A summary of the Day by Lisa

To wrap up the week, indices were pushed higher on even lower volume. The Fed isn’t making any promises to cut rates and the President says he’s not bailing out anybody. Well, he is offering limited help to a few, and proposing more regulations. Let’s shut the barn door AFTER the horse got loose, shall we?

Asset backed commercial paper (ABCP) is still a major problem looming on the horizon. Major financial institutions are reporting next month. Uncertainty remains.

I could go on ( and believe me, later I will), but for now this is my advice:

Get some sleep tonight. Have some major fun over the weekend! Check back here and catch up on the posts made over the weekend, and we’ll get our sights set on the exciting week ahead.

Happy Labor Day! Stay safe!

Market Brief from NewsWires

Market Update

Two things are missing today to make the advance convincing. Volume, there is none. And money in bonds is still holding firm there. Until we have substantial volume (conviction of the moves) and a sign that money is leaving the bonds and moving into stocks then any movement is at risk of failing.

Pre Market - August 31st 2007

The Day that Was - August 30th 2007

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If you’ve read the headlines, you know the Feds injected 10 Billion into the banking system. A sell rating issued on Wal-Mart, Sears 2Q down 40% and (surprise!) jobless claims rose. Possible early “window dressing” before Labor Day has been suggested , as well. Any of these would be market movers, but who knew which way. Rumor of nerve gas found at UN, evacuations happening now. Dow just dropped on that news.
Hate to sound like a broken record, but it’s just too crazy to take a position long or short today or tomorrow.
Hang in there, everybody.

Pre Market - August 30th 2007

Unemployment data came in and it is showing a continued decline in the employment situation. This figure would be bullish for those counting on the FOMC to do a rate cut. The GDP number came in and it was “as expected” with no major surprises, this is bearish for those wanting a rate cut.

Again, this is why we are not advising our readers to be swing trading right now. The risk is higher than the reward. The risk of substantial losses outweighs the risk of making consistent money. Remember that people who have been trying to get into the pits (the market) and trying to trade are getting hit, bumped, slammed, whipsawed, and downright beaten up. And as on the football field the medics are having to keep rushing onto the field to pull out another player who lost. Don’t be the next victim to be carried out on a stretcher, have patience.

Index Charts

Lisa’s View from Texas

Hello! I’d like to thank Chuck for that nice introduction, and I hope you all will benefit from my contribution to this site. Now, just a quick note to let you know a little about my view on this market action lately…

If you are putting your money in this market and getting frustrated by these wild swings, trust me, you are not alone. There are many things influencing the day-to-day movements that are anything but normal. Credit crunch, hedge funds, carry trade, the Fed, mortgage lending problems, derivatives that can’t be priced, etc. Every piece of news seems to cause a swing one way or the other.

People like to refer to Wall Street guys as the smart money. The smart money is just as confused as you and me right now. No one really knows exactly how all of this “credit” mess is going to be worked out. If they knew, we wouldn’t be seeing this extreme volatility.

Don’t let any of this intimidate you. Just know that when these guys figure out what needs to happen, then they can bandage their wounds, or bury the bodies, and we have a better shot at making money. It’s important to remember that we “little guys” don’t move the markets, the “smart money” does. We ride the coattails. If they are in a frenzy, it’s hard to keep up with them. And, right now they are in a bit of a panic. An astute daytrader may have some luck here, but it’s still difficult. I have a hard time holding anything overnight and still get any sleep.

In light of all the bad news out there, it’s hard to keep things in perspective. But, the market will not go straight up or straight down overnight. In time we will establish a more defined trend, and whatever it is, we will make money.

I will be working diligently with Chuck finding ways to bring value to all of you through his site. Goodnight. $

Ben Bernanke speaks..

The market bounced this morning which was not a surprise and I mentioned that it may happen in the pre market report. But what turned this reaction bounce from just that into an emotional orgy was a letter that was released by Ben Bernanke and in that letter he basically said that the FOMC would do whatever is needed. And as the markets always do they read between the lines and are now thinking that the FOMC will cut the Fed Funds rate. This guy Ben Bernanke goes from hot to cold and back again.

Is the letter that Ben Bernanke released today the equivalent to nothing more than “a lap dance” at a nude bar or does he mean business? In the commentary last night I said that the big drop yesterday was fueled by speculation that the FOMC did not understand the scope of the problems and that made traders think there would be no cut. Then today he makes people believe that he will. Again I say, is it a tease or will they restore order to the markets?

I stand firm in my commentary last night that there are more problems coming down the road which have not been fully absorbed by the markets yet and the rate cut may only be a temporary fix for the markets. It depends on how forceful a rate cut (if they actually do one) and the statement that goes along with it. Yesterday the market was in depression as the facts of the economy and the fear there would be no rate cut sunk in and today it was party in the streets thinking that “there is a Santa Clause” (ie: letter form Ben Bernanke).

What we don’t know is if this emotional lift will translate into a logical lift. What that means is on one hand there was excitement which ran the market up in the afternoon. Will that excitement fade back to reality and we come back down again? Or will the perception of a rate cut bring large money back into stocks?

On one day we are down huge, the next day we are up huge.. this is why we can’t swing trade in this emotion driven market.. We need a market that is driven on at least some logic, and not all emotion.

What did today’s moves do as far as support/resistance.. well think of it this way. We are in a S/R sandwich. We still stuck in between greed on one side and fear on the other. And it is like peanut butter and until we can move decisively out of the S/R sandwich then we are going to continue this up and down swings.

More later..

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