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Presented by Gareth Soloway March 06, 2013 12:48PM
As the Dow Jones Industrial Average makes new all time highs, investors and fund managers are charging into the market, afraid of missing the boat. News flash: The boat left in March 2009. While the emotional response is to rush in, a wiser path would be to wait until a major negative divergence subsides.
This negative divergence is copper. As the markets have been pushing higher, copper has collapsed, falling from a recent high of $47.80 in late January on the iPath Dow Jones UBS Copper Total Return Sub-Index ETN (NYSEARCA:JJC). The low today was $43.64. Copper is a major building block of global growth. If the price is collapsing, something may be wrong. Another major concern on the copper chart is the massive head and shoulder pattern that stretches back to 2009. Head and shoulder patterns are bearish and if it triggers, the price target of copper would be back at the 2009 lows. Scary.
If you are an investor that is feeling the emotion, wanting to chase the markets? Remember what happened when you bought in 2007 at the highs. There were warning signs there as well. My short term projections on the market are for further upside, seeing the S&P 500 make a new all time higher. After that, be careful.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
This negative divergence is copper. As the markets have been pushing higher, copper has collapsed, falling from a recent high of $47.80 in late January on the iPath Dow Jones UBS Copper Total Return Sub-Index ETN (NYSEARCA:JJC). The low today was $43.64. Copper is a major building block of global growth. If the price is collapsing, something may be wrong. Another major concern on the copper chart is the massive head and shoulder pattern that stretches back to 2009. Head and shoulder patterns are bearish and if it triggers, the price target of copper would be back at the 2009 lows. Scary.
If you are an investor that is feeling the emotion, wanting to chase the markets? Remember what happened when you bought in 2007 at the highs. There were warning signs there as well. My short term projections on the market are for further upside, seeing the S&P 500 make a new all time higher. After that, be careful.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
Presented by Gareth Soloway March 06, 2013 11:52AM
The Dow Jones Industrial Average made a new all time high yesterday, hitting 14,253.77. Analysts on CNBC, Bloomberg and Fox Business News were cheering the run. A common question posed to members of the media and stock market analysts was whether the markets could continue to keep going higher, indefinitely. The majority said, 'yes'. When asked for the reasoning behind it, the main point was not valuations or technical analysis, it was purely "The Federal Reserve has backstopped this market. They started doing it in 2009 and will keep doing it for the foreseeable future. Therefore the markets will not go down.
This is probably one of the most scary statements ever made. To believe an entity, an independent bank, run by a group of men will never make a mistake is almost laughable. In history, the Federal Reserve has been responsible for every major bubble created. What makes them invincible now?
To give an example of the Federal Reserve creating the last major bubble, look at the Financial Collapse and Real Estate Bubble. This was created simply because of Federal Reserve intervention following the Technology Bubble collapse. To help the economy weather the massive technology collapse, the Federal Reserve lowered interest rates dramatically and encouraged the borrowing of money. This helped drive up home prices exponentially and encouraged the banks to take risky bets.
While I do believe the markets will continue to head higher in the near term, I think anyone believing the markets can never drop because the Federal Reserve will always be there to prop it up is smoking crack. They will and are causing the next big bubble. As the analysts and media pump this Federal Reserve safety net, the little investor is sure to go all in and be hurt the most. Sad but true. No entity run by a human being is ever infallible, especially an entity that has been wrong so many times in the past.
Related: SPDR S&P 500 ETF Trust (NYSEARCA:SPY), SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ).
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
This is probably one of the most scary statements ever made. To believe an entity, an independent bank, run by a group of men will never make a mistake is almost laughable. In history, the Federal Reserve has been responsible for every major bubble created. What makes them invincible now?
To give an example of the Federal Reserve creating the last major bubble, look at the Financial Collapse and Real Estate Bubble. This was created simply because of Federal Reserve intervention following the Technology Bubble collapse. To help the economy weather the massive technology collapse, the Federal Reserve lowered interest rates dramatically and encouraged the borrowing of money. This helped drive up home prices exponentially and encouraged the banks to take risky bets.
While I do believe the markets will continue to head higher in the near term, I think anyone believing the markets can never drop because the Federal Reserve will always be there to prop it up is smoking crack. They will and are causing the next big bubble. As the analysts and media pump this Federal Reserve safety net, the little investor is sure to go all in and be hurt the most. Sad but true. No entity run by a human being is ever infallible, especially an entity that has been wrong so many times in the past.
Related: SPDR S&P 500 ETF Trust (NYSEARCA:SPY), SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ).
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
Presented by Nick Santiago March 05, 2013 03:28PM
All of the talking heads in the financial media are popping champagne today as the Dow Jones Industrial Average makes a new all time high. Almost everyone on CNBC is dusting off their pom-poms from 2007 and is now looking for higher prices to come. Everyone in the business knows that this is a central bank induced stocks market rally. The Federal Reserve Bank Chairman Ben Bernanke is living up to his nickname; Helicopter Ben, dropping money from the sky on all of the large banks.
While many investors are celebrating today, we are seeing weakness in one particular group of stocks, the regional bank stocks. Leading regional bank stocks such as BB&T Corporation (NYSE:BBT), U.S. Bancorp (NYSE:USB), and SunTrust Banks, Inc.(NYSE:STI) are just a few leading names that have reversed lower from their early morning gains. Kelly King, chief executive officer of BB&T Corp said that loan growth is now challenging. With the stock market making new all time highs, you would think that these stocks would be soaring higher and loan growth would be surging.
One way to track the regional bank stocks is to follow the SPDR KBW Regional Banking (ETF) (NYSEARCA:KRE). The KRE traded as high as $51.05 a share in 2007, today the KRE is trading around the $30.78 level. Traders can easily see that this is more than $20.00 from its old high. Many small financial firms are also complaining that the large banks get the free money from the Federal Reserve and the small financial institutions cannot compete with the larger global banks. It is never a good sign to see the regional banks lag on a day where the euphoria is running wild.
Nick Santiago
www.InTheMoneyStocks.com
While many investors are celebrating today, we are seeing weakness in one particular group of stocks, the regional bank stocks. Leading regional bank stocks such as BB&T Corporation (NYSE:BBT), U.S. Bancorp (NYSE:USB), and SunTrust Banks, Inc.(NYSE:STI) are just a few leading names that have reversed lower from their early morning gains. Kelly King, chief executive officer of BB&T Corp said that loan growth is now challenging. With the stock market making new all time highs, you would think that these stocks would be soaring higher and loan growth would be surging.
One way to track the regional bank stocks is to follow the SPDR KBW Regional Banking (ETF) (NYSEARCA:KRE). The KRE traded as high as $51.05 a share in 2007, today the KRE is trading around the $30.78 level. Traders can easily see that this is more than $20.00 from its old high. Many small financial firms are also complaining that the large banks get the free money from the Federal Reserve and the small financial institutions cannot compete with the larger global banks. It is never a good sign to see the regional banks lag on a day where the euphoria is running wild.
Nick Santiago
www.InTheMoneyStocks.com
