Blast-Off

You can not afford to be out of the stock market – not even for one single day. The market is going to start a rally very soon and I expect it to carry the DOW to over 11,000. Hop on board and enjoy the ride.

Plump Juicy and Tasty

Tasty was the market this week as it went up for 5 days in a row- something it has not done in all of 2008. I hope this is the beginning of the mother of all bear market rallies. The market has gone down so far and so fast in the preceding 11 months it is due for a major rally. Historically, December has had the largest returns and I expect that to continue in 08.

I have added a couple more buys to the list and now the boat is fully loaded so no more passengers can get on unless a couple get off. So for now we will see where the market takes us.


Ticker........ Buy Date...........Price

UVT .................11/14...................$15.50
QLD ..................11/14 ..................$29.00
UUPIX ..............11/14 .................$7.40
AMD …………….11/28.. ………..$3.28
UYG ………………11/28………… $6.16

Long Dong Ding Dong

The market must not know that I went all in last week; otherwise it would have gone up. I guess I need to send Mr. Market a singing telegram to let him know I have been waiting over 6 months to get long.

Patiently waiting, watching day-after-day as the market continued to fall. At last I saw my chance, as the market made a double bottom and there was blood in the streets I decided to go all in and even leverage up with some 2:1 funds. I was quickly rewarded by the market as it fell another 15% in a week- making my losses 30% with the leverage. No risk no reward. Nothing to do now but pray to the market Gods for that year end rally we so desperately need.

It’s Go Time

The economy is terrible, a deep recession has already started and stocks have been in a bear market for over a year. It’s a perfect storm for a bear market rally. The following stocks have been purchased and I expect at least a 50% gain from them in the coming months.


Ticker........ Buy Date........ ..Price
UVT .................11/14................... $15.50
QLD ..................11/14 ..................$29.00
UUPIX ..............11/14 .................$7.40

Slapping Punks

Slapping punks, smacking losers, and knocking out chumps. That’s what the market was all about in October. Not kind to anyone.

Some of the statistics for the month of October as compiled by MarketWatch:
In spite of the big double-digit gain this week, mostly on one-day, the Dow was down 14% for the month, the worst October since 1989.
October had the most down days in a month since 1973, in the 1973-74 bear market.
It was the most volatile month since 1929.
In one 8-day period early in the month the Dow lost 2,396 points.
The MSCI Emerging Markets Index lost 30% for the month.
Gold lost 18%, its biggest one-month decline sine 1983.

The fist week of the month is usually the strongest part of the investing cycle. My recommendation is to buy QLD at $35 on Monday morning and watch it run up to $45 later in the week at sell for a quick 28% profit.

$$$$$$$ HAPPY INVESTING $$$$$$$

Wild Week

In a Bear Market “Nobody get out alive.”

So if you have followed my advice since March you are in cash and have a nice big watermelon smile on your face. If not, and you are still in the market then you are either looking for a second job to make up for the losses and/or are on welfare (my condolences).

The markets pretty much had their worst week in history, as the chart of the Dow below indicates. Markets are now where they were 10 years ago. So that means if you are a buy and hold investor you officially have made 0% on your money and are in the red if you count in inflation.

The good news is there is a gift horse buying opportunity coming in the next couple weeks. Follow my picks and you will be making triple digit gains (that’s over 100% for those of you who attended public schools). How can you make 100% in the stock market? Buying leverage and on margin – only recommended after the market is at 10 year lows, as it is now. Follow my advice and you will soon be taking up new hobbies like yachting, squash, and aggressive spending. You may even have enough cash to replace your above ground pool with a real one or buy your hideous teenage daughter those braces she needs so she can finally get a date to the prom. As soon as this market is ripe for the picking I’ll post those picks and then you can watch those profits flow.

Market Down 10% This Week

That would be a big number for a year’s worth of losses, but it’s gigantic for one week. The market got its wish with the $700 billion dollar government rescue package but that was not even enough to stop the endless selling pressure.

The real kicker in this market is housing prices which continue to fall on a monthly basis. In addition to lower home prices the unemployment rates are rising along with credit card and mortgage delinquencies. I think both will continue to get worse and companies start laying off large numbers of employees to help reduce overhead cost.

The market will continue to stay weak and we still have not seen the ultimate lows in 2008. The good news is I expect we will put in the low for the year in the next 2-6 weeks and that will be followed by a powerful rally heading into 2009.

Uncle Sucker

A bail out package of $700 Billion will cost the average American family over $10,000.

Is this fair? Consider the pay package of the new Washington Mutual CEO, who has been on the job for 3 weeks.

“NEW YORK (CNNMoney.com) -- Washington Mutual Chief Executive Alan Fishman could walk away with more than $18 million in salary, bonuses and severance after less than three weeks on the job, according to the terms of his employment agreement.”

Wow, the stock is worthless. WAMU is bankrupt and stockholders all got burned. An $18 million dollar payday for 3 weeks on the job? Is it any wonder that polls overwhelmingly show the average taxpayer does not support the current wall street bailout package? Washington's bailout plan is apparently in trouble. With lawmakers saying their e-mails and phone calls from constituents back home are running as much as 100 to 1 against the bailout, it may be difficult for them to vote for it and then go home to run for re-election. But something has to be done before they break for the election recess this weekend.

One interesting note on the economy is new home prices plunged 11.8%, not in a year, but from July's level. That is going to lead to more defaults and foreclosures, which were already soaring.

The only question is which banks will be going out next? Wachovia is the next big bank rumored to be teetering on the edge.

What a Week!

The stock market was down 8% from Monday to Wednesday and up 8% from Thursday to Friday to finish the week flat.

This is a period in the financial markets you will be telling your grandchildren about, the closest the U.S. financial system has come to meltdown since 1931, and the first time in its history the U.S.A. moved so far and abruptly from democracy and a free market system toward socialism, government control of markets, and nationalization of its financial institutions.

My current recommendation is to take 50% of your portfolio and burry it in the backyard and take the other 50% and hide it under a mattress in the upstairs bedroom.

Waiting for Godot

Waiting for Godot is a play by Samuel Beckett, in which two characters wait for someone named Godot, who never arrives.

Waiting for a market to bottom feel a lot like waiting for Godot. You are always wondering when he will show up. I think we are closer to the end of the play then the beginning and patience is our friend. The market will bottom and there will be a great buying opportunity but we must wait for a couple of things to take place. First and foremost the market must make a new bottom. This mean the S&P must break down below 1,200. Second, we must see a reading of over 30 on the VIX (Fear) Index. As the chart above shows we are currently at 25 so 5 more points up and we have a green light to be a buyer.

Sit and Do Nothing

That’s my current recommendation – better to be in cash earning 2-3% then watching the market go down day after day. This market sure looks like it wants to continue falling. Looking at the below chart and see the pattern of lower highs and lower lows. I think the current market will bottom sometime in October – November and then it will be time to put your cash to work – but for now it’s all about patience.

Here Comes September

September has been, on average, the worst performing month for the stock market with an average return of negative 1.13 percent since the Dow inception in 1896. This market sure feels like it is due for a major correction of somewhere between 10%-20% as we head into the last part of the year. I think the market will bottom for the year around the October – November time frame.

Georgia's Integrity Bank is Closed by State Regulators

Integrity's closure is the 10th bank failure so far this year. The bank had $1.1 billion in total assets and $974 million in total deposits as of June 30, the FDIC said. The bank had $1.1 billion in total assets and $974.0 million in total deposits.

The Next Crisis

It’s only a matter of time before the next shoe drops and you will start hearing about the massive defaults in consumer credit card payments. The stock market has not produced any wealth in the last 8 years. Home prices have come down sharply and will continue to fall for the next couple of years. The only place left to turn for the average American to maintain the world’s highest standard of living is their credit card.

Unfortunately, credit cards are the highest priced debt on the menu. The average balance and delinquency rate has been rising steadily in 2008. As the credit crunch moves from the 3rd to the 4th inning banks will start to tighten credit standards and raise the interest rate on the current credit card balances. None of this will be good for the economy or housing prices. It is going to take years to unwind the credit mess.

Time to Buy Gold?

Gold has come down faster than the market has risen in the last month. The 52 week high for gold is just a little over $1,000 an ounce. It is now currently trading at around $770 an ounce. That’s down over 23% in a little more than a couple months. No matter where the long term trend for gold is headed it should at least see a short term bounce up to the $850 an ounce level.

The Dollar Continues to Rally

The dollar is at a five month high and it is causing the US market to celebrate by having a summer rally that is also fueled by the falling price of oil.




Oil is now under $116 a barrel, and down 21% from its peak at $147 a barrel. It was only a couple months ago that many were forecasting oil at $200 a barrel. It has gone down so far so fast that I would not be surprised to see it bounce back up to at least the $120 mark before heading back down to under $100 a barrel.

Market ends little changed on the week

What an exciting week in the market. Triple digits changes on both the up and down side were the norm. Stocks ending one of the most volatile weeks of the year little changed as economic concerns resurfaced amid rising oil prices, rising unemployment, and a huge quarterly loss at General Motors Corp.

Nonfarm payrolls fell by 51,000 in July, the seventh straight month in July, while the unemployment rate jumped to 5.7%, a four-year high, the Labor Department reported Friday. Since December, 463,000 jobs have been lost, the strongest signal that the economy is in a recession.

The investing climate continues to be weak and the smart money is staying on the sidelines waiting for the perfect moment to pounce when stocks are in freefall. It will be the strong hands taking money from the weak hands.

Another Bank Bites the Dust

First Priority Bank was shut down by regulators on Friday, making the Florida lender the eighth bank failure in the U.S. so far this year.

SunTrust agreed to take on the deposits of First Priority, the Federal Deposit Insurance Corporation said in a statement late Friday. The six branches of First Priority will reopen on Monday as branches of SunTrust, it added.

If this is anything like the last banking crisis in the 90s we have 8 banks down and about 992 more to go.

Two More Banks Fail This Week

Two more banks were shut down by federal regulators late Friday, who sold the banks' deposits to Mutual of Omaha Bank. It brings to seven the number of bank failures so far this year. The Federal Deposit Insurance Corp. said it was appointed receiver of First National Bank of Nevada, based in Reno, Nev., and First Heritage Bank of Newport Beach, Calif. - both units of First National Bank Holding Co., of Scottsdale, Ariz.

Back in the late 80s and early 90s there were over 1,000 banks that failed. I think that we will see at least that amount in the coming 1-2 years before the current credit crunch has played out.

For investors there’s nothing more important than recognizing that business, the economy, and markets always move in cycles, not endless straight lines. Recessions follow boom times, bear markets follow bull markets, bull markets follow bear markets – every time. This current bear market will not likely play itself out until sometime in 2010. The good news is there will be opportunities to capitalize on bear market rallies from now until then.

For now keep your cash on the sideline and wait for a massive panic sell-off before committing any money to the market. Investing in the current market can be compared to a job of an airline pilot - Months and months of boredom followed by shear moment of terror.

Scary Chart

Look at a long term chart of the S&P500 - it made a double top in 2000 and 2007. If history repeats its self, it will bottom around 750 in 2010. That’s around 40% lower than where it is right now. No market goes straight up or straight down so it’s possible to make money in down markets on counter trend rallies – but it is not easy. The scenario is similar to what happened in 2000 when the techs lead the market into bear territory after coming out of a huge bubble. This time it is housing and the credit markets leading the bear after the huge real estate bubble from 2003-2006.

DOW FLAT FOR THE WEEK

I expected the market to be flat to up this week but it actually declined a modest .5%. I still think we have not seen a bottom yet and we need to have more selling pressure along with some more investor pain. One indicator I’m watching to trigger a buy signal is the VIX. The VIX is an indicator of investor pessimism. The higher it goes the more pessimists the average investors are. Anytime in the past year when the VIX has reached over 30 a big multi week rally has ensued.

It’s a good time to get your shopping list together. My pickS will be 2:1 leveraged ETFs and mutual funds that will soar twice as much as the market when we get a snap back rally.

UYG is the financial index that has been beaten down
QLD is the NASDAQ and technology market
UGPSX is a China fund that has been crushed in this global bear market.

All these will be excellent buys and I expect they will go up at least 25% in the short term once the bottom is in place .

MARKETS GET ROCKED

Dow industrials, Nasdaq down about 4% this week; S&P off 3%. I expected this week to be flat to down and my expectations were met. The market was down almost every day this week in the face of higher oil and a weakening economy. Dow's off about 20% from last October when the sell off first started.

I still do not think we have seen a bottom, as bad as the market has been there is still not enough bearishness in the market to start any significant rally. I don’t believe we will see a bottom in the market until we get a few more investors to throw in the towel as the market is hitting fresh lows for 2008 – that would put the S&P 500 around 1250 – or about 3-4 % lower than where it now stands.

I think this market will take one step forward for every two back so we may see a relief rally this week going into the 4th of July holiday . If the market does gain – I don’t think it will be much and is not worth the risk of putting any new capital in at this point. Be patient and wait for an entry point below S&P 1250.

Dow down 3.8% on week, closes below 12K for first time since March

U.S. indexes fall sharply as oil prices rise and financials stagger. The market continued to move down this week. There appears to be too much headwind for it to move higher. Selling pressure has been present all week. Seldom does the market rise the week following options expiration week.

I expect next week to be flat or down and the market to make fresh lows for 2008 before we see any signs of a relief rally.

Oil in a Bubble?

This chart compares the price percent change over time for the NASDAQ, homebuilders and Oil. We know with 20:20 hindsight that the Nasdaq and homebuilder stocks were in a bubble that popped with a huge bang. Will oil suffer the same fate allowing soccer moms to shuttle their kids to and from school in big SUVs again? I think not but I better on oil continuing to go higher and higher is a dangerous game.

When will the bubble burst ... or will it.Isaac Newton On Oil...by Alexander Green, Chairman, Investment UInvestment Director, The Oxford ClubDear Reader,"Is Oil Becoming the 'Mother of All Bubbles.'"Personally, I don't think it is. Even though oil has since hit several new records, some bubbles are just hard to beat.In 1623, according to Charles Mackay, author of "Extraordinary Popular Delusions and the Madness of Crowds," a single tulip bulb changed hands for a thousand Dutch florins. (The average annual income in Amsterdam was 150 florins at the time.) Within a few years, tulip bulbs were traded on numerous Dutch exchanges. Some traders even sold tulip bulbs they had just planted or those they only intended to plant. (Tulip futures contracts, in other words.)We all know how the famous Dutch tulip bulb mania ended. Fortunes were lost. Thousands of Dutchmen ended up financially ruined.In 1720, an English firm - the South Sea Company - was granted a monopoly to trade with South America under a treaty with Spain. The primary product? West Africans sold into slavery. This seemed like such a good deal - even though the company made little actual profit - that shares rose more than ten-fold in a single year.When Sir Isaac Newton was asked how high South Sea stock might eventually go, he replied, "I can calculate the motion of heavenly bodies, but not the madness of people."Good answer. The stock soon collapsed and thousands of investors were wiped out.With these classic bubbles in mind, let's take a dispassionate look at today's oil market.

There is a disconnect when supply goes up, demand goes down and prices continue higher. This often happens in the late stages of a bubble where higher prices are what cause higher prices as people find ways to fool themselves into jumping in just before a crash.

Oil demand in the United States is actually down 2% so far this year. According to the federal Energy Information Administration, high prices and a weak economy will knock down U.S. oil consumption by 90,000 barrels a day in 2008.The situation is similar in other parts of the world. The International Energy Agency (IEA), the Paris-based energy watchdog of the world's richest nations, recently lowered its forecast for world oil demand growth by 460,000 barrels a day. The IEA also sees supply from outside OPEC growing by 815,000 barrels a day, the strongest growth since 2004. (And this was before Saudi Arabia's recent promise to boost production by a million barrels a day.)

Yet despite these decidedly bearish developments for oil, the price is up 51% since January 1 - and more than 700% since trading at $17.45 a barrel in November 2001.Some will argue that this price rise is fully justified. After all, most of the world's major oil deposits have already been discovered. The low-hanging fruit has been picked. The remaining oil supplies are tough to get at - and expensive to recover.Meanwhile, the world's demand for oil keeps rising as more people around the globe - especially in emerging giants like India and China - pound the table for "more juice."This story is essentially correct. But it is just a story - and a thoroughly well-known one at that. It is not a rationale to buy oil today.Especially since high prices always sow the seeds of their own collapse. Consumers start to conserve. Producers search for oil that was once too costly to extract. Supply and demand come back into balance.According to Stephen Schork, President of Schork Group, a firm that advises the Organization of Petroleum Exporting Countries, "There's nothing different between this mania, the dot-com mania, the real estate mania, the Dow Jones mania of the 1920s, the South Sea bubble and the Dutch tulip-bulb mania. History repeats itself over and over and over again."