Market Volatility is Ramping Up-A Traders Game

Position traders beware! Trading volatility is ramping up. Investors shouldn’t be trying to figure out which way the market will run. Let’s look at the past week as an example. Here are the closing prices for the December futures contract for the Dow Jones Industrial Average:

Monday 9/29 16980 -50
Tuesday 9/30 16965 -15
Wednesday 10/1 16740 -225
Thursday 10/2 16724 -16
Friday 10/3 16921 +197

On Monday and Tuesday the stage was set for the bears to take control. The media reports were notably bearish. The Conference Board’s assessment of consumer confidence fell to 86.0 in September, down from 93.4 the previous month.

Then the Case Shiller report on home prices reported that seasonally adjusted prices in 20 cities fell .5% in July.

Topping the bearish news, the Institute of Supply Management’s Business Barometer fell to 60.5 in September from 64.3 in August. Expectations were for and increase to 61.9

On Wednesday more bad news. The Institute of Supply Management issued its reading on factory output. The latest September reading was 56.6, down from the August reading of 59 and lower than analysts expectations of 58.5.

Now the media is screaming-correction, correction. To add fuel to the fire they touted the Ebola scare and fears of the epidemic spreading the United States. Now the bears load up and slam the market for 225 Dow points on Wednesday. This was followed by another 16 point drop on Thursday.

These four days of selling were on top of the previous weeks sell offs. Now from the high of 17260 in the futures prices we were down 590 points. This is sellers dream, right?

On Friday, the monthly job growth numbers came out with 248,000 new jobs created during the month of September and the jobless rate falling to 5.90%. Now the bulls take command and drive the futures to a high of 17055, closing at 16921. Now the high of the day is only 205 points off the all time high. The shorts are driven back into hibernation.

What this illustrates is that this is no time to be a market guru. It is a traders game. You must be nimble and take each day as it comes with no preconceived notions as to whether the market is bullish or bearish. Look for this volatility to continue.

There are some other big plays that have been underway for a couple of months. Most notably is the strong dollar. The US Dollar index has risen to a 12 week high of 86.74 and is up 8% this year. Conversely, the Euro and Japanese Yen have nosedived. The Euro fell from a recent high of $1.40 down to $1,25, The Yen traded 109.90.

Commodities are getting destroyed, especially gold and oil. The December crude oil contract has fallen from a high of $112.24 per barrel down to a low of $88.18 per barrel on Friday. December gold fell from a high of $1383.10 to a low of $1192.10 on Friday for a loss of $191.00.

The US Dollar and commodities tend to move in opposite directions. There have been excellent trading opportunities in the currencies, oil, commodities and commodity related stocks.

One final word. Do not have a fixed mind set. It is perhaps a good time to let the market tell you where it is going. So far, major trend lines have remained intact.

Investors Seek the Fed’s Guidance on the Economy

What do the latest Fed minutes tell us? Since the recession began, the Fed has set two goals for the economy. Perhaps the foremost objective is to maintain inflation at or near the 2% level. The one crisis point would be a drop in inflation below the flat line. This would indicate that the economy is teetering on the brink of recession. The entire quantitative easing program is aimed at keeping the economy growing. We are seeing the effects of stagnation in Europe with the introduction of negative interest rates to stimulate the economy. So far, the US economy has been expanding, albeit very slowly. The latest 2nd quarter GDP numbers came in better than expected at 4.6%. The media has jumped on this number and is prodding the Fed to raise interest rates. However, all is not that great. The 1st quarter GDP actually fell 2.1% after a brutally cold winter in the Northeast. When taken together these numbers indicate a moderate expansion in the economy. According the Fed’s statistics, inflation in August was at 1.7%. However, this number does not include food, energy and shelter.Continue Reading

Currency Info: How Does the Strong US Dollar Affect Your Portfolio?

Currency fluctuations affect a country’s economy and, in turn, the individual investor. Here we want to examine how a strong or weak currency will permeate the economy. Always remember that currency fluctuations are relative depending on the countries involved.Continue Reading

Smartphone Wars: Apple Leaps Ahead of the Competition

This week Apple (AAPL) walked the red carpet with its new iPhones, Apple Watch and Apple Pay. The iPhones are the attention grabbers for smartphones with a wait of up to a month to own one. However, when we analyze the three innovations in interlocking devices, we see that Apple has stolen the lead, not only in iPhones but in the electronic payments arena. Apple is setting the stage for a dynamic and profitable new technology that changes the way we pay for purchases. Let’s take each product separately, then link them together in a seamless whole:Continue Reading

Save Over $100,000 by Refinancing Your Mortgage

The train is leaving the station. Now you have the chance of a lifetime to save over $100,000 by refinancing your present mortgage. Sound too good to be true? Not at all. Before we crunch the numbers, you should have a basic knowledge about how a mortgage works and what expenses you are likely to have.Continue Reading

Why are Oil Prices Falling in the Midst of Mid-East Chaos?

The oil market is one of the most illusive and difficult markets to understand. In past decades it was simple. OPEC controlled prices. When prices got too low, they cut production and prices rose. Now, however, we no longer have a single group in charge. The market is fraught with trends and counter trends that create confusion and places traders on edge. Just about a month ago, West Texas Intermediate (WTI), the US benchmark, was trading at $106-$107 per barrel. This Friday prices have dropped to $93.65 per barrel for October delivery. There are rumors of a price drop to $70-$80 per barrel.Continue Reading

The Alibaba IPO is Coming Soon

Get ready. Get Set. It’s coming. The Alibaba IPO (BABA) is set to make its debut. Word on the Street has it that it will be in September. The Alibaba IPO promises to be one of the biggest IPOs in history. Many people are still wondering: “What is Alibaba?” Much like visionary Steve Jobs at Apple, founder, Jack Ma, had a vision of starting the biggest online e-commerce company in the world in China. Much like the first techies at Silicon Valley, he started Alibaba in his garage. He knew that the United States had the technology to build huge online stores like Amazon. He was able to convince a small group of entrepreneurs to work with him and Alibaba was born. Today, Jack Ma is China’s 8th richest man and ranks 122nd on Forbes list of richest persons. He has since given up the reins at Alibaba but will remain the largest shareholder. He has structured his board of directors so that he has control over half of the appointments. Ma’s business philosophy states that he recognizes the ruthlessness of capital markets, but has vowed to put customers before shareholders.Continue Reading

Ebola Stocks-Should You Invest Now?

The dreaded disease, Ebola, has captured the imagination and attention of traders and speculators. It has erupted in Africa and has spread quickly, causing 1,000 deaths, and 2,000 new infected cases. There is a dire race to find a cure. To date, no cure is available. This has prompted a search for biotech companies that have started to do research on Ebola.Continue Reading

Trouble Ahead-Big Company Profits and Declining Employment

Over the past two decades we’ve had growing trends toward globalization and technology. The stock market crash of 2008-09 and the ensuing unemployment exacerbated and accelerated these mega changes. Profits are down. Continue Reading

Step Into the World of Google Glass and Vuzix M 100 Smart Glasses

Perhaps some of you are old enough to remember the Dick Tracy wrist watches. If you used you imagination, your wrist watch would do magical things. Now, you can let that imagination carry into the latest technological breakthrough of Google Glass and Vuzix M 100. What we have is a wearable computer with an optical head monitor and display. It can be voice activated and hands free.Continue Reading