Posts Tagged ‘SPY’
JOBS REPORT AN EARLY CHRISTMAS GIFT FOR OBAMA
December 2, 2011
The top three issues in the upcoming 2012 election are jobs, jobs and jobs. President Obama would be fighting against strong historical precedent trying to win reelection with unemployment staying above 9%.
Over the last several months, unemployment has stubbornly refused to budge down. At 8:30 EST this morning the U.S. Department of Labor reported a dramatic drop in unemployment. Expectations were that unemployment would stay at 9%. The number dropped dramatically to 8.6%. Such dramatic drops are rare.
ADP had given us on Wednesday forewarning of the possible strong employment number. ADP is one of the largest payroll processors in the United States, and uses the payroll data it has from private employers to compile private sector jobs data. On Wednesday, ADP reported that the private sector added 206,000 jobs in November. This was way up from October’s job number of 130,000 and the largest gain in 11 months.
Challenger, Gray and Christmas, an outplacement firm, recently reported that the number of planned layoffs in November 2011 was 42,474, down 13% from November 2010.
The dramatic fall in the unemployment rate is remarkable considering federal, state, and local governments lost 20,000 jobs. Also remarkable is that the number of part-time workers dropped by 378,000 over the month. It is believed that individuals work part-time because their hours have been cut or they were not able to find a full time job…Read More at Forbes ..
Tags: BIG EUROPEAN BANK FAILURE AVERTED: WHAT CENTRAL BANKS DID NOT TELL US
November 30, 2011
It appears that a big European bank got close to failure last night. European banks, especially French banks, rely heavily on funding in the wholesale money markets. It appears that a major bank was having difficulty funding its immediate liquidity needs.
The cavalry was called in and has come to the successful rescue.
The Federal Reserve, the Bank of England, European Central Bank, the Bank of Japan, the Swiss National Bank, and the Bank of Canada in a coordinated action moved to provide liquidity to the global financial system.
In a separate move, the Chinese Central Bank cut bank reserve requirements. The People’s Bank of China cut reserve–requirement ratio by 0.5%, the first cut in nearly three years.
The problem was not at U.S. banks as is evidenced by the following excerpt from a statement by the Federal Reserve.
U.S. financial institutions currently do not face difficulty obtaining liquidity in short-term funding markets. However, were conditions to deteriorate, the Federal Reserve has a range of tools available to provide an effective liquidity backstop for such institutions and is prepared to use these tools as needed to support financial stability and to promote the extension of credit to U.S. households and businesses.
These are the type of actions that were being taken during the financial crisis in 2008. Now most knowledgeable experts agree that not rescuing Lehman Brothers was a mistake. The authorities are not about to make the same mistake again. The only explanation for the massive action is that central banks were concerned about a pending failure that is not publically known. The readers may want to make their own judgment from the following excerpts from a statement by the Federal Reserve…Read More at Forbes..
DRAGHI CHANGES THE GAME FOR STOCKS, GOLD, SILVER AND OIL
November 5, 2011
It turns out that Mario Draghi is Super Mario. Mario Draghi is an ex-central bank governor of Italy who just took over from Jean-Claude Trichet the presidency of the European Central Bank (ECB).
In a surprise bold move, Draghi announced that the ECB is lowering its main rate from 1.5% to 1.25%. This rate cut will either avert the looming recession from Europe, or make the recession milder.
This cut in interest rate came despite inflation in the eurozone at 3%, which is a three-year high. Draghi’s predecessor Trichet saw the ECB’s mandate as controlling inflation irrespective of the economic slump. Inference from the bold action by Draghi is that a major shift in policy in Europe is occurring. It appears that finally monetary authorities are about to give priority to growth.
Considering that eurozone is a major part of the world economy, Super Mario has changed the game for stocks, gold, silver, oil and currencies.
The following are the actions we are recommending:
- Take profits on a short silver position. Prior to the announcement, our models had just given a signal to add to the short silver position and were close to giving a short signal on gold.
- After plugging in the rate cut, we are no longer inclined to short sell silver and gold. If there is a big dip in silver and gold, and all six screens of the ZYX Change Method are met that may be a time to buy gold and silver.
ETFs of interest include GLD, IAU, SLV, GLL and ZSL….Read More
MAKING MONEY FROM OBAMA SPEECH: (SPY),(QQQ),(VMC),(MLM),(MBI),(MWW),
September 9, 2011
Barack Obama in an attempt to reinvigorate his presidency and the economy has presented to the congress a jobs plan. The $450 billion price tag is larger-than-expected.
The plan proposes to reduce payroll tax paid by employees to 3.1% in 2012 from the 4.2% level temporarily introduced this year. As it stands now, without this plan, this tax would revert to its traditional rate of 6.2%.
The plan will also reduce the payroll tax paid by the employers from 6.2% to 3.1%, with a limit of the first $5m of wages. Further employers hiring new workers or increased salaries will be exempt from payroll taxes on the higher payroll.
The plan also calls for the establishment of an infrastructure bank funded with $80bn.
The plan also proposes finding ways to help homeowners take advantage of low mortgage rates.
As my long time readers know the point of my articles is to help readers make money. As always, I will refrain from making comments that have no bearing on generating profits. Here is my plan to make money from his speech:
The plan has a very heavy emphasis on tax cuts. This portion of the plan is likely to pass the Congress. Consider buying Monster Worldwide (MWW), LinkedIn (LNKD), Automatic Data Processing (ADP), and Paychex (PAYX).
Proper timing of the purchases can make a big difference in the profits that are ultimately realized. Please consider using a proven method such as ZYX Change Method to time the purchases. I will provide buy signals in real time on the Real Time Feed of the ZYX Buy Change Alert. Read more….
HEWLETT-PACKARD (HPQ) AND SYMPATHY PLAYS: OPEN TEXT (OTEX), DELL (DELL), LEXMARK (LXK), SPY, DIA, QQQ,
August 18, 2011
Hewlett-Packard (HPQ) stock has fallen from a high of $49.39 to a low of under $30.00. One of the problems that Hewlett-Packard faces is that PCs and printers are low margin commodity businesses.
Today, there are reports that the Hewlett-Packard will spin off its PC and printer unit. Such a move will help the company shed its low margin business.
There is also a report that Hewlett-Packard is close to buying Autonomy for about $10 billion.
Autonomy is based in Cambridge, England, and trades on the London stock exchange.
Autonomy is the leader in providing software to search and organize data like emails. The company counts some of the largest corporations in the world as its clients.
When we apply the Quantitative Screen of the ZYX Change Method , the fair value of Hewlett-Packard is in the range of $45. to $50. There is an underlying assumption that the company does not botch up the transition in reaching these valuation numbers.
Leo Apotheker used to run SAP (SAP), one of the largest software companies in the world.
Hewlett-Packard is a member of Dow Jones Industrial Average. Any big up move in Hewlett-Packard will have a positive impact on ETFs DIA, QQQ, and SPY. Hewlett-Packard is not included in QQQ, but QQQ will be the main sympathy play.
Open Text (OTEX) is a company similar to Autonomy and may move up in sympathy.
Buy signals have been provided with exact entry points to the subscribers to ZYX Buy Change Alert. Read more…..
STOCK MARKET SENTIMENT STILL FLASHING CAUTION: NOT PRUDENT TO INITIATE LONG POSITIONS YET (SPY,QQQ,DIA)
August 16, 2011
We are long QQQ (QQQ). Some accounts we advise are also long SPY and DIA.
As long time readers know, I follow the ZYX Change Method. The method combines fundamental, quantitative, and technical analysis. From a fundamental and quantitative point of view, the stock market is not expensive and should move up. However, the sentiment component of the technical screen of the ZYX Change Method is flashing caution.
For us, sentiment is an important indicator. We use a proprietary sentiment indicator that is a composite of the following:
- Emails from our subscribers and clients
- AAII Survey
- Option skews
- Put call ratios
- Put call open interests
- Money flows
The following table describes how the sentiment is interpreted at The Arora Report (click to enlarge images):
Bottoms are formed when sentiment gets extremely bearish. This is the point when all the weak hands have sold the stock. Once stocks get in the strong hands, markets rally.
The American Association of Individual Investors weekly survey data is shown in the table below. The readers will notice that during the June 9, 2011 swing low, the bullish sentiment was lower than the point when the market went down 1500 points. This shows that during the recent sell off, bullish sentiment never got flushed. Read more…
U.S. DOWNGRADE MAY NOT AFFECT INSTITUTIONAL TREASURY HOLDINGS (SLV, GLD, TBT, TBF, TLT, SPY, DIA, QQQ, ZSL,)
August 8, 2011
….Correct Information About The Law
Here is what the law is:
- While S&P cut the long-term rating, it reaffirmed the short-term rating for the US at the top A-1+ level. This means money market funds will not be forced to sell US Treasuries.
- Most banks in the United States are regulated by the Federal Reserve Bank. The Federal Reserve has issued a crystal clear statement that there is no change in the risk weighting of US Treasuries. This means that the banks will not be forced to sell US Treasuries.
- Most insurance companies in the United States are governed by state regulators. It is likely that state regulators will follow the lead of the Federal Reserve, and insurance companies will not be required to sell US Treasuries.
- There are three primary credit rating agencies – S&P, Moody’s (MCO), and Fitch. W…
The Plan
I will be providing guidance in real time to clients and subscribers. If time permits, I will also provide some guidance on an ongoing basis on my blog.
We will stick with the plan outlined in my last article.
- If stocks get hit, we will be buyers of the ETFs SPY, DIA, and QQQ.
- If gold and silver spike up, we will short sell the ETFs GLD and SLV or buy ZSL.
- We will take the opposite side of the first move in US Treasuries. We will use the ETFs TBT, TBF, and TLT.
- We will be buyers of other assets if they come down to . read more….
U.S. DOWNGRADED: WHAT TO DO NOW (SLV, GLD, TBT, TBF, TLT, SPY and QQQ)
August 6, 2011
Standard & Poor’s (S&P) has just downgraded U.S. credit rating to AA+
from AAA. S&P analysis can be found here.
THis dongrade presents investment opportunities in SLV, GLD, TBT, TBF, TLT, SPY and QQQ.
S&P Analysis
Here is an overview of the analysis by S&P:
- We have lowered our long-term sovereign credit rating on the UnitedStates of
America to ‘AA+’ from ‘ AAA’ and affirmed the ‘A-1+’ short-term rating. - We have also removed both the short- and long-term ratings fromCreditWatch
negative. - The downgrade reflects our opinion that the fiscal consolidation plan that
Congress and the Administration recently agreed to falls short of what, in our
view, would be necessary to stabilize the government’s medium-term debt
dynamics. - More broadly, the downgrade reflects our view that the effectiveness,
stability, and predictability of American policymaking and political
institutions have weakened at a time of ongoing fiscal and economic challenges
to a degree more than we envisioned when we assigned a negative outlook to the
rating on April 18, 2011. - Since then, we have changed our view of the difficulties in bridging the
gulf between the political parties over fiscal policy, which makes us
pessimistic about the capacity of Congress and the Administration to be able to
leverage their agreement this week into a broader fiscal consolidation plan that
stabilizes the government’s debt dynamics any time soon.
Our Analysis
There will be no shortage of opinions in the media on the downgrade. The
problem is that the vast majority of the opinions do not make money for the
investors. I am refraining from writing my opinion; instead I am focusing on
helping investors make money.
