy by targeting the market, begging you to BUY S&P STOCKS.
On Tuesday, the market, having already priced in the election results, did not sell off as expected. An indication traders did not believe the market is overbought or overpriced.
On Wednesday, the Federal Reserve announced the details of the quantitative easing, which were in line with expectations. Ben Bernanke was very clear that the Fed would focus specifically on moving the equities market. He acknowledged the immediate impact the market has on companies and individuals. Again, the market did not sell off as expected on the QE news (the “sell on the news” effect). Instead, the S&P held and closed at 1197, a critical level the professional investors wanted to see the market hold before buying.
Thursday, White House spokesperson, Robert Gibbs said the President is willing to discuss extending the Bush tax cuts to all income levels. Investors took this as a signal that the White house was possibly moving center.
Thursday afternoon, the Fed announced that strong banks meeting capital requirements may be allowed to raise dividends soon. This has been a weight on the financial sector. Banking stocks popped on the news, with huge volume of money flowing into the sector. The XLF index fund, Goldman Sachs and JP Morgan broke resistance levels to the up side.
Which sectors moved on this news: materials, financials, industrials, energy, IT, telecom, consumer stables, consumer discretionary, and utilities, healthcare. (In that order – signals which sectors traders believe will benefit most)
Where can the market go? How does this shift in D.C. change the forces effecting specific sectors?
The latest issue of Edgy Economics Update looks at the changes to the weight of uncertainty, which issues are still on the table, and how the current changes in DC impact specific industries.
Edgy Economics Updates is a bi-weekly newsletter published by an economic futurist, who looks at the primary forces and factors driving the equities markets. For more information, visit www.edgyeconomics.com.
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This week, the market moved up in response to the election results and the government’s aggressive attempts to stimulate the economy by targeting the market, begging you to BUY S&P STOCKS.
On Tuesday, the market, having already priced in the election results, did not sell off as expected. An indication traders did not believe the market is overbought or overpriced.
On Wednesday, the Federal Reserve announced the details of the quantitative easing, which were in line with expectations. Ben Bernanke was very clear that the Fed would focus specifically on moving the equities market. He acknowledged the immediate impact the market has on companies and individuals. Again, the market did not sell off as expected on the QE news (the “sell on the news” effect). Instead, the S&P held and closed at 1197, a critical level the professional investors wanted to see the market hold before buying.
Thursday, White House spokesperson, Robert Gibbs said the President is willing to discuss extending the Bush tax cuts to all income levels. Investors took this as a signal that the White house was possibly moving center.
Thursday afternoon, the Fed announced that strong banks meeting capital requirements may be allowed to raise dividends soon. This has been a weight on the financial sector. Banking stocks popped on the news, with huge volume of money flowing into the sector. The XLF index fund, Goldman Sachs and JP Morgan broke resistance levels to the up side.
Which sectors moved on this news: materials, financials, industrials, energy, IT, telecom, consumer stables, consumer discretionary, and utilities, healthcare. (In that order – signals which sectors traders believe will benefit most)
Where can the market go? How does this shift in D.C. change the forces effecting specific sectors?
The latest issue of Edgy Economics Update looks at the changes to the weight of uncertainty, which issues are still on the table, and how the current changes in DC impact specific industries.
Edgy Economics Updates is a bi-weekly newsletter published by an economic futurist, who looks at the primary forces and factors driving the equities markets. For more information, visit www.edgyeconomics.com.
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MARKET UPDATE: Market response to election – priced in, waiting for Fed. Reserve meeting this afternoon. Expecting min. $500 B stimulus through treasury purchases. If they go over, expect a bounce in material stocks, commodities, beneficiaries of inflation and higher prices.
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MARKET UPDATE: Lousy earnings killed. SIGNAL ALERT: High Risk Mkt. Next week earnings kick off. We have an over blown market with earnings season ahead, followed by an election, and a market that went up without retail traders. Equinix EQIX down 30% on lower than expected earnings. Cloud computing stocks getting hit hard from news. This could be an indication of how hard the market will react to earnings news, particularly stocks that lead the rally.
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AIG Govt Exit Plan Nothing But Political PR. Analysis follows. Nothing But Speculative Trading.
This is a response to questions regarding the AIG news about the government’s exit plan. The following summarizes the exit plan strategy, which analysts weigh regarding any AIG stock potential.
• The announcement is an agreement in principal to start exiting AIG. The announcement is a PR political statement.
• The government will start converting their preferred shares to common shares AFTER the NY Federal Reserve is paid back, starting Q1 ‘2011.
• After the stock is converted, AIG plans to go on a road show to reintroduce the company to the institutional investors. Currently, few constitutional investors in the stock since the government owns 92%.
• Only after improving interest, a $2.5Billion IPO will be offered to start selling off shares of AIG stock.
• The treasuring will continue to sell off 1.65 billion shares over time. THIS WILL PUT SELLING PRESSURE ON THE STOCK UNTIL THE GOVERNMENT IS OUT.
• The government needs $70-80B from stock sales to break even. No analysts expects that to happen. So, the government will likely take a loss. How much will depend on how well they can boost the stock. The company needs a $80billion market cap for that to happen.
• AIG expects earnings of $6-8B next year. The company had sold off most of its largest revenue generating divisions to raise money over the last two years. The divisions left are stable, but limited and specialized.
• AIG’s CEO Benmosche said he will stay until the government is completely out, which he expects to take years.
• The exit strategy will put continuous selling pressure on the stock, and take years to complete.
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The physical book should survive for another 50 years, according to Daniel Clancy, Engineering Director of Google Book Search Project. After looking at the enthusiasm of the latest e-book devices, the techies’ prognosis of the imminent death of the physical book seemed more probable. But the love affair with the physical book, its power to forge a personal bond with its readers, enhance its environment, and act as a comforting tool does not transfer to electronic books. So, I am back to believing that our beloved book will be protected — for now, at least until those who have enjoyed the pleasure of handling a physical book are themselves dead and gone.
The generation that has little exposure to the book to establish that bond, the generation that will have little appreciation for the physical book, will create that baseline, which has started. They are the children being born today and the preschoolers who are now getting electronic devices in place of books. The transition is in place. The evolutionary process will be a constant replacement. Where will the traditional book readers be in 50 years? The youngest, about 60 years old, hoping their family will some day appreciate inheriting their antiquated collection of dusty, smelly books. UNLESS, those who impact childrens’ exposure — the teachers, parents, librarians — do not take the easy step and insist the book will be saved from distinction.
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