By Nicholas Santiago on November 3rd, 2010 3:12pm Eastern Time
You can look at the SPY, DIA, or the QQQQ's and see that they have had a wild ride today. However, the stock market continues to trade inverse the U.S. Dollar Index virtually tick for tick today. The overall market indexes have done a whole lot of shaking and baking while trading basically right back to the high range of the session. The Federal Reserve came out and announced that they would buy $600 billion worth of U.S. Treasuries as their quantitative easing plan. Originally they leaked out earlier in the week that they would only buy $500 billion worth of U.S. Treasuries. Therefore, they sandbagged the number as they often do. These guys are getting very predictable. Please read the morning blog post 'The Street Expects Bernanke To Accommodate'.
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8:27, The SPX is still bouncing around between the lower channel line, and it's median line making higher lows, but in the last six days has been unable to make any higher highs as it progresses forward in what is best counted as an on going series of corrective a-b-c's since the high back on September 20th. 1177.65 is where the first lower low would now take place. 7:31, On the long-term weekly chart, the 200 week MA is in play now.On the long, long-term chart, the 50 month MA is coming into play as strong resistance at 1204.40, it has been close now to two years that the SPX has spent below this resistance with the last challenge back in April this year where it was rejected. There is also very strong support building in the 1065-67 area from the 20, and 200 month MA's. The 20 month provided support for the low back at 1010, this is one level that the bears need to take out if there is ever going to be a serious sell-off, in a P3, or a "C" wave down of some sort.
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By Gareth Soloway on November 2nd, 2010 11:40am Eastern Time
The markets are trading higher again but not on any sort of speculation as to the results of the elections. This again is simply a Dollar move. The U.S. Dollar is getting pounded again today, dropping to two week lows. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) trades at $22.26, -0.15 (-0.67%). The weak Dollar is sending the markets sharply higher. The SPDR S&P 500 ETF (NYSE:SPY) is trading at $119.35, +0.82 (+0.69%). Notice the percentage drop on the Dollar is the equivalent to the percentage gain on the markets.
Common sense dictates a neutral to positive market on election day. The Democrats, the party in control right now have kept the markets higher with the help of the Federal Reserve into the elections to help their chances of maintaining control. Today is possibly the most important day to have the markets higher as swing voters may need just a little extra convincing. If the Dow Jones Industrial Average was lower by 300 points on election day, swing voters could fade to the Republicans. Obviously this would be a negative for the ruling party. Therefore the markets would be neutral to positive which is exactly where they currently sit.
Tomorrow the Federal Reserve will release their quantitative easing policy statement and amount. The market expects $500 to $750 billion. It could even be as high as $1 trillion. This announcement will be made at 2:15pm ET. This is the single biggest Federal Reserve announcement in recent history. The markets have rallied sharply higher over the last two months. They will need a better than expected result to continue to move higher. The Federal Reserve knows this and will try and oblige.
Do not make the mistake of thinking quantitative easing is anything other than the Federal Reserve being the buyer of last resort of U.S. debt. They have veiled it in terms of stimulus but a majority of it is the difference between the amount of debt other countries are willing to buy and what the U.S. needs to sell to keep the economy from collapse. China and other countries are now buying less U.S. debt. Other countries are finally saying NO, to throwing money down an empty hole with no signs of getting it back. Quantitative easing is simply the Federal Reserve buying the amount that these other countries will no longer buy. Thus the Federal Reserve steps in. When the markets realize the Federal Reserve is acting as a buyer of last resort panic may set in. Keep an eye on it. To gain more insight, analysis, guidance, swing trades and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
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By Nicholas Santiago on November 2nd, 2010 4:34pm Eastern Time
Everyone is waiting to hear what the Federal Reserve has to say regarding the highly anticipated quantitative easing program known as QE-2. Will the Federal Reserve do a $1 trillion program or perhaps more? Everyone that is involved in the day to day trading and investing community has their eyes and ears pinned to every word that the Federal Reserve Bank Chairman Ben Bernanke will utter. However, will it really matter what he says or does? Right now he has told the world that he is trying to cause inflation in order to fight deflation. While this sounds somewhat bizarre this is what they are trying to do.
What happens if this move by the QE-2 action by the Federal Reserve fails? Well, then there is quantitative easing three (QE-3). These guys will simply do more of the same. Does anyone realize that the taxpayer has to pay this money back with interest? This is what the high price in gold has been telling us since gold began to take off in 2001. Gold has been in a bull market for nearly 10 years now and still remains very strong. The action in gold has told us that regardless of what problems the country or the world may face inflation is the answer by the central banks. Take note of the SPDR Gold Trust (ETF) (NYSE:GLD).
Japan has been fighting deflation for over twenty years. The Nikkei Index topped out in 2008 at nearly 40,000. Today that index is trading at just over 9,000. This is what happens in deflationary markets. Many people argue that Japan should have inflated their stock market sooner and they would not have had a stock market that has gone no where for twenty years. This is one of the most ridiculous statements that I have ever heard. When you inflate the stock market artificially you create asset bubbles. Just look at what Alan Greenspan and the Federal Reserve Bank did in 2002 -2007. They created the greatest credit and housing bubble since the Great Depression. This was done by simply lowering the Fed funds rate (overnight bank lending rate) to 1.0 percent. This time around the current Federal Reserve bank Chairman Ben Bernanke has had the Fed funds rate at zero percent since December 2008 and he has been buying U.S. Treasuries and mortgage back securities at an alarming rate. One can only wonder what the next bubble will look like when it pops. It will certainly not be pretty. When will the people in charge admit that the world cannot continue to inflate their way out of every crisis?
Inflation can be fought off by raising interest rates and firming up the currency. However, deflation does not have such a simple cure. There have been very few economies that have ever fixed the problem of deflation. As far as I know there is only one answer for deflation and that is failure. Simply allow the institutions that are bust go bankrupt and fail. That is the answer. The powers that be must allow capitalism to work as it was intended and designed to function. Bailouts will simply not do the trick. Remember the more money that is printed and created, the more diluted it becomes. Will someone please pass this message to the Fed Chairman.
Nicholas Santiago
Chief Market Strategist
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Starting a commercial equipment financing business can be a doubly successful endeavour for mortgage brokers because it can generate a new income stream as well as open up more doors for building their existing mortgage business. Also, financing equipment can be a good stepping stone for a mortgage broker into the more complicated world of project & commercial property finance. With good commissions available, this area should be of interest to the expanding mortgage broker's business.While the thought of commencing a new business venture can be a daunting one success will come from having sound procedures and practices. A small amount of work initially will quickly help you to determine if there is a business opportunity, and if there is - how to go about taking advantage of it.1. Establish your footings.Initially using a broad brush you need to determine if there is an immediate opportunity for you in financing equipment. Call some people in your client or personal network and ask them if their employer or business uses finance for their equipment. Get some names and contact the people responsible for the financing and ask them what they finance, and when they finance. Also what product they use and why. You might also ask who they use and how they decide who to use.By doing this you are educating yourself on some of the terms and jargon that is used plus your are testing your comfort level in discussing this sort of financing with exactly the people you will be talking to when you kick your business off.2. Place your foundations.If you get some positive feedback you are well on the way to making your decision to venture into this new area of financing. Now you need to line up your finance sources. Most banks and financiers will have a minimum value business introduction hurdle for accreditation. You may need a number of sources so call around and find out the criteria. Also ask about relationship issues. You may want to manage the client relationship yourself or alternatively simply refer clients to the financier who will manage the relationship. Find out about fees & commissions at the front, during and at the end of a transaction. Investigate marketing and other support the financier can provide you in your local area. Also what products are on offer and how do they differ. Importantly, ask them who their target clients are and their credit criteria, it will be best if you are working in the same or similar direction.3. Build your business framework.A good database tool is essential. You may be able to use your existing database to manage your new business transactions and pipeline or adapt it to the new process and information you will need to store. Remember, you are now dealing with companies and businesses in addition to the individuals that operate them. How much income do you want to generate, how much time are you going to allocate & when will you allocate the time. What marketing will you use and when. With the end of the financial year approaching what angle would work now.Mcx Tips TrialRead more…
