Tuesday, November 25, 2008

TUES. NOV. 25- What Is "Real?"

A key point missing from the discourse about the downdraft of American finance is this: how much of the economic growth that took place in the last 60 years was “real?” The growth rate since the advent of the Kennedy presidency has been approximately twice that of the preceding 160 years. The United States has consistently run trade deficits for approximately two generations. Thus, when one really thinks about it, was the engine of economic growth the boom in Silicon Valley, the technological advances in industries such as defense, and, say, the mini-boom in ethanol or is it more due to the fact that the U.S. has been a debtor nation in which our consumers have bought too many televisions and other gadgets? There is not a doubt that advances in technology and efficiency in industry has played a substantial role in increasing productivity. However, the fact of the matter is that the rate of borrowing has been commiserate with the rate of growth. What this may well portend is that the slowdown we are experiencing may be much more deep and extended in duration than most economic slowdowns in the history of the United States. The biggest worry of course is that the lenders, i.e. foreign nations decide that the U.S. may not be able to pay them back and they reduce their easy credit. And the bad times continue. For day traders, this very macro thinking leads to one thought- don’t think about this type of topic during the trading day! It is impossible to guess a bottom (which for all we know already occurred) in the stock market, so why try? at Protrading Network, the focus is on the next two minutes rather than the next 20 years so instead of pondering deep concepts such as the one described in this entry, focus instead on what will happen in the imminent future else your mind gets muddled- and your trading losses start.

The Wall Street rally spread throughout Asia and Europe with markets up 3% on average in Europe and about 1% in Europe. Futures state-side are a bit weaker ahead of the final third quarter GDP report this morning. However, the huge $500b billion investment in MBS's by the Feds should give the market a good bid no matter what- something that should last most of the morning if not all day. Look for a little profit-taking, but the tone is good.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-

Good- The following stocks have good news and/or a strong technical pattern

HPQ – company had good earnings and raising guidance, but did uptick sharply on close yesterday.

SBLK- decent earnings

CTRN- good earnings

DCI- decent earnings

SLG- very strong; could be A-B-A2 thru yesterday’s 16.31 high

BAC, JPM, USB- all very strong; will likely be choppy today, but kinda like A-B-A2 to downside if markets weak

APP- huge rally into close; should hold below 3.95…if not, buy above 3.95

SIFY- massive rally; may be more short covering…looking for buy above 1.75 the first time it gets above there if it does

JNY- on “Mad Money” last night

AFL, MET- among the insurers which closed near their highs

HPT, DDR, KIM, GGOP- among the REIT’s closing at or near their highs

Bad-The following stocks have bad news and/or a weak technical pattern

ADI- bad earnings

TWB- continued weak yesterday; like an A-B-A2 short thru 2.07

GS- issuing $2 billion of new debt

GCO- missed earnings and warned slightly

TECD- missed earnings

VIP- missed earnings estimate












Good luck today.


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