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JimVanMeerten (62.47)

Prez yells FIRE! in a crowded theater

Recs

15

January 23, 2010 – Comments (8)

Every week after the market closes on Friday I go to Barchart and use the same methodology to gauge what happened to the market in the previous week and plan what my strategy will be for the next week. Things started out fine early in the week but then our Prez dropped a bomb when he demonized the banks and everything on Wall Street. Most of the middle class owns a mutual fund, has an IRA or a securities account and has a bank account and/or loans with a bank. The confidence that the middle class has in these institutions is the key to this economic recovery. The balance and direction of the stock market is tied to the confidence people have in the banks and securities firms. I find it hard that he did not know the consequence of his attacks. Enough of that let's see what kind of damage he did.

Value Line Index -- contains 1700 stocks so it is much broader than the S&P 500 or the very narrow Dow 30 -- 20 DMA is sensitive and signaling caution
1 - The Index was down 3.37% for the week and is down .61% for the month

2 - The Index closed below its 20 day moving average but is still above the 50 and 100 DMA

3 - Barchart's 13 technical indicators signal a short term 60% sell signal but an overall hold

Barchart market momentum -- contains 6000 stocks -- the percentage of stocks trading above their daily moving averages for various time frames -- 20 DMA also signaling caution

1 - 20 DMA -- only 33.90% trading above their DMA -- that's less than half!

2- 50 DMA -- 55.50% trading above their 50 DMA

3 -  100 DMA -- 69.20% trading above their 100 DMA

The ratio of stocks hitting new highs to stocks hitting new lows for various time frames -- above 1.0 bullish, 1.0 neutral, below .99 bearish -- all 3 time frames bearish

1 - 20 day new high/new low ratio -- 484/2347 = .21

2 - 65 day new high/new low ratio -- 272/327 = .83

3 - 100 day new high/ new low ratio -- 208/229 = .91

Summary and strategy: The stock market has taken a blow to the gut given by the person who is supposed to be leading the recovery. He sees the key as new jobs but he is attacking the institutions that can lend the money and raise the capital to make those new jobs possible. This next week I will trim any stocks failing to maintain a price above its 50 DMA but will not be replacing in my portfolios until I see the Value Line Index recover above its 20 DMA. I don't spit into the wind.

Wall Street Survivor results: I took it on the chin this week. The market as measured by the S&P 500 down 2.09% month to date and the leader Anthony Miraydari is up 30.14% so far this month. I'm down in the 7th out of 8th place with a loss of 3.61% month to date -- maybe next week.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com.

 

8 Comments – Post Your Own

#1) On January 23, 2010 at 4:03 PM, Varchild2008 (85.17) wrote:

" I find it hard that he did not know the consequence of his attacks."

Which is why on my blog I ranted and raved in heated emotion labeling this President as a Sociopath.

Look.. He may not be a Sociopath.... But, he continues to do things...fly at the mouth....without any actual thinking of consequences before hand....  Either he doesn't consider the consequences or what you said is true..... The President is intentionally destroying the lives of everyday middle class Americans.

Rush Limbaugh is in the same camp of saying President Obama is intentionally destroying the middle class... 

That is grounds for impeachment if true.....  Congress must put a stop to this President, knock some sense into him if that's possible, or force him kicking and screaming to a business friendly posture...  Otherwise....if all else fails.... It's impeachment and the guy is a Sociopath.

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#2) On January 23, 2010 at 4:38 PM, janis1023 (< 20) wrote:

George Bush destroyed the middle class long before Obama arrived on the scene, and should have been impeached at the very least for the lies that got us into an unjustified war that has broke the bank!  Bush came into office with a surplus, Obama came into office with a catostropic budget deficit and then a collapsing economy heading for a depression. 

 Since you apparently listen to Limbaugh I'm wasting my time pointing this out, but someone has to keep bringing up reality!

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#3) On January 23, 2010 at 4:53 PM, eddietheinvestor (< 20) wrote:

Yes, Obama's comments about the banks definitely hurt the markets.  It's ironic given that Obama har surrounded himself with people like Tim Geithner and Larry Summers, who have been part of the problem.  Obama demonized the banks but ignored Fannie Mae and Freddie Mac, who helped create the housing and credit bubble that destroyed the economy.  Perhaps it's because his right hand man, Rahm Emanuel worked for Freddie Mac and was significantly responsible for the damage to the US economy.  The Democrats have been in control of Congress for four years now, with people like Barney Frank and Christopher Dodd "guiding" the economy into ruin, so it is very sad that Obama defenders (apologists) continue to blame it all on Bush.  Obama even blamed Republican Steve Brown's election on Bush, indicating that people are so angry at Bush that they are voting Republican.  What?  I hope that Obama can succeed and turn away from his failed policies, and I certainly wish him well.  But Obama will never succeed until he works toward success instead of inpotently saying, "I inherited this" and blaming it all on Bush.  Good leaders take responsibility for their actions.  And let's no forget that when Bush took over in 2001, he also inherited a bad recession.  He could have spent his time blaming Clinton or fixing the problem.  He chose the latter.

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#4) On January 23, 2010 at 5:15 PM, gartersnk (50.83) wrote:

"someone has to keep bringing up reality"

what ????

deficit spending like there will be no more tomorrow

Barney Frank "fixing" the banks - yea right

Socialist president ruining the middle class - who'd a thunk it??

Anyone who thinks this administation is good for America REALLY needs a reality check

Bush had his faults but he at least had courage and did what he thought best without polls, etc

 O'Bama is a poor community organizer at best at worst he will ruin this economy - maybe if quit letting Palosi and Reid wag his tail  - naw that still won't work

Well you ****** that wanted change got it - now can we change in the right direction  ?????

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#5) On January 23, 2010 at 5:24 PM, ETMatyahoo (43.57) wrote:

Demonize the banks?  Sounds more like he has put his thumb on the opinion of the masses...lots of them feel quite screwed.

 

They've also been told to let Mutual Fund middlemen park them in "safe" investments.  Plenty of blame - but let's be positive and try to fix it.   Bit at a time.

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#6) On January 23, 2010 at 9:24 PM, RainierMan (77.98) wrote:

So were any of you financial wizards applauding the "Prez" for the run up since market? Or were just thinking up cute monikers like "sociopath" and acquiring your in-depth financial analysis from Rush Limbaugh?

 

 

 

 

 

 

 

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#7) On January 23, 2010 at 10:40 PM, Lienbuster (94.21) wrote:

It will be interesting to see if Obama doubles down next week during the State of the Union address or moderates his attack.

My bet is he goes all in and yells "Fire!, Tsunami!, Flood!, Twister!, Plague!, and Oh My God Godzilla!!! only Glass-Steagall can save us from Godzilla!!! in the time honored tradition of marshaling fear and populist anger in a bid to re-capture political capital (Glass-Steagall may have been timely a year ago, IMHO.)

I will also be watching for heightened rhetoric regarding China, Obama may need an external enemy as the domestic situation continues to deteriorate at home (November is a long ways away).

 

 

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#8) On January 24, 2010 at 10:06 AM, ChrisGraley (29.60) wrote:

Expect some backpedalling next week.

Liberals are scrambling now because they don't know why they aren't popular.

Once they figure out that the voters want job creation as the priority, they'll fire up the printing presses again and this time spend money on infrastructure instead of pork. It's too bad that Obama made pork his first priority. Instead of "Last year's business.", he should have focused on this year's business.

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