Tuesday Market Thoughts

Still 100% long. Decided to let last week's buys run. They ran into a wall today. Not feeling too bad about it.


Yes, September is a dismal month historically. But I think I bought near the bottom of the summer's trading range and I'm not going to get too fancy with it. I believe the market is heading higher, and avoiding the brunt of the summer (and election year) correction was the plan.

Something about "trading the plan" comes to mind. But I do feel that reviewing the plan is a good idea. And when we were near the bottom of the trading range last Monday with the gloom very thick, it seemed to me that buying into the Labor Day and monthly strength pattern made sense.

We shall see!

***

Was at a bread and breakfast over the weekend up in the foothills. In the middle of nowhere. Very different.

Pic is of Carolina Marconi.

Investors Flee Stocks for ... The Next Bubble?

This USA Today column caught my eye. Investors believe bonds are safer.


Here.

Near historic low yields.

After a major bond rally.

So, investors got caught up in the 90's stock bubble. "Just click it in there, Mr. B" (remember Ameritrade commercial?). That wiped them out.

Investors got caught up in the housing bubble. "Sure, the mortgage is more than you make in a month, sir. But you can just flip the house in a month or so and make tens of thousands of dollars. No money down. Just sign here. And say, as you were signing, your equity went up $40,000. Would you like to borrow that out via a home equity loan and get a new car or go on vacation? That's your money. Unleash that equity!" Well, yeah.

Now, bonds are safe. Uh huh. And they're probably in bond funds, right? "After all, sir, you need the experience of a Bond manager and diversification. And you know, these short term funds only yield a percent. Let's go out a little longer for more yield."

Well, I think we know what's coming next.

Meandering Market Thursday

The market deviating a bit today from the pre-Labor Day week pattern. $$


Yes the pattern calls for a relatively flat day, but negative. We are drifting a bit higher as I type on my iPhone.

What does it mean?

Well, if you've been reading awhile, you know I pay attention to history. Not that things will repeat exactly, but things do tend to look familiar. The pre-Labor Day week has been up in the past, and we are in the pay day period where money is put in 401k plans.

Everyone was warning about September. But the market took a 7% hit in August. The gloom was thick. So maybe a lot of September was priced in during August.

Another thought is that maybe this is just a sigh or pause in the selling.

Everyone is anticipating a gloomy jobs number tomorrow. It will be interesting to see if that's priced in and the Labor Day pattern overrides the gloom.

Wednesday Randomosity (and Virtual Girlfriends!)

• Market rally was nice today.  If pattern holds, then tomorrow is flat and Friday is a rally.  Wouldn’t that be something if the market did exactly what it has done historically this week?
• The “other” big news today?  Steve Jobs decided Apple would try TV again.  There will be a new Apple TV device that sells for $99, TV shows rent for 99 cents, and movies for $4.99.  You will also be able to stream Netflix movies.
• Will everyone now believe that Apple invented streaming content to your TV? 
• Seems kind of underwhelming.  The Roku box does movies, Amazon streaming, MLB, and Netflix’s instant streaming library.  I’m sure the Apple device will be nice, but who wants to pay $.99 for a TV rental?  That seems lame when you can watch Hulu or record shows on a DVR.  And $4.99 per movie is pricey when Red Box is $1 a night and Netflix streams movies in an all-you-can-view for $9 a month format. 
• How does Apple TV compare to Roku? 
• Outlook dimming for Democrats.  The Cook Political Report, a newsletter that tracks congressional races, now lists 68 Democratic House seats as being at "substantial risk," up from 62 in July and 58 in June, and the group plans to raise the figure to more than 70 this week. Other pollsters and analysts have also increased their list of Democrats they now consider imperiled. By comparison, less than 10 Republican-held seats are thought to be in jeopardy. Before the Republicans start dancing in the end zone and celebrating in the 3rd quarter, they may want to press on and make sure they finish the game.
• In Japan, real men go to a hotel with virtual girlfriends.  After choosing one of three female characters—goodie-goodie Manaka, sassy Rinko or big-sister type Nene—to be a steady girlfriend, the player taps a stylus on the DS touch-screen in order to walk hand-in-hand to school, exchange flirtatious text messages and even meet in the school courtyard for a little afternoon kiss. Using the device's built-in microphone, the player can carry on sweet, albeit mundane, conversations.  Pictured above and here.
• So. Yeah, okay.  Who would you pick? 
• Had my fantasy football draft last night.  Eh.  We shall see.  Nothing is more boring than someone talking their fantasy football lineup.  Except, maybe, talking about their virtual girlfriend.

Wednesday Market Thoughts

Well, yes.   I am happy with the Labor Day trade I made on Monday.  I remain 100% invested in high-beta stocks.

So today will probably qualify as an Investors Business Daily follow through day.  Nice price move.  Nice volume day. 

I don’t know what’s getting the credit.  The ISM number?

"Investor sentiment was so negative that any flicker of light was going to move sentiment with quite a roar, and that's what we got," said Anthony Chan, chief economist at J.P. Morgan Private Wealth Management. "With the purchasing-managers index coming out of two largest economies in the world—China and the U.S.—coming in larger than expected, you can't ignore that this is good news."

…

"If there are markets that are growing, U.S. companies can prosper, regardless of the domestic labor markets in the next few months," said Jerry Webman, chief economist and senior investment officer with OppenheimerFunds.

Dow up 2.5%. 

SP500 up 2.6%

Nasdaq up 3%.

QQQQ up 2.99% and the VB up 3.69%

Monday Randomosity

• It seems as if I am a bit "early" in my stock buys today, eh? Sure, I probably should have waited until near the close. But buyers could have came in trying to do the same thing I am. I think the bearishness is getting a bit thick. And lots of warnings about September coming. So, trying to fade that a little.




• Jeremy Siegal says that income investors should look at large cap dividend stocks and get out of bonds. He lists the top-10 large cap dividend payers. I agree, but I'm more slanted to growth right now.
• "We'll slog our way through this", said Thomas Hoenig, president of the Federal Reserve Bank of Kansas City.
I think that is true. But I also think things are better out there than what we're reading in the papers or watching on Glenn Beck. And by the way, how many attending the Restoring Honor rally? Liberals cling to the 87,000 number from CBS. ABC said between 200,000 and 600,000. NBC said 300,000 to 500,000. And I say who the heck cares? More than a handful attended. Good enough.
• Paris Hilton To Face Felony Drug Charge Report. We will put a picture in of Paris from her glory days; and I do mean the Carl's Jr. Bikini ads. Those were hot.
• Jim Rogers is a little gloomy on the US nothing new. Likes Asia. Thinks the US debt problem is a historical problem that will end as it has always done.

Buying Stocks

Taking a position in some stocks here. $$ If the Labor Day pattern holds (as noted below) maybe there will be some pop after today's swoon.

Maybe. [crosses fingers]

Maybe not.

Stock Market Returns Around Labor Day

So, I guess it's a good time to look at how the market has done before and after Labor Day.

All of this news will come just in time for the Labor Day weekend, a historically unkind time for stocks. The folks at Bespoke Investment Group, an investment research and money management firm, crunched 20-years of data and found that the Dow doesn't like the end of summer anymore than anyone else does.

On average, the Dow has lost 0.54% in the five days before Labor Day over the last 20 years, the firm found. That would equate to a decline of about 55 points on the blue-chip index this week, leaving it below 10,100. When investors return from the holiday, the results historically have been equally lackluster. In the four-day trading week following Labor Day weekend, the Dow has averaged declines of 0.04% in the past 20 years.

As the researchers at Bespoke put it, "Isn't the end of summer already depressing enough?"

See full article from DailyFinance: http://srph.it/cILNoN

And here is a longer term chart. Looks like so far, things are progressing as expected...

The Big Bond Bubble

I think we all know that at some point, bond investors will get crushed when rates begin to rise.


On the other hand, yields continue to fall and "the experts" expect more rate declines as the sluggish economy stumbles along.

I will say it again, but I think the economy is on the mend.

Bloom Box is Trending

I downloaded a new trending topics app, and Bloom Box was the number one item. What is it? Alternative energy!

Not to be confused with what else showed up in the search results, Boom Blox, a game for the Nintendo Wii.


Let's hope Bloom Box is more successful than Boom Blox was for the Wii.

The iPad app is called TrendTopic. Very cool way to view what's hot on the web via Twitter and Google.