Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your market update for Monday, the 11th of July.
Last week, the standout story was the disastrous jobs report. As this week unfolds, we are faced with more problems such as the debt ceiling and the total lack of cooperation between the Democrats and the Republicans. It seems as though both parties are firmly entrenched in their own party lines and are failing to see just what it's doing to the country.
We have talked about this before, and the fact that the politicians both in Europe and here in the United States really don't want to face the truth has created the current mess over the last 20-30 years. It is always same old story of "kick the can down the road" and let somebody else take care of it.
Well, it's showtime or should I say it's a showdown now! We need to get serious about getting this right in this country. I believe that we got into this together and now we should get out of it together.
Now let's see how we can protect and make your money grow.
S&P 500: +75. The resistance level we discussed all last week was enough to turn this market back down. The symmetry of the S&P is striking and should not be ignored as we could be making a right shoulder of a much larger head and shoulders formation. However, it should not be ignored that the Trade Triangles remain in a positive mode. Look for support to come into this market around the 1300 level.
Silver: +90. Silver reversed course and hit the top of the Donchian trading channel and also moved out of an overbought territory. Our Trade Triangle technology is longer-term trend positive. Intermediate term traders should now be long this market. We still believe that silver is building in major energy base to go higher.
Gold: +65. Like silver, gold is at the top of its Donchian trading channel and this was enough to bring pressure on this market. We continue to believe that gold is building a long term energy field to go much higher later in the year. Long-term trends with the Trade Triangles are positive, while intermediate term trends are neutral.
Crude Oil: -80. Profit-taking and liquidation in the crude oil market is making this market pullback into what could be a very interesting area. A 61.8% Fibonacci retracement brings crude oil to $93.30 for the August contract. We expect that this level should offer sufficient support for this market. Overall the Trade Triangles continue to reflect a negative trend.
The Dollar Index: +70. This index rallied just enough to trigger our intermediate term Trade Triangles, which in turn put us in the neutral camp for this market. The longer term trend for the dollar index is still negative based on our Trade Triangle technology. Resistance remains between 76.35 and support at 74.00.
Reuters/Jefferies CRB Commodity Index: -80. This index is back to the midpoint of the Donchian trade channel and has just moved out of an overbought situation. We expect that we will see more backing and filling in this market before it starts to move higher. Look for support at 335 and again at 330. Resistance starts at 345 up to 347.
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I am really worried about our country. There have been other times of woe, but this time, it really does seem different.
It seems that our country has become many groups of competing special interests, many with lobbyist support. Corporations, nurses, policemen, truckers, foreign countries, oil, medicare, government workers....all these groups lobby Congress for representation. No wonder there is such gridlock. The way Congress now runs ---is about what special interests groups pay up.
We are not organized and dont think like a nation anymore. We are organized and think like a group of nation states all with opposing interests. Isnt it amazing that illegal immigrants acctually have quite powerful legal representation and lobbying in our Congress? Astounding. Yet this is what is going on. This is why there is gridlock.
We have divided and conquered ourselves.
We need to get on the same side of the table (as a nation) and negotiate from a unified perspective, or we are done for.
Re: Eric Meyers
Thank you for your support and yes, I would like to be enlightened. As an aside, an effort was made to blame "THE MESS" on "greedy people" for accepting bank loans on houses for which they could not pay. My answer to that is: Why do banks have well paid Loan Officers; what is their job and purpose? As I recall, it is to grant loans to people who can prove they can pay them back and to DENY loans to people who are insolvent or can not prove that they can pay beck the loan. Relaxing those requirements to those who "can fog a mirror" is, in my book, a certain sign of greed.
Carlos J. Romero MS MetE/NE(Ret.) [Not worth a cup of coffee today!]
I concur with Carlos Romero's question...what do you mean us?
It was the greed of Wall Street Banksters (gangsters) and tilted speculators like John Paulson, AIG, Moodys, Fitch, etc...
So Adam...what do you mean us? Please enlighten Carlos and myself.
Respectfully yours,
Eric J. Meyers, CPA, CFA, MBA
Your insight is excellent. The Captains of the Universe who crated this mess are still in control. They were said to have fixed the underlying issues in 2008.
There is one easy takeaway: You still can't trust Wall Street. The same players, the same rules that created this mess are still in control.
Forget about blaming. This is history repeating itself.
sorry, not the right blame. The only way the debt gets bigger is by congress to appropriate and spend ... appropriate means that they can say. "print more money". The debt belongs in congress, the senate, and the president. It took all 3 to get together to do the dirty deed. This has happened over a lot of years. Talk to b frank and see what he did. he made it possible for people with no credit, no knowledge of money and no job to buy million dollar shacks. then the smarter ones got in the game. then everyone got in the game. The result, zillions of dollars in housing smoke and mirrors.
Those running the country have money and are entirely contolled by those who have much money and they give us what they want through thier bickering. Again we give all of our means to other countries and we continue to take it in the ass. W e are becoming a balless country lacking common sense.
You are right. We are the suckers here. The jobs are not coming back. The revised numbers make the initial ones look like lies. The debt ceiling will be raised but only after much trumpeting and finger pointing. We are the people. We should stop paying the Senators and Representatives as they have lost connection with us. They did it in California. Maybe we can do what many states do and only have a Congress which meets for 10 days straight each month. It would be harder for the lobbyists to influence them. We would not have to pay for their Washington, D.C. world for the rest of the month. AND, they might meet their constituents!
My guess is they lift the debt ceiling in a "soft kick" so the next problem is in January, 2012.
Ric U.
Tax the rich, that seems to be the solution for all our problems.
Seriously, if someone was making $1 mil a year and retires with a few million in the bank, wouldn't it be smarter to offer them a tax credit against investment income in lieu of a social security payment, thus reducing the net draw on the system.
I live in Silicon Valley, CA. Out here the trend has been to fire American engineers of all types including software, hardware, electrical and mechanical (over the age of 35) and replace them with foreign, non-U.S. citizens mainly from India, China and South Korea. This trend has been speeding up since 2001. (my research and calculations show about 1.2million engineers and other tech workers here fired since 2001)
All the presidents talk about Americans getting better educations in math and science. But here in Silicon Valley, we all know the real truth. There are literally tens of thousands of American citizens (from every ethnicity) who are out of work, while hiring is strong. Hiring of "20 something" foreign born H1B visa holders for (in many cases) 1/3 the wages of experienced engineers. I have dozens of friends with masters and PhD degrees in math, physics, engineering and all that who have been fired and replaced by the foreign born visa holders. And these people are not "old" they are all between 35 and 45!!
Now I paid about $80,000 to get a B.A. and masters degrees, my husband too. But dispite all this tremendous work ethic and effort----companies like Intel, Applied Materials, Oracle, Apple, Microsoft---etc. on and on, wont have us anymore. I have literally watched our towns, schools and companies over the last 20 years transform from American citizens to foreign-dominated towns right here in our own backyard. There are literally enormous pockets of towns that comprise 50% of the population that are not U.S. citizens.
What's really strange is that friends of ours who were born in India, but are now American citizens are out of work too! The foreign born who went through the trouble of becomming citizens cant get hired either. Its because they have "too much" experience and "cost too much." Its all about pushing wages lower and lower. Its not about tech companies not having enough Americans with math and science and engineering degrees to hire--that story, repeated in the press is literally propoganda. There are all kinds of studies to support what I am saying but that would be a whole other article.
So, I am using my education to trade stocks and luckily that is working out. But its really sad when you are a successful engineer to not be able to do that anymore because Multinationals have decided they wont hire Americans anymore due to pay.
I just wanted to make this comment because I noticed the companies who are bringing in all the foreign born engineers (Infosys, Wipro, and others) are now targeting about 25 other American professions from Attorneys to doctors (radiologists) to pharmacists, Accountants and any college grad job you can think of. The U.S Chamber of commerce is behind this trend and says so on the website called COmpeteAmerica.org---which states their strategy of having the H1B visa limit raised for good. They want to "import" more than 500,000 foreign students next year and then let that number be unlimited. Ironically, the country of India has a law that prevents any Indian company from hiring more than 1% of Americans(or any foreign born) in its companies.
How can our economy ever recover if all the well paying jobs go away forever? It can't.
Why are we surprised at all about this jobs report? In May, the entire central core of our country was in flood stage, and two good size towns were literally blown away by tornados. In June, we heard that retail sales were down in May. Really.
We are pushing hard for all levels of government to reduce spending. Even if this is a good idea - necessary to get our budget in line with reality - the net effect is lost jobs all over the place. From school teachers to clerks at Staples to County road work and landscaping crews to workers at the Drivers License Bureau - jobs are gone when the Feds/State/County/Town can't fund schools, buy office supplies, man offices, or build or repair roads. At one time, we felt that tax advantages for the "Captains of Industry" would help to create employment. But now, the really wealthy are the "Captains of Finance", and a lot of their wealth is not tied to material goods that are created in factories and sold through outlets. If they spend their wealth on consumables, jobs are created, but if they use their wealth to speculate in commodities, our prices go up. We hope they decide to spend money travelling in the US and buying stuff. Those in industry who are expanding, are doing most of that through technological advances and equipment that do not require a lot of labor.
We are small business owners with two retail stores in resort areas. One store is in Jackson Hole, WY. This year, the crowds are incredible, and you can hardly find a room. We don't sell t- shirts or tourist stuff. At 10 PM, we have to practically drive people out. Perhaps people are afraid that they won't be able to see Yellowstone if the government shuts down, but at any rate, the area is mobbed with record numbers of tourists.
I am firmly convinced that one reason interest rates were kept so low was to support home building and commercial contruction, because those jobs could not be outsourced or sent overseas. And it worked for awhile. Until we killed the goose.Those jobs will not come back for years. The same is true for banking/real estate/Title Companies/plumbing fixtures/light fixtures or carpet mills.
So.....just exactly how will Obama fix jobs? Neither he or any successor we choose will be able to do that.I'm afraid that continued tax breaks won't make much of a dent either. They certainly have not so far. What will change the employment picture is the number of Boomers retiring and leaving full time employment over the next 20 years. It doesn't look like that will be me, though. When I turn 65 in two years, I will keep working. But 3.5 Million will turn 65 every year. And, our health care system stinks. We must make massive and tough overhauls there.
You are sure right about one thing - small business is the fulcrum. After all, I employ 7 people. If it weren't for me, and the money we spend with suppliers, a lot more folks would be unemployed.
I do not understand "...we got into this together and now we should get out of it together..." THE BANK CARTEL and THE WALL SETREET CARTEL got US into this financial mess and WE THE PEOPLE will CERTAINLY end up paying for it, NOT THEY!!! They control the money and they WILL PROTECT THEMSELVES at whatever cost to US!!!!