STOCK TRADER'S ALMANAC BLOG

Brand New Revamped Stock Trader's Almanac Blog & Digital Content Delivery System

2010-02-24T09:19:00.000-08:00

We have taken our trading and investment strategies to the next level in 2010. Our Brand New Blog now has all the daily up-to-date Stock Trader's Almanac stats live on the web for every NYSE trading day. And our new digital content delivery system for paid subscibers now delivers more content more frequently.

We will no longer be blogging here at the blogspot/blogger site. Our new address is:
http://blog.stocktradersalmanac.com. To receive the RSS Feed or Email Feed you will need to visit the new blog and re-subscribe. Thanks!

The markets are moving fast, and in our subscriber survey a few months back folks told us they'd like to hear from us with more Almanac strategies more often. So starting February 18 we rolled out a revamped site, brand new blog and e-newsletter. This allows us to provide more frequent updates on the tried and true Almanac strategies subsbribers asked for through our NEW - redesigned Almanac Investor Alerts. These twice-weekly alerts will give you more than ever before – including more timely versions of the in-depth articles you received each month in the Almanac Investor Newsletter. Plus, they'll be delivered right to your email inbox each Tuesday and Thursday at the close of the market.

New Almanac Alert features include:

Almanac Trading Forecast
Get an exclusive look at the week's market sentiments along with data tying in to the Stock Trader's Almanac, as well as tools and insights to plan your week in trading including data from the Dow, NASDAQ, S&P, Russell 1000, and Russell 2000 indices.
Regular Features
From the ETF Corner & Portfolio to the Vital Stats and Pulse of the Market you'll get strategy breakdowns, explanations, and detailed charts and graphics that will help you take the Almanac strategies and portfolio to the next level.
Guest Columns and Full-Length Articles
You'll hear from regular almanac experts including Adam Hutt, David Fried, Bill Staton and John Person through monthly columns on stock strategies, commodities ETFs and more. AND, we'll feature guest articles from trading celebrities and Almanac fans on timely topics and trends including authors from the Almanac Investor book series and Wiley Trading.

Plus, subscribers will now see the best of the month's articles and news rolled up into our Almanac Investor e-Newsletter on the last Thursday of each month in their email inbox. This e-newsletter will also feature a look at the month ahead and can be downloaded and printed as a PDF, or you can read the whole month in review by clicking on the articles and reading them in full-text on StockTradersAlmanac.com. Subscribe Today and Get the Stock Trader's Almanac FREE!

Our free Brand New Almanac Investor Blog, available through the blog tab on StockTradersAlmanac.com or at http://blog.stocktradersalmanac.com, features regular entries every Monday, Wednesday and Friday keeping Almanac followers up-to-date between alerts with the Almanac Weekly Trading Forecast, musings on the market, media and speaking updates, and insights on the day's news and events.

We've designed the new Alerts, Newsletter and Blog to make it easier to get the news, strategies, data and updates you need from Almanac Investor Newsletter when and how you need it. You'll also see updates to the website making accessing these important features more convenient and user friendly. With expanded options for viewing and printing articles, we hope StockTradersAlmanac.com will stay on the top of your list for trading and investing news and information.

Daily Market Probability Data & Trading Notes

Just like in the Almanac on the weekly calendar pages and in the Newsletter Monthly Strategy Calendar, the BULL Icon on the daily blog signifies favorable trading days based on the S&P 500 rising 60% or more of the time on a particular trading day during the most recent 21-year period.

A BEAR Icon on calendar pages signifies unfavorable trading days based on the S&P falling 60% or more of the time for the same 21-year period.

Also, to give you even greater perspective we have listed for every day that the market is open the Market Probability numbers for the same 21-year period for the Dow, S&P 500 (S&P), NASDAQ (NAS), Russell 1000 (R1K) and Russell 2000 (R2K). Our complete Market Probability Calendars both long term and 21-year for the Dow, S&P and NASDAQ as well as for the Russell 1000 and Russell 2000 indices can be found in the Stock Trader's Almanac.

Other seasonalities near the ends, beginnings and middles of months; options expirations, around holidays and other times are noted for Almanac investors’ convenience on applicable daily blogs. All other important market stats and economic releases are provided in the Strategy Calendar every month in our Almanac Investor e-Newsletter. Subscribe Today at HALF-PRICE and Get a FREE Stock Trader's Almanac!

2010 January Barometer Official Results: Second Warning Shot

2010-01-29T16:35:00.000-08:00

The market has fired its second warning shot in a week at the 11-month old bull. Even with our Market Probability numbers positive for the last trading day of January the odds were slim that the market could rally enough today to put the January Barometer positive for 2010. After a feeble attempt early in the day stocks faded in the afternoon, pushing the S&P down 3.7% for the month, registering a negative January Barometer for 2010.

With a down January it is difficult to be bullish as 50-day moving-average support levels that have held since July 2009 have been broken. Absent a sharp reversal, 200-day averages are the next line in the sand, but they are well below current levels. All eyes are on Washington now and if they don’t get something done soon on the jobs front, the odds increase of the lower end of our 2010 Forecast materializing before the upper end.

For the full alerts sent to subscribers and to find out more about these valuable indicators logon or subscribe @ http://www.stocktradersalmanac.com/.

December Low Breached

2010-01-26T19:44:00.000-08:00

As we warned in the Pulse of the Market in the February 2010 issue on page 3, the market was ripe for fall as sentiment had been at extremely complacent levels for some time. With help from the political arena stocks turned tail last week, pushing the major averages down about 5% in three days; the biggest pullback since July. This drop was enough to cause the Dow to close below its December closing low of 10285.97 on 12/8/09, triggering the dreaded December Low Indicator (2010 STA, page 40).

This comes on the heels of a positive Santa Claus Rally and First Five Days, which initially had positive implications for the bull market to continue relatively unabated for the better part of the next few months. But now with the December Low breached and the January Barometer in the red with only a few days left to remedy that, the short term outlook – even the longer term outlook – have gotten more dire.

Technical and seasonal warnings have been issued, sentiment has been giddy and the folks in Washington are on notice. Midterm years as we have been reminding lately are often fraught with uncertainty and market volatility. Obama presents his first State of the Union this week and Bernanke’s confirmation deadline is month end. The most prudent course of action is to refrain from major new purchases, tighten stops, take any sizable short term profits and assess the conditions at week’s end when the January Barometer registers it’s crucial prophesy.

For the full alerts sent to subscribers and to find out more about these valuable indicators logon or subscribe @ http://www.stocktradersalmanac.com/.

Dow 15000 Discussion on CNBC

2010-01-15T11:30:00.000-08:00

The mention of the number Dow 15000 in our 2010 Stock Trader's Almanac has been somewhat of a lightening rod lately. Thanks to Erin Burnett and CNBC for inviting me down to the NYSE to explain the historical precedent and that is not a prediction, but merely an extrapolation based on the 50% average move in the Dow from the midterm low to the pre-election year high.

From page 78 of the 2010 Almanac entitled "Why A 50% Gain in the Dow Is Possible from Its 2010 Low to Its 2011 High" we state: "Since 1914 the Dow has gained 49.2% on average from its midterm election year low to its subsequent high in the following pre-election year. A swing of such magnitude is equivalent to a move from 8000 to 12000 or from 10000 to 15000."

Others have latched on to this fact and find it somewhat incredulous. The historical facts speak for themselves. Check out the full interview with me and Erin here:
http://www.cnbc.com/id/15840232?play=1&video=1385601111

And check out our actual annual forecast in the January 2010 at http://www.stocktradersalmanac.com/.

Two for Two -- Santa & 1st 5 Days Deliver

2010-01-15T11:22:00.000-08:00

Following the late-breaking, solid Santa Claus Rally, January’s First Five Days have also turned in an encouraging positive performance with the S&P 500 up 2.7%. This is the best first week of the year since 2006. The last 36 up First Five Days were followed by full-year gains 31 times for an 86.1% accuracy ratio and a 13.7% average gain in all 36 years. However, in Midterm Years like 2010 the First Five Days has a dubious record. The S&P 500 posted a gain for January’s First Five Days in 9 of the last 15 Midterm Years. Only five followed suit. (2010 Stock Trader’s Almanac, page 14).

The return of seasonal bullish market action is encouraging. This up First Five Days reinforces our belief that the current bull market still has some legs and lends support to our 2010 Annual Forecast in the recent January 2010 issue for further gains before any sizeable pullback later in 2010. Today's selloff is an excellent reminder that the final arbiter of these yearend/New Year indicators is of course the January Barometer at month-end. The December Low Indicator (2010 STA, page 40) should also be watched with the line in the sand the Dow’s December Closing Low of 10285.97 on 12/8/09.

For the full alert sent to subscribers and to find out more about these valuable indicators logon or subscribe @ http://www.stocktradersalmanac.com/.

Santa Claus Rings in 2010

2010-01-05T14:20:00.000-08:00

At the close of business on December 31, 2009, with the major indices under snow for the last five days of the year, the Santa Claus Rally (SCR) was nowhere in sight. As defined in the Stock Trader’s Almanac, the SCR is the propensity for the S&P to rally the last five trading days of December and the first two of January an average of 1.5% since 1950.

The lack of a rally has often been a preliminary indicator of tough times to come. This was the case most recently in 2008 and 2000. However, the first day of trading in 2010 was up strong and put SCR into the black. The S&P tacked on a few more points today, putting the SCR near the historical average at 1.4% for 2009-2010.

There have been several instances in which a positive SCR preceded bad years or markets, so some caution is in order. But this is an early indication that the current bull market still has some legs and lends support to our 2010 Annual Forecast in the recent January 2010 issue for further gains before any sizeable pullback later in 2010. We’ll want to see positive performance for the First Five Days of January and the full-month January Barometer.

For the full alert sent to subscribers and to find out more about this valuable indicator logon or subscribe @ http://www.stocktradersalmanac.com/.

Free Lunch Aged One Day

2009-12-22T12:13:00.000-08:00

Our 2009 FREE Lunch Menu of Bargain Stocks making new 52-week low is off to a decent, but manageable start. This is availing Almanac Investors ample time to take positions. The few losses are minor and as whole the list is already outpacing the benchmark composite indices.

Click for larger image...

For the original alert sent to subscribers over the weekend and to find out more about this time-tested, short-term trading strategy logon or subscribe @ http://www.stocktradersalmanac.com/.

New Year's Wishes / 2010 Forecast

2009-12-17T20:38:00.000-08:00

As Congress and the White House wrestle with pushing through an overhaul of the healthcare industry before yearend, and other policy initiatives in the coming year, we share a few New Year’s wishes for President Obama and the country.

What happens in Washington is inextricably linked to Wall Street and in midterm 2010 market performance is likely to be impacted by how the populace feels the Democrats and the Obama administration are performing. Greater disappointment in the incumbent government will likely result in a weaker market and larger losses of House and Senate seats in the midterm elections next November.

Our first wish is a simpler solution to healthcare reform. Aside from the throngs of uninsured and underinsured people, the main problems with our healthcare system are high and rising costs, ridiculous amounts of waste and fraud and an embarrassing lack of oversight in both public and private arenas.

Case in point is the recently discovered rip-off of Medicare in Miami- Dade County. When one county in America gets $500 million in Medicare reimbursements – more than the amount received by the entire country – that should be a glaring red flag. Federal employees responsible for this lapse in oversight should be relieved of their duties. According to the Associated Press on December 15, 2009:

“Miami-Dade County received more than half a billion dollars from Medicare in home health care payments intended for the sickest patients in 2008, which is more than the rest of the country combined, according to a report by the Department of Health and Human Services’ Office of Inspector General. Medicare paid the county about $520 million, even though only 2 percent of those patients receiving home health care live here.”
http://finance.yahoo.com/news/32-accused-of-60M-in-Medicare-apf-2311103177.html?x=0

Something also seems rotten in Connecticut. With all due respect to political chameleon Senator Joe Lieberman, his recently exposed flip-flop on the public option illustrates the ever-present high level of chicanery in U.S. politics and industry. Humorously revealed by late-night satirist Stephen Colbert, before opposing the public option, specifically making Medicare available to younger folks 50 or 55 years old, Lieberman supported this in an interview with the Connecticut Post on September 2, 2009.

Entitled, “For He’s a Jowly Good Fellow,” the segment is available at colbertnation.com. Remember there is truth in jest. Perhaps it is no coincidence that his state’s capital, Hartford, is the “Insurance Capital of the World.”

http://www.colbertnation.com/the-colbert-report-videos/258564/december-15-2009/for-he-s-a-jowly-good-fellow

Our wish is that instead of this 1000-page tome of a bill that complicates matters more, we end this state-by-state insurance regulation mess that jacks up costs and make one set of rules for the whole country. Add in some medical malpractice reform and with an oversight overhaul, make Medicare and Medicaid available to more needy people.

Level Playing Field

The stock market has returned from the abyss and is functioning at a more “normal” level. Once the banking industry revitalizes itself and begins to lend freely again, the government can level the playing field of the financial markets and banking industries. Reinstituting the sort of rules and oversight that existed for the better part of the seven decades after the Great Depression will go to great lengths to prevent another financial crisis of the magnitude we experienced from 2007-2009. Though this may spook the Street initially, this would help re-instill confidence in the marketplace and be a boon for the stock market long term.

Jobs

Create jobs by taking the lead in the country and worldwide on clean energy initiatives, clean energy technology, clean energy incentives and rebuilding America’s ailing and aging infrastructure. We lag other developed and developing nations in these areas, but can leap-frog the world with a White House driven initiated on the scale of the Tennessee Valley Authority, the Hoover Dam, the Manhattan Project or the Apollo Program.

From our vantage point on the west shore of the mighty Hudson River, less than 20 miles as the crow flies from Manhattan, the crumbling Tappan Zee Bridge’s proposed replacement with new eco-friendly commuter-connections has been stalled for years now. Between this project and a modernization of the northeast electricity grid that blacked out much of the northeast, including parts of Canada, in the summer heat of 2003, we would venture to guess that hundreds of thousands of jobs would be created directly and indirectly, in addition to creating safer, cleaner and more efficient services.

National Security

We applaud Mr. Obama’s thoughtful efforts to communicate so eloquently and clearly with all of us citizens and his rekindling of international relationships, but enough already. Get off the TV and get to work with some effective behind the scenes wheeling and dealing and black ops on the terrorists. Stop talking about every strategy angle detail publicly and come out when there is some progress. A few successful clandestine operations and some closed-door diplomacy that result in action would go a long way.

Failure or inaction in these four areas could trigger the market’s next downturn. Something nasty on the geopolitical front or lack of job creation would steepen the decline. We do not expect our wishes to come true exactly, but we expect that some progress will be made and that any pullback next year will be mild and orderly and set up another great buying opportunity for years to come.

2010 Forecast

From the depths of the worst bear market since 1932 the current bull market was born on March 9, 2009. The rally has been fast and furious with a mild pullback in early summer and sideways action the past five weeks. The debate is on whether this is just another cyclical bull or the beginning of a new longer term secular bull that spans a decade or more. We are leaning towards the secular camp and expect the 2009 lows to hold. Save some catastrophic events or galactically stupid moves by our government we should be on the road to full recovery.

There will be fits and starts along the way, but our Four Horsemen of the Economy appear to have turned the corner. The Dow is up strong, Consumer Confidence has rebounded, healthy Inflation appears to have commenced and Unemployment looks like it peaked. We believe the recession ended in October 2009 if not sometime earlier in Q3 2009.

View larger image of Four Horsmen of the Economy charts.

Based upon research of the Ten Worst Bear Markets Since 1900 in the table below, the Four-Year Presidential Stock Market Cycle, as well as market seasonality, technicals, fundamentals and economics discussed above we expect this bull market to rally into Q1 or Q2 of 2010 with the Dow stalling near 12000, followed by a garden variety bear market that brings the Dow down 20–30% before yearend 2010, creating another midterm bottom from where the Dow has rallied an average of 50% to the pre-election year high since 1914.

Click for larger image of Ten Worst Bear Markets Since 1900.

Happy Holidays & Happy New Year, we wish you all a healthy and prosperous 2010!

Read the full forecast @ http://www.stocktradersalmanac.com/

“Founding Father” Of Seasonal Trend Analysis

2009-12-15T09:03:00.000-08:00

This flattering testament to our seasonal work is even more satisfying coming from an international rugby power house nation. WAtoday is Western Australia’s premier news and information website. Our colleagues down under also recognize our fellow Wiley author Jay Kaeppel, who’s excellent new book, Seasonal Stock Market Trends: The Definitive Guide to Calendar-Based Stock Market Trading, we endorsed and selected as one of the Top Investment Book for the 2010 Stock Trader’s Almanac.

In addition to our research Mr. Hogan cites some of Kaeppel’s findings in the book and other salient insights on the Santa Claus Rally. Here is an except:

Yale Hirsch was the original editor and publisher of ‘The Stock Trader’s Almanac’ which has been published annually since 1967. He is often referred to as the “founding father” of seasonal trend analysis in the stock market and his most notable contributions in this area of seasonality are the renowned January barometer, Santa Claus rally and the best six consecutive months of the year.

His research has assisted many traders and investors to profit in the stock market and has served to legitimise its validity and the analysis of seasonal trends in the share market.

Will Santa Claus rally the markets this year?
STEPHEN HOGAN
December 15, 2009 - 9:15AM

http://www.watoday.com.au/business/cfd/will-santa-claus-rally-the-markets-this-year-20091215-kt19.html

DJIA 10500 Line in Sand

2009-12-08T13:54:00.000-08:00

Fear not this early December weakness, it is quite customary. The first half of December has been prone to flat and negative seasonality as annual tax-loss selling and yearend profit taking intensify ahead of triple witching and the holidays. We once again find solace in the market's continuing return to historical seasonal patterns.

After the Dow recorded its "best" Worst Six Months (May-October) since 1958 with an 18.9% gain in 2009 -- its first double-digit WSM gain since 2003, normal seasonal market behavior returned. Normally, weak September was strong, but the week after triple witching was typically negative. Then we had our perennial bout of Octoberphobia as stock prices retreated in October, followed by a customary return to bullishness in November, especially ahead of Thanksgiving. Then December began on its usual positive note before heading lower over the past week.

Seasonal evidence is beginning to accumulate of underlying economic and market health. We have several seasonal indicators on the horizon that will provide better insight: The Santa Claus Rally, January's First Five Days and The January Barometer. As triple witching day approaches on December 18 market strength should resume. If not, we will begin to get more cautious as the market's momemtum could be waning. As our seasonal indicators register technical readings will become crucial.

In the graph below, the Dow's struggle to break through 10500 with gusto is concerning (1). This sideways action has created a tight range from about 10200-10500 intraday and put the Sell-Side MACD into a bearish cross (2). But if the Dow can bounce off its 50-day moving average (black line) as its has since July, we would expect the rally to recharge and finally blast through 10500 and achieve more substantial new recovery highs in the 11000-12000 range before this bull is put out to pasture some time in the early part of 2010.

Click image big graph...

Damned Decade & Thanksgiving Famine

2009-12-01T13:18:00.000-08:00

The recent obsession with the market's failings over the past decade are understandable. For the first time since 1939 the Dow Jones Industrial average is down for the decade ending in the ninth year. The good news is it is not nearly as bad as the Great Depression and the decades following bad decades have bounced back solidly.

Click image for larger view.

Our good friend Sam Stovall at S&P informed us in a recent note that there is however a darker cloud over the current period. Including dividends, Stovall notes, the 2000s are the only decade in the past 90 years to post a decline. Stovall's 11/30/09 Sector Watch note states:

"No matter how well the S&P 500 performs this month, it will not be enough to erase the black mark on the annals of equity market returns. On a price-only basis, the S&P 500 fell nearly 26% from December 31, 1999 through November 27, 2009. And even when you include dividends, the 2000s have the inauspicios distinction of being the only decade in the past 90 years to post a decline; even in the 1930s the S&P 500 was able to eke out a cumulative advance of 10%."

Current economic underpinnings still leave something to be desired and the Obama adminstration's political capital has shrank like the market did in 2008, increasing the prospects of a more substantial market decline in 2010. Also disconcerting is some news we here from our friends in the high-end catering business: Wall Street and other corporate holiday parties have been reeled in the last minute.

With the "pros" pulling back, we have moved to higher alert. Also, Black Friday retail activity was unimpressive. Traffic was reported higher than last year , but sales were flat. It will be especially important to watch all the indicators over the next 2 months: seasonal, fundamental, technical, sentiment and the like, for clues to a break or a resumption of the bull market's momentum.

For all intents and purposes we have hit our initial target of Dow 10500, but we are having trouble breaking through. If we can, Dow 11000-12000 is doable before a substantial decline or bear market ensues. If not, a retreat back to the July lows around Dow 8000 could come sooner.

2010 America’s Finest Companies Is Here!

2009-11-24T12:45:00.000-08:00

Purchase, Download, Use, and Print Your E-Book Today

This year, Bill & Mary Staton have partnered with John Wiley & Sons, Inc., and Jeffrey A. Hirsch to produce the 2010 Edition of their annual directory of America's Finest Companies®. This 19th Edition is in a handy e-book format and is the third book in the Almanac Investor Series.

It is now available at Amazon.com and Wiley.com for purchase. (Please note the Amazon.com Edition is for the Kindle, and the Wiley.com edition uses Adobe Digital Editions software from which you can print a copy after downloading it to your computer.)

Please visit the e-book’s page on Wiley.com for purchase details: http://www.wiley.com/WileyCDA/WileyTitle/productCd-0470547960,descCd-buy.html

If you choose to purchase Wiley’s Adobe Edition, please make sure to read the link Important E-Book Information because you will be asked to download Adobe’s DIGITAL EDITIONS software which is FREE, but takes a few steps to complete. Click on the link all software and system requirements in order to get information on properly downloading and using your Directory. If you have any questions or need assistance while purchasing the e-book from Wiley.com, please contact Wiley Technical Support at www.wiley.com/techsupport or call (877) 762-2974 (8am-5pm EST, Monday-Friday).

Because Adobe has certain restrictions on the sharing and printing of e-books, reading the Important E-Book Information section is paramount to downloading and using the Directory correctly and easily. TO PRINT OUT A HARDCOPY OF YOUR E-BOOK AFTER PURCHASE, be sure to open ADOBE READER, click on FILE, select DIGITAL EDITIONS and click OK when prompted by the dialogue box. Then, make sure you are in the READING view, click READING and then PRINT.

Russell 2000/Russell 1000 1979-October 2009

2009-11-18T13:28:00.000-08:00

As the market begins to improve small-cap stocks tend to lag the performance of their bigger brethen. Notice in the chart how small caps began to underperform as major bull moves matured in 1983, 1994 and 2006. Complete analysis is available in the December issue of Almanac Investor at www.stocktradersalmanac.com.

Cramer Takes Bernanke's Side

2009-11-17T16:49:00.000-08:00

Many have been eager to attack Ben Bernanke and the manner in which he has handled the financial crisis thus far, us included. As a student of the Great Depression he undoubtedly has a unique view of the economy and as the Chairman of the Federal Reserve he has a responsibility to keep it as healthy as possible.

We do believe that the worst is behind us and the U.S. economy could easily handle a bump in rates to the 1-2% range, which could slow the dollar's descent and possibly head off any future inflation that could crop up as a result of all the unprecedented actions that have been taken to bring the U.S. (and global) financial system back from the brink of collapse.

Ben Bernanke does have at least one ally, Jim Cramer of all people. Although Jim does catch flack for some of his stock picks and on air antics he usually has a good read on the overall market and macroeconomic situation. Jim eloquently explains himself here: www.thestreet.com/p/rmoney/jimcramerblog/10627332.html.

Basically, he finds it absolutely unbelievable that traders expected Ben to kill the market’s rally on Monday while giving a speech and presents a reasonable case to support the actions and position the Fed has taken on interest rates. Jims kindly reminds us all "don't fight the fed."

Crisis Averted – Fed in Denial

2009-11-10T11:50:00.000-08:00

While we appreciate the Fed's intentions to stimulate job growth and the economy, we are a bit baffled by their decision to keep rates at virtually zero. This epic accomodative stance was implemented to avert a deeper financial crisis. We also commend them on this effort as it likely served its purpose effectively.

However, at this juncture, rates at this level do not seem to be doing anything to create jobs or stimulate lending and the economy has once again begun to grow. It would seem to us, now that the crisis has been averted, that rates should be returned to normally accomodative levels, gradually increasing up to 1% and then 2% over the next year or so.

Perhaps Bernanke and Company should take a page out of the Aussie central bank's play book. Last month the Reserve Bank of Australia raised rates 25 basis points to 3.25%. Granted the commodity-based economy down under has some different circumstances, but they seem to have it right that the global economy is on the mend. Here's an excerpt from Governor Glenn Stevens' October 6 statement:

"In late 2008 and early 2009, the cash rate was lowered quickly, to a very low level, in expectation of very weak economic conditions and a recognition that considerable downside risks existed. That basis for such a low interest rate setting has now passed, however. With growth likely to be close to trend over the year ahead, inflation close to target and the risk of serious economic contraction in Australia now having passed, the Board’s view is that it is now prudent to begin gradually lessening the stimulus provided by monetary policy. This will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead."
Click here for the full story...http://www.rba.gov.au/MediaReleases/2009/mr-09-23.html

Dow Dances on 50-Day MA -- Mini 3 Peaks

2009-11-04T14:23:00.000-08:00

So far the Dow has managed to stave off even a 5% correction on a closing basis and barely registered a 5% drop from the intraday high on October 20 to the low on November 2. In the chart below you can see how strong the support is at the 50-day moving average red line.

We suspect this 50-day MA support to hold for the next several months. If the economic recovery begins to falter more dramatically and the political climate of midterm election year 2010 heats up in the early part of 2010 – as it often does – the ensuing pullback could bring us back to the July 2009 lows near Dow 8000.

Also plotted on the chart are the possible points of a mini 3 Peaks/Domed House Pattern that may be forming. For now the pullback appears to be contained, but we'll have a close watch on the jobs picture, housing, confidence, the political atmosphere as well as technical readings, fundamentals and seasonal indicators for signs market strength and momentum are waning. In any event we expect another prime buying opportunity in 2010, so buy this rally with caution.

Click image for larger view...

Down Friday/Down Monday

2009-10-27T14:30:00.000-07:00

This week registered the first Down Friday/Down Monday since August 31 and today's failed turnaround adds to the prospects for a mild correction over the next several weeks. October's Month-end bullish seasonality could put it off for a few days, but the first half of November is not expecially strong. We alerted last week in a subscriber email alert that market rally has hit some formidable resistance.

Dow 10000 Hurdle (22 October 2009)
Cost cutting and stimulus have helped earnings so far this quarter and many companies have beaten estimates. But sooner or later we are going to need to see an improvement in revenue. Though the economy is recovering and corporate numbers have been good, the market run up in advance and has entered some what of a what-have-you-done-for-me-lately phase.

This is why the market has run into a bit of a wall. Our resistance level of 10500 should prove more formidable than 10000. This is where the initial Waterfall Decline began in October 2008. Over the next several weeks the market is likely to correct 5% or so back to the 50-day moving averages before reaching Dow 10500 some time between now and Q1 2010. Read more...
https://www.stocktradersalmanac.com/sta/alertDisplay.do?alertId=1298

Our buddy Barry Ritholtz, who's timing has been stellar the last few years, and others have recently remarked that this bull is getting tired and sleepy.

Famed Market Timers Say Rally’s Getting Sleepy
Posted by Steven Russolillo on October 27, 2009
Dow Jones Industrials, Economic Indicators, Economy, Markets, S&P 500
http://markettalk.newswires-americas.com/?p=5745

Many market observers predict tops and bottoms, but few successfully get their timing right. Jeremy Grantham and Barry Ritholtz sit in the latter category, so when they offer their forecasts, investors would be wise to take note.
-------------------------------------------------------------------------------------
Just Deserts and Markets Being Silly Again
Jeremy Grantham
Quarterly Letter – Just Deserts – October 2009 http://www.gmo.com/websitecontent/JGLetter_ALL_3Q09.pdf
-------------------------------------------------------------------------------------
Rally Getting Tired ?
By Barry Ritholtz - October 27th, 2009, 11:30AM
http://www.ritholtz.com/blog/2009/10/rally-getting-tired/
-------------------------------------------------------------------------------------

However, when too many of us are in agreement our contrary antenna begin to purr, tempering our concerns. The break will most likely come when the fewest expect it.

Stock Trader's Almanac Best Investment Books

2009-10-27T12:11:00.000-07:00

We were recently asked by a reader for a compleete list of all of our Best Investment Books of the Year.

Each year a list of our favorite books is included in the annual Stock Trader's Almanac and from this list the top book is selected for the Best Investment Book of the Year honor. In a handful of year's it was too difficult to choose just one, so in those years additional honors were handed out.

Here is a complete list of all books that have recieved the Best Investment Book of the Year honor since 1973, the first year. Many of the authors are familiar names and most of these titles are available on http://www.amazon.com/. If a year is repeated, then there was more than one recipent of the honor in that year.

2010 – Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy by Barry Ritholtz (John Wiley & Sons, $24.95)

2009 – The Post-American World by Fareed Zakaria (Norton, $25.95)
2009 – Common Wealth: Economics for a Crowded Planet by Jeffrey D. Sachs (Penguin Press, $27.95)

2008 – Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals by David Aronson (John Wiley & Sons, $95.00)

2007 – Entries & Exits: Visits to Sixteen Trading Rooms by Dr. Alexander Elder (John Wiley & Sons, $95.00)

2006 – Technical Analysis: Power Tools for Active Investors by Gerald Appel (Prentice-Hall, $44.95)

2005 – Trade Like A Hedge Fund: 20 Successful Uncorrelated Strategies & Techniques to Winning Profits by James Altucher (John Wiley & Sons, $59.95)

2004 – The Right Stock at the Right Time by Larry Williams (John Wiley & Sons, $27.95)

2003 – Trading Classic Chart Patterns by Thomas N. Bulkowski (John Wiley & Sons, $69.95)

2002 – Trading On Volume: The Key to Identifying and Profiting From Stock-Price Reversals by Don Cassidy (McGraw-Hill, $49.95)

2001 – The Lexus and the Olive Tree by Thomas L. Friedman (Farrar, Straus and Giroux, $27.50)
2001 – A Future Perfect: The Challenge and Hidden Promise of Globalization by John Micklethwait and Adrian Wooldridge (Crown Business, $27.50)

2000 - Building Wealth: The New Rules for Individuals, Companies and Nations by Lester Thurow (HarperBusiness, $14.00)

1999 – The Gorilla Game: Picking Winners in High Technology by Geoffrey Moore, Paul Johnson and Tom Kippola (HarperCollins, $26.00)

1998 – Point & Figure Charting: The Essential Application for Forecasting and Tracking Market Prices by Thomas J. Dorsey (John Wiley & Sons, $55.00)

1997 – Cyber Investing: Cracking Wall Street With Your Personal Computer by David L. Brown and Kassandra Bentley (John Wiley & Sons, $80.00)

1996 – What Works on Wall Street : A Guide to the Best-Performing Investment Strategies of All Time by James P. O’Shaughnessy (McGraw Hill, $36.95)

1995 – Invest Like The Best: Using Your Computer to Unlock the Secrets of the Top Money Managers by James P. O’Shaughnessy (McGraw Hill, $34.95)

1995 – 100 Minds The Made the Market by Kenneth L. Fisher (Pacific Publishing Group, $24.95)

1994 – The Money Monarchs: The Secrets of Today’s 10 Best Investment Managers by Douglas J. Donnelly (Irwin, $30.00)

1994 – The New Market Wizards: Conversations With America’s Top Traders by Jack D. Schwager (Harper, $17.99)

1993 – The Practical Forecasters Almanac: 137 Reliable Indicators for Investors, Hedgers, and Speculators edited by Edward Renshaw (Irwin, $55.00)

1993 – Blue Chips & Hot Tips: Identifying Emerging Growth Companies Most Likely to Succeed by W. Keith and Howard Schilit (Ny Inst of Finance, $19.95)

1992 – Trader Vic – Methods of a Wall Street Master by Victor Sperandeo (John Wiley & Sons, $29.95)

1991 – The New Money Masters by John Train (HarperBusiness, $16.00)

1990 – One up on Wall Street: How to Use What You Already Know to Make Money in the Market by Peter Lynch (Penguin, $13.95)

1989 – Stan Weinstein's Secrets For Profiting in Bull and Bear Markets by Stan Weinsteins (McGraw-Hill, $19.95)

1988 – The Wall Street Waltz: 90 Visual Perspectives : Illustrated Lessons from Financial Cycles and Trends by Kenneth L. Fisher (Pacific Publishing Group, $31.95)

1987 – Martin Zweig’s Winning on Wall Street by Martin Zweig (Warner, $19.99)

1986 – Contrary Investing: The Insider’s Guide to Buying Low and Selling High by Richard E. Band (Penguin, $9.95)

1985 – Strategic Investment Timing by Dick A. Stoken (Macmillan, $14.00)

1984 – Volume Cycles In The Stock Market by Richard W. Arms, Jr (Dow Jones-Irwin, $30.00)

1983 – Gaining On The Market by Charles J. Rolo (Little, Brown & Co, $14.95)

1982 – The Highman-De Limur Hypotheses by Arthur Highman and Charles de Limur (Nelson-Hall Publishers, $14.95)

1981 – Stock Market Trading Systems by Gerald Appel and Fred Hitschler (Dow Jones-Irwin, $30.00)

1980 – Investing On Your Own: How To Find Winning Stocks In Your Own Backyard by Richard L. Thorsell (McGraw Hill, $13.95)

1979 – How to Make Big Money in the Over-The-Counter Market by Milton Fisher (William Morrow & Co, $12.50)

1979 – The Momentum Gap Method by Lowell Miller (G.P. Putnam’s Sons, $15.00)

1979 – The Thinking Investor’s Guide to the Stock Market by Kiril Sokoloff (McGraw-Hill, $14.50)

1979 – Cycles: What They Are, What They Mean, How To Profit By Them by Dick A. Stoken (McGraw-Hill, $17.50)

1978 – New Encyclopedia of Stock Market Techniques A.W. Cohen Editor (Investors Intelligence, $34.95)

1978 – When To Sell by Justin Mamis and Robert Mamis (Farrar, Straus and Giroux, $9.95)

1977 – Technical Analysis of Stock Trends (5th ed.) by Robert D. Edwards and John Magee (John Magee, Springfield Massachusetts, $16.00)

1976 – The Financial Analyst’s Handbook, Sumner N. Levine, Editor (Dow Jones-Irwin, $30.00 per volume, two volumes)

1975 – How To Make Money In Wall Street by Louis Rukeyser (Doubleday, $7.95)

1974 – How The Average Investor Can Use Technical Analysis For Stock Profits by James Dines (Dines Chart Corp, N.Y., $19.95)

1973 – Winning Market Systems by Gerald Appel (Capitalist Reporter, Inc. N.Y., $20.00)

Pulitzer Material Underscores War & Markets

2009-10-20T14:15:00.000-07:00

We are thoroughly enjoying David Rohde's gritty and insightful account of the situation and conditions in Afghanistan and Pakistan in his five-part series "Held by the Taliban" this week in The New York Times. Seems like Pulitzer material to us and we can't wait to discover the details of his and his colleagues escape.

Held by the Taliban
International / Asia Pacific
7 Months, 10 Days in Captivity
By DAVID ROHDE
Published: October 18, 2009
A Times reporter, David Rohde, and two Afghan colleagues were kidnapped by the Taliban in 2008 and held for seven months in Pakistan. This is the first installment in a five-part series offering his account.
http://www.nytimes.com/2009/10/18/world/asia/18hostage.html

But, more importantly, Rohde's story underscores the impact war has on the markets. In our ongoing study of "War & the Markets" we illustrate how the stock market has stayed in a trading range while the U.S. remains entrenched in a foreign military conflict or operaration that involves tens of thousands of U.S. troops.

After the conflict is resolved and the troops come home the tab comes due, generating heightened inflation. This wartime inflation propelled the Dow Jones Industrials up 500% or more following the ends of the major conflicts of the 20th Century. We expect this pattern to carryover into the 21st Century.

The market will be hard pressed to breakout of its current range since 1998 of about 6500-14000 with a line in the sand at about 10000 much like Dow 1000 held the line from 1966-1982 with a Dow range of about 600-1100. Below is an update of our chart, “500+% Moves Follow Wartime Inflation.”

Thanks Mark Hulbert!

2009-10-15T08:10:00.000-07:00

Hybrid Halloween Indicators
Commentary: Two advisers have improved on the Halloween Indicator

By Mark Hulbert, MarketWatch

ANNANDALE, Va. (MarketWatch) -- You should be completely out of stocks right now, sitting comfortably with 100% cash in your portfolio.

That at least is the current posture of the stock market timing system that arguably has the strongest statistical foundation of any that is in widespread use today.

I'm referring to the so-called Halloween Indicator, which says that we should be invested in the stock market for just six months each year, from Halloween until May Day. During the other six months we are to be in cash -- which is why this Indicator also goes by the name "Sell in May and Go Away."

The statistical pattern on which this indicator is based has been found to exist in the U.S. stock market back to the 1800s, in the United Kingdom stock market back to 1694, and in 35 of 36 foreign countries studied....

http://www.marketwatch.com/story/should-followers-of-halloween-indicator-buy-now-2009-10-14?siteid=nwhnwhnr

Bravo Counselor Suing SEC Over Madoff

2009-10-14T09:44:00.000-07:00

John Oleske, a securities litigator at Herrick Feinstein, the firm filing the suit against the SEC, artfully fielded tough questions on CNBC, clearly illustrating how the SEC was asleep at the wheel while Madoff drove away with $65 billion. Caveat Emptor, but regulators wake up. The SEC needs to be revitalized to properly referee the financial markets and protect individual investors as it was created to do. Well-played on TV Mr. Oleske!

Views from NOLA & Jim Rogers

2009-10-13T16:46:00.000-07:00

It was enjoyable and insightful to present at the recent New Orleans Investment Conference this past weekend. The Big Easy was in much better shape than I expected with Katrina a distant memory. This granddaddy of investment conferences is packed with excitement and knowledge. Founded 35 years ago by legendary investor Jim Blanchard, this conference is steeped in history and provides a myriad of sophisticated investment ideas year in and year out. I hope you join me there next year.

The heated political debate between conservative Karl Rove, libertarian Doug Casey and liberal Howard Dean was the talk of the show. But the global investing panel with Marc Faber, Frank Holmes and Adrian Day enhanced what we heard from Jim Rogers last week at the ETF Securities seminar in New York City.

These four gentlemen are quite convinced the secular bull in commodities has got legs and should last for the better part of the next 10 years along with a reduction in U.S. financial, economic and geopolitical hegemony. Jim also sees a bond bubble upon us and a stock market trading range for 10 years or more.

While we concur that the commodity boom will continue for years to come and that the rest of the world is giving the U.S. a run for its money – literally, we are just not convinced that U.S. prowess and largesse will fade into oblivion and believe major U.S. stock indices will be several times higher 10 years from now and at new all-time highs. Perhaps globalization in the 21st century will mean many nation-powers will coexist and work together for the advancement of the planet instead of there being only one superpower at a time. However, the good ole U. S. of A. needs to get rolling on nation building at home.

I was particularly pleased by the reception to my presentations and will look to incorporate some of the favorite charts from my slides into the Almanac and newsletter. I was also afforded the opportunity of some candid conversations with Stephen Leeb (The Complete Investor) who offered to interview me in his newsletter and Peter Eliades (Stock Market Cycles). The big chart at Stock Market Cycles’ booth caught my eye and we ended up debating the prospects for the market for the better part of an hour.

Additionally, we are evaluating for recommendation in the newsletter many of the mining and alternative energy stock opportunites that exhibited at the show as well an interesting firm that makes a real market in rare coins.

In general I found skepticism about the near future for U.S. stocks higher than expected so my contrary antenna are purring that stock prices are likely to increase over the next couple of quarters despite the vigorous rally we have enjoyed since the March low.

2 SFO Mag Articles

2009-10-02T09:22:00.000-07:00

October 2009 Issue

OCTOBER BEST BUYS

By Jeffrey A. Hirsch

Seasonal stock index trends provide valuable starting points for many trading strategies. But it is equally important to take a proper reckoning of market conditions as the historical seasonality period approaches and again when it wanes. In addition to assessing the overall market trend and economic environment, it is crucial to employ one or more technical indicators to further improve entries and exits. Full Article...

Good Reasons for Analyzing the Seasons

By John L. Person

A general form of fundamental market research is studying and applying the art of seasonal price analysis. This can be used by all traders, whether their focus is in stocks, exchange-traded funds, forex or futures. Staying with the seasonal price flow or dominant trend is like running with the wind at your back. Full article...

Octoberphobia?

2009-10-02T07:11:00.000-07:00

Despite posting the best quarterly gains since 2003 (though S&P and NASDAQ were stronger in Q2 2009), stocks began to weaken toward the end of the third quarter. The week after Q3 triple witching was down as it usually is. Stocks fell about 2% across the board.

Perhaps it’s a little Octoberphobia but, the market’s mild end-of-September retreat has gathered some momentum, down 2-3% today. Economic readings are reflecting a pause in the recovery. Job losses have picked up. Auto sales have softened now that cash-for-clunkers is over. Confidence pulled back and manufacturing stalled.

The banner performance of Q3 2009 and the chart pattern of the entire year (and bear market) are quite reminiscent of 2003. If 2009 pans out anything like 2003, Q4 should be strong. Once we get through Q1 2010, the recovery is bound to suffer some deeper setbacks and a more substantial decline. But for now in the short term, Dow 9000 or so is solid support near the June highs, between the 50- and 200-day moving averages and the trend line connecting the March and July lows. If the Dow should break 9000, falling to the vicinity of 8000 becomes more likely.

This pullback has put the Best Six and Eight Months MACD Seasonal Buy indicators in the red, potentially setting up for a strong Buy Signal. But for now with stocks on the run, be patient before taking new long positions or adding to existing ones. Once we get a clear MACD Buy Signal we will email out an official Buy Alert to subscribers.

Subscribe to Almanac Investor Newsletter and Get Your FREE 2010 Almanac Today!

Triple Witching Blues

2009-09-24T12:30:00.000-07:00

Just when we all were getting so cozy with the bull market, on queue stocks have begun to correct this week as they often do the week after third quarter triple witching. This pullback is something we warned of the last couple of months, but as we discussed last issue some positive economic readings and bullish market action lead us to believe that any pullback this fall is likely to be short-lived and shallow.

After a brief respite we expect the market to resume its rally and for the Dow to reclaim 10500 before this bull market is over and likely before yearend. We expect the Dow to move even higher than 10500 before the next bear market materializes, which we anticipate sometime in mid- or late-2010. Use any weakness from now through October to establish or add to long positions.

Colt of the Economy

In our Proving Ground piece in the September 2009 issue we highlighted the positive ramifications of the decline in Initial Jobless Claims and dubbed it a “colt of the economy.” Initial Claims turns out to be a much better leading indicator of economic recovery and nascent bull markets. Claims peaked in March near the low and have been in decline since.

There may be setbacks along the way as we just saw today in Existing Home Sales, but for now the pace of layoffs is declining and that is positive for the market in the near term. Note the undeniable inverse correlation between the Dow and Initial Jobless Claims in the updated chart below. (Click for larger image)

Buy Yom Kippur?

We have fielded a few questions recently about page 88 in the 2008 Stock Trader’s Almanac entitled, Sell Rosh Hashanah, Buy Yom Kippur, Sell Passover. It hearkens back to some old Wall Street adage and yet still has validity. Note in the updated table below that since Rosh Hashanah the Dow is down about the average and a bit more at today’s close. Observing this tradition in 2008 would have been a wise move.(Click for larger image)