This article will start by mentioning some of the shortcomings of the Dow Theory, which is explained in detail in: My First Post Examining Dow Theory.   For example, the Dow Theory, on average, might miss around 20 to 25% of a move before generating a signal identifying it. For many traders this is too late. A Dow Theory buy signal usually occurs in the second phase of an uptrend as the price penetrates a previous intermediate peak.  This is about where most of the trend following technical systems begin to identify the existing trends.

There is never a time when the Dow Theory does not lend itself to presumptions as to questions concerning the direction of the primary trend, because this is an area that is highly prone to misjudgment, particularly at the beginning of each major trend and ensuing for a short time after when the answer given by Dow will usually be prove wrong. There will be a certain time then when the Primary Trend will be up according to Dow, but analysts may advise not to invest at that stage because the looks of the trend are showing on the trend being diminished somewhat and the smart investor better stay out, and the one who is already invested may wish to opt out at this point, being that there is a larger chance that the trend will fail.
However as you see in the Chart below, one can do pretty nicely for himself over the years if he buys and sells only of Dow Theory signals:

Popular Posts:

• The Euro Is Bottoming Out Against the Japanese Yen Views: (67865)
• Why China is Winning the Economic War Views: (66068)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)

Share and Enjoy

During what was called the “cold war” that ended with the fall of the Communist Totalitarian Regimes in Eastern Europe, one of the major fears was a military conflict between Russia or China and the U.S.
It did not happen. The potential of a military conflict has instead evolved into an economic war.

The U.S. was winning hands down for a long time. It used to be that the U.S. was number one in almost every category: education, technology, standard of living, economic and military strength; and as a moral and ethical leader of the world. It was leading the rest of the world into the future with the demonstrative power of democracy and free markets, for example, new technological breakthroughs in many fields: automation, computers, communications, energy, medicine and space travel, amongst others.

In recent years, a number of countries have surpassed the U.S. in specific areas, including consumer incomes, standard of living, and health care. The true economic powerhouse, however, has been China. Some of the statistics, and the speed with which they have changed, have been startling. Over the last ten years Chinas economy has surged past those of Canada, Spain, Brazil, Italy, France, and Germany, and is expected to pass Japan this year, to become the second largest economy in the world, behind the U.S.

Whether it is categories of manufacturing efficiency, high-speed rail-line technology, nuclear power plant construction, clean air energy technology or education, China is making impressive global inroads, even in areas where the U.S. still has significant dominance. Much of it has to do with Chinas massive population, about which the U.S. can do nothing.

For instance, while U.S. Internet companies dominate global headlines, China now has the worlds largest Internet market as measured by the number of users. Yet Internet use has only penetrated 22 percent of the population versus 75 percent in the U.S. Meanwhile, U.S. Internet giants like Google, Yahoo, eBay, Amazon and FaceBook are experiencing problems trying to transport their dominance into the Chinese market. Part of this are obstacles placed in their way by Chinas government, in support of Chinas state-controlled corporations. The result is Chinese Internet companies like Tencent, and Baidu, cannot help but become world leaders.

Here is a statistic of more importance: U.S. universities should graduate about 150,000 engineering students this year, while Chinese universities will likely graduate more than 500,000. Now that may be an unfair comparison since Chinas population is larger by approximately the same ratio. But that is not the issue. The issue is the degree to which China has moved higher education to the top of its priorities, and the fact that 500,000 new engineers a year will probably come up with more high-tech innovations than 150,000 can. Chinas great leap forward has been going through the same phases that the United States experienced in the turn of the last century as it worked toward becoming the worlds dominant economy.

In the midst of all this, it may be that China is starting to eat Americas lunch, never taking its eyes off the goal; while we squabble among ourselves, paying no attention. Thats unfortunate. As Sam Houston said in the U.S. Senate in 1850, “A nation divided against itself cannot stand.” Yet, for the last 15 years the U.S. has divided itself in increasingly bitter time and energy-consuming political arguments: the morals of President Clinton, whether or not war should be waged to remove Saddam Hussein from power in Iraq, whether the country’s current problems are due to the depth of the economic hole dug during the last administration, or ineptness of the current administration in pulling the economy out of the hole.

Meanwhile, China has instead kept its eye on the goal. It not only is making great economic strides, but on the financial side has become the worlds largest creditor nation, even as the U.S. has become the worlds largest debtor nation, with China holding much of its debt. The U.S. needs to interrupt its angry divisiveness and name-calling long enough to recognize the importance of what is going on. Unfortunately, historically speaking; this does not seem to be happening soon.Popular Posts:

• The Euro Is Bottoming Out Against the Japanese Yen Views: (67865)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)
• The Dow Theory: Part I Views: (57998)

Share and Enjoy

This is Vanguard Fund Group’s Sector Fund that follows the whole world markets’ trends and situations.  Excepting, and this is one HUGE exception, the United States.  This fund was formed in 2008 in the midst of the sub-prime fiasco in an attempt to gain investors who sought less affected areas of the world as a general investment.  This proved wrong because, as we know, the depression became world wide and Vanguard investors lost about the same as, say, an investor in the Futures Contracts on the S&P 500.

This Fund is now in a long term sideways (resting) pattern called a symmetric triangle.  It is shown on the weekly chart below.  It seems ready to break out and will probably do so within the next 2 weeks or so.  The profit potential at breakout is about 35%.  Follow the Chart on a daily basis with the triangular lines drawn upon the weekly chart, and AFTER a break is confirmed, only then buy long if it is breaking upwards, or sell short if it is breaking in a downwards direction.  These is generally a pattern with a high percentage of breakouts being fulfilled.

This is the way the Chart looks:

Popular Posts:

• The Euro Is Bottoming Out Against the Japanese Yen Views: (67865)
• Why China is Winning the Economic War Views: (66068)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)

Share and Enjoy

If you look to the Chart below you will see most evidently the major top I speak of.  It is a Head and Shoulders top like the one in my US Dollar Index article’s Daily Chart.  But this is on the Weekly Chart and therefore shows longer term patterns.  This top is considered a long term major top and may play this role for some months to come.  The target to fulfill the pattern may be below 950 point for the S and P 500 Index and may well spell the beginning of a long term downwards cycle for the world’s financial markets.

This is the way the Chart looks:

Popular Posts:

• The Euro Is Bottoming Out Against the Japanese Yen Views: (67865)
• Why China is Winning the Economic War Views: (66068)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)
• The Dow Theory: Part I Views: (57998)

Share and Enjoy

The US Dollar Index Futures, a major tool used to estimate the US Dollar’s true worldwide value as it trades against the major currencies of the world, has been quietly making a technical pattern called a “head and shoulders” .  If you look at it  carefully you will see an image, more or less of a man’s head and shoulders, with the shoulders peaking slightly at their end.  This is the classical look of the pattern.  Once more, the Index has already broken out from the pattern, i.e. passed the neckline, and is on the way to fulfill its destiny and head to the target I listed on the Chart below, that is, 82.00 points.

Since this pattern is usually associated with major tops and we have no reason to believe that such is not the case here, I do believe we are at the start of a major downwards trend that could last a few months to a year and drag the Dollar down to places it has not seen in a long time.  More than 10 years of US Government spending on wars and bailing out financial criminals have flooded the world with its own currency of reference.  Now it is time for the Dollar to pay back for the devastation it has wreaked on many innocent people.  It will be only a symbolic gesture, and we may well forget it this time next year.  Because, you know, this is a world where lies thrive and the Mighty Dollar rules!

This is the way the Chart looks:

Popular Posts:

• The Euro Is Bottoming Out Against the Japanese Yen Views: (67865)
• Why China is Winning the Economic War Views: (66068)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)
• The Dow Theory: Part I Views: (57998)

Share and Enjoy

If one gives a brief glance at the Charts of major currencies as they are currently being traded against the Euro, there can be observed a certain change, maybe even a trend-reversal in the making.  This is especially true when you see the EUR/JPY cross rates in the Chart below:

The June Double Bottom can be clearly seen as a W shaped bottom built in a classically-shaped pattern.  What makes the bottom even more commanding is the long and extremely proving negative divergence that I show in blue from the beginning of May to the start of June.  The RSI trend, as shown by the blue line below, is in an upwards trend, while the prices are in a definite downwards trend, as shown by the blue line above.  This lends credence to my thesis of a W bottom having formed on this Chart.

All of this  is good news for the Euro, which had little good news to smile at lately.  And, considering the 6-8 possible bottoming patterns I have seen in Charts depicting trading of the major currencies vs. the Euro, this may be indeed the time to invest in what I see is a relatively cheap Euro that in my mind has been bashed enough and is now in turn for better days.Popular Posts:

• Why China is Winning the Economic War Views: (66068)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)
• The Dow Theory: Part I Views: (57998)

Share and Enjoy

A reality knock is on its way for the pound. For the past week or so, sterling has been gliding higher, boosted by the new coalition government’s fiscal discipline and by talk from one Bank of England monetary policy maker that rates should rise. In a world where austerity is becoming the norm, Chancellor George Osborne’s plans to slash public spending even more than expected removed the risk of a credit downgrade.

For investors who have spent the last few months dodging the debt crisis sweeping through the euro zone, this could only be seen as good news. However, as data on Monday indicated, the economic price for reducing the country’s deficit so fast will be high. The economic recovery that showed signs of taking off in the first half of this year has already started to falter, even before the fiscal measures in the emergency budget late last month have been introduced. Although the manufacturing industry may not have contracted quite as much as many feared last month, the much larger and much more important services sector of the economy has proved a lot less resilient. The latest purchasing managers’ index fell much more than expected with business expectations plunging to a 15-month low.

Coming against a background of increased fears about a double-dip recession not only in the euro zone but in the global economy as a whole, the prospects for the U.K. economy are looking decidedly dim. So, although the economy may have achieved growth of 0.6% in the second quarter, that is the best the country is likely to see for some time. “The survey data have continued to cast doubt on the ability of the private sector to weather the fiscal tightening when it begins in earnest soon,” warned Vicky Redwood, U.K. economist with Capital Economics, an independent research group, in London. By taking its fiscal medicine on the chin, the U.K. economy may yet achieve more sustainable growth sooner than its competitors, paving the way for U.K. interest rates to start rising well before their peers do.

But, there is little sign that higher U.K. rates are needed in the near term. On the contrary, pricing power in the service sector appears fairly limited while input prices are running at the lowest level in six months. Given this, there should hardly be any fresh pressure for the Bank of England to start tightening policy when its policy members hold their next meeting on Thursday. Last week, three other members of the policy committee made it clear that they didn’t support any early move. This should ensure that sterling remains at a disadvantage to high yields just now and even if general market sentiment improves that the pound loses some of its recent support.

Even though sterling is still trading firmly over $1.5100, technical analysis suggests that its recent rally is more or less over. See how the pound has glided higher against the dollar and seems to be nearing a certain top as it bounces off the historically strong resistance line that is active for over 20 years.

This is the way the Chart looks:

At Den Dansk Bank, analysts are putting out a sell recommendation for any rise over $1.5304, warning that there is scope for a return all the way back down to $1.3500.

Early Tuesday, financial markets were having a little bit of relief rally with the Nikkei rising 0.8% and the Shanghai Composite gaining 1.1% after the Reserve Bank of Australia left rates unchanged as predicted but proved much less dovish about global growth prospects than expected. A larger-than-expected increase in Australia’s trade surplus also helped to offset some of the recent negative sentiment that has been dominating global markets.

By 0645 GMT, the pound was up at $1.5192 from $1.5135 late on Monday in North America, according to EBS.

The euro was up at $1.2585 from $1.2541 and rose to Y110.50 from Y110.02. The dollar was essentially flat at Y87.77 compared with Y87.75.

The improvement in sentiment may not last long given that a continued decline in the Baltic Dry Index points to a further reduction in global trade, suggesting lower demand from countries such as China. Also, the latest Institute for Supply Management survey for U.S. non-manufacturing is expected to show another decline, reminding investors that the U.S. recovery is stalling.Popular Posts:

• Why China is Winning the Economic War Views: (66068)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)
• The Dow Theory: Part I Views: (57998)

Share and Enjoy

For the last month and a half, the Chinese giant China Res-Land has been on a very promising road upwards.  Exactly at the end of the last month, for some obscure reason, she went off her beaten track and broke her uptrend.  In 3 days of trading she lost more than 8%.  Quickly the M.A.C.D Histogram made a dive under the zero mark, a clear sell signal.  The RSI also shows this with its own sell signal after dipping below 50% to selling territory.  This is not however a short-sell yet as she has to pass a strong support at 14.0.  But, keep watching this lady, and if she breaks 14.0, the short-sell would then be indicated.

This is way the Chart looks:

Popular Posts:

• The Euro Is Bottoming Out Against the Japanese Yen Views: (67865)
• Why China is Winning the Economic War Views: (66068)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)
• The Dow Theory: Part I Views: (57998)

Share and Enjoy

Here is Frankfurt’s one and only INFINEON TECH, who has recently started a new upwards trend.  Upon first glance at the chart below, it is my gut reaction to say “good time to buy”  because it has indeed hit the supporting upwards trend line and should be at an optimum price for a strong buy.  But technical factors, and too many of them, are in the way.

For one, a very natural line can be drawn above the current trend.  This and the line of the trend itself form a pattern we call an opening fan.  These can become unstable as they run their course and for the short term, these 6 weeks are enough.  The pattern is expected to break soon and it will probably be in the downwards direction because several technical factors are here to influence this.

For one, the Moving Average 5 has been crossed by the MA 21 and the MA 13 is on its way to do the same.  Five days ago the Directional Movement DI+(blue) crossed the DI-(pink) going downwards, a clear sell signal.  And the Price Oscillator shows a slope down to zero and heading into negative territory, this being another strong sell signal.  Add to this failure to be supported at current levels, and the fact that the nearest support below is at 4.43, about 10% below current market price, and here you have a good case for a sell-short position on this darling equity.

This is the way the Chart looks:

Popular Posts:

• Why China is Winning the Economic War Views: (66068)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)
• The Dow Theory: Part I Views: (57998)

Share and Enjoy

With the stock market lurching again, plenty of investors are nervous, and some are downright bearish. Then there’s Robert Prechter, the market forecaster and social theorist, who is in another league entirely.

Mr. Prechter is convinced that we have entered a market decline of staggering proportions — perhaps the biggest of the last 300 years. In a series of phone conversations and e-mail exchanges last week, he said that no other forecaster was likely to accept his reasoning, which is based on his version of the Elliott Wave theory — a technical approach to market analysis that he embraces with evangelical fervor.

Originating in the writings of Ralph Nelson Elliott, an obscure accountant who found repetitive patterns, or “fractals,” in the stock market of the 1930s and  -40s, the theory suggests that an epic downswing is under way, Mr. Prechter said. But he argued that even skeptical investors should take his advice seriously.

“I’m saying: ‘Winter is coming. Buy a coat,’ ” he said. “Other people are advising people to stay naked. If I’m wrong, you’re not hurt. If they’re wrong, you’re dead. It’s pretty benign advice to opt for safety for a while.”

His advice: individual investors should move completely out of the market and hold cash and cash equivalents, like Treasury bills, for years to come. (For traders with a fair amount of skill and willingness to embrace risk, he suggests other alternatives, like shorting the market or making bets on volatility.) But ultimately, “the decline will lead to one of the best investment opportunities ever,” he said.

Buy-and-hold stock investors will be devastated in a crash much worse than the declines of 2008 and early 2009 or the worst years of the Great Depression or the Panic of 1873, he predicted.

For a rough parallel, he said, go all the way back to England and the collapse of the South Sea Bubble in 1720, a crash that deterred people “from buying stocks for 100 years,” he said. This time, he said, “If I’m right, it will be such a shock that people will be telling their grand kids many years from now, ‘Don’t touch stocks.’ ”

The Dow, which now stands at 9,686.48, is likely to fall well below 1,000 over perhaps five or six years as a grand market cycle comes to an end, he said. That unraveling, combined with a depression and deflation, will make anyone holding cash “extremely grateful for their prudence.”

Mr. Prechter is hardly the only market hand to advocate prudence now, but nearly everyone else foresees a much rosier future, once current difficulties are past.

For example, Ralph J. Acampora, a market analyst with more than 40 years of experience, said he moved entirely out of stocks and into cash late last month. Now a partner at Alverita, a wealth management firm in New York, he said recent setbacks suggested that the market would drop another 10 or 15 percent, probably until September or October, before resuming another “meaningful rally.”

Over the next several years Mr. Acampora expects an “old normal market,” characterized by relatively short-lived swings that will provide many opportunities for smart investors — one that resembles the markets of the 1960s and 70s. “I’ve lived through it,” he said.

Like Mr. Prechter, he is a past president of the Market Technicians Association, the leading organization of technical market analysts, and he said that his colleague has done “some very good work.” But Mr. Acampora doesn’t agree with Mr. Prechter’s long-term theories, either intellectually or emotionally.

The “mathematics don’t work,” Mr. Acampora said, because such a big decline would imply that individual stocks would need to trade at unrealistically low levels. Furthermore, he said, “I don’t want to agree with him, because if he’s right, we’ve basically got to go to the mountains with a gun and some soup cans, because it’s all over.”

Still, on a “near-term” basis, he said, “We’re probably saying the same thing.”

Similarly, Larry Berman, who co-founded ETF Capital Management in Toronto and recently ended his term as the president of the technicians association, says he sees a “classic” short-term negative market trend developing now. But he doesn’t use the Elliott Wave theory, saying Mr. Prechter is trying to “measure the market in decades, which is too long a time frame for practical trading purposes or for risk management.”

Mr. Prechter, 61, lives in Gainesville, Ga., where he runs Elliott Wave International, a forecasting and publishing firm. He graduated from Yale as a psychology major in 1971,dabbled as a singer, drummer and songwriter in a rock band and became a technical analyst for Merrill Lynch.

He became fascinated by Mr. Elliott’s writings, which suggest that the market moves in predictable if complex patterns. Along with A. J. Frost, Mr. Prechter wrote “Elliott Wave Principle,” a 1978 book that predicted the emergence of a great bull market — a forecast that was largely fulfilled. By 1987, he was widely regarded as an expert in technical analysis. Articles in The New York Times said he was known as “the market’s leading technical guru” — and more. An article in October that year said he had “emerged as both prophet and deity, an adviser whose advice reaches so many investors that he tends to pull the market the way he has predicted it will move.”

He has far less day-to-day influence now, after years spent developing a theory he calls “socionomics,” which holds “social moods” as the cause not only of market cycles but also of economic and political events. A grand cycle is ending, he says, and the time for reckoning is near.

In 2002, he published “Conquer the Crash,” which predicted misery ahead. Even so, he said in 2008 that the market would soon rally sharply — then said late last year that stocks were about to fall and that the great decline would resume.

Since 1980, the advice in his investing newsletters, when converted into a portfolio, has slightly underperformed the overall stock market but has been much less risky, losing money in only one calendar year, according to calculations by The Hulbert Financial Digest. Mr. Prechter said he disagreed with the methodology used in these measurements, but offered none of his own.

For his part, Mr. Acampora says that the Elliott Wave has some validity as an indicator but that “it’s only part of the story” of technical market analysis, which also needs to be buttressed by economic and fundamental research.

Mr. Prechter says his unifying theory, socionomics, is a “young science.”

“We’re quantifying it,” he said. “We’re working on it.” In the meantime, he contends, it has enabled him to “look around the corner” and prepare for a dangerous future.Popular Posts:

• The Euro Is Bottoming Out Against the Japanese Yen Views: (67865)
• Why China is Winning the Economic War Views: (66068)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• The Dow Theory: Part I Views: (57998)

Share and Enjoy

The Dow Theory is a major corner stone of  Technical Analysis.  It is one of the oldest and best known methods used to determine the major trend of stock prices.  It was derived from the writings of Charles H. Dow as published in the newspaper he founded, “The Wall Street Journal”.  It was later refined further by analysts and writers during the first few decades of the 20th century.

Seven Basic Principles of Dow’s Theory:

The Dow Jones Industrial Average and the Dow Jones Transportation Average reflect all information, experience, knowledge, opinions and activities of all stock market investors.  Therefore, everything that could possibly affect the demand for or supply of stocks is not worthy of consideration.
There are 3 trends in stock prices.  The Primary Tide is the major long-term trend.  But no trend moves in a straight line for long, and therefore there come up Secondary Reactions in the form of intermediate-term corrections that interrupt and move in an opposite direction against the Primary Tide.  Within these are Ripples, or minor day-to-day fluctuations that are or concern only to short-term traders and not Dow Theorists at all.
When the Primary Tide is upward pointing, this is also known as a “Bull Market”, there are usually three upwards pushes in stock prices.  The first move up is the result of far-sighted investors accumulating stocks at a time when business is slow but anticipated to improve.  The second move up is a result of investors buying stocks in reaction to improved fundamental business conditions and increasing corporate earnings.  The final upwards push occurs when the general public finally notices that all the financial news is good.  During this move there is usually rampant speculation seen.
When the Primary Tide is downward pointing, this is also known as a “Bear Market”, there are usually three downwards pushes in stock prices.  The first push down occurs when far-sighted investors sell based on their experienced judgment that high valuations and booming corporate earnings are unsustainable.  The second move down reflects panic as a now fearful public dumps at any price the same stock they just recently bought at much higher prices.  The final push down results from distress selling and the need to raise cash.
The two Averages must confirm each other.  To signal a Primary Tide Bull Market major trend, both Averages must rise above the latest highs made by their previous Secondary Reactions.  To signal a Primary Tide Bear Market major trend, both the DJIA and DJTA must drop below their last Secondary Reaction lows.  One average meeting these conditions alone in meaningless,  but it is not uncommon for one Average to signal a change in trend before the other, with no set time limit as to when the second Average gives the trend confirmation.
Only end-of-day, closing prices on the Averages are considered.  Intra-day price movements are ignored.


The end of  a Primary Tide is confirmed only after being signaled by both Averages.


The next article will focus on some of the shortcomings of this Historic Theory.Popular Posts:

• The Euro Is Bottoming Out Against the Japanese Yen Views: (67865)
• Why China is Winning the Economic War Views: (66068)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)

Share and Enjoy

Goldman Sachs’ disastrously unfortunate year is halfway over, and questions about its conduct during the credit crisis linger on Wall Street and in Washington. The firm has made plenty of money, of course, amid the political criticisms and federal investigations questioning its ethics and business practices. But Goldman has lost something money can’t buy, something vital that must be reclaimed. And it isn’t just a big chunk of its reputation that’s at stake. Goldman has lost that special something that has always made its long-term greediness, to use a late chairman’s phrase, seem special, and that made the firm appear smarter than other banks. Indeed, that quality helped Goldman command top dollar, euro and yen for its services. Now, Goldman seems to be in danger of being viewed like any other bank, except somehow suspect for performing too well during the credit crisis. Wall Street knows any investment professional who is any good at what he does encounters potential conflicts, and the expectation is that those conflicts should be handled appropriately. If Goldman proves to have failed in this regard, its stock (ticker: GS), recently at $132, could be taken down a few more notches.

The shares already have been bashed, having fallen 23% during the past two years. They are wilting ahead of the second-quarter earnings release, scheduled for July 20. Analysts are lowering earnings estimates, and expectations suggest even Goldman’s stable of star traders had difficulty, like everyone else, making money in the second quarter.

As this harsh year for Goldman began, the bank seemed unable to extricate itself from a leading role in a polarizing post-credit-crisis news cycle. At the time, Goldman was preparing to pay $16 billion in staff bonuses, which indicated political tone-deafness and an arrogance that seemed to bode poorly as the financial crisis entered the recrimination phase that always occurs after Main Street has lost a lot of money on Wall Street.

There are always rumors that Goldman — which might have done absolutely nothing wrong, remember — will settle some sort of case with federal investigators, which could boost its stock price.

Goldman could say something on its earnings call that makes its troubles seem manageable, or it could even reveal massive profits and an optimistic view of the future that overshadows everything. In the markets, making lots of money always does that.

But, most likely, Goldman will end the call with a reputation that still isn’t commensurate with its distinguished past. Fixing Goldman’s public image is a huge challenge for the company’s chief executive, Lloyd Blankfein. For now, Goldman seems destined to remain Wall Street’s version of Humpty Dumpty, who, as everyone knows, suffered a big fall.

Should all the king’s horses and all the king’s men fail to put Goldman’s reputation together again, Blankfein will preside over a company that has become like any other bank, and that could be quite bad as Wall Street seems more and more like an assembly line.Popular Posts:

• The Euro Is Bottoming Out Against the Japanese Yen Views: (67865)
• Why China is Winning the Economic War Views: (66068)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)

Share and Enjoy

Brazilian share prices closed higher yesterday because of the rising global commodities prices. The benchmark Ibovespa stocks index closed 1.4% higher than the previous days close at 64,442 points. Volumes were at the usual level for this season.  Volumes were reduced yesterday by Brazil’s participation in World Soccer Cup play in South Africa, with most investors watching the televised game rather than the Ibovespa index.

Brazilian shares, meanwhile, rose in yesterday’s trading together with global commodities prices. Rising metals and oil prices contributed directly to the bottom line of major Brazilian exporters. Locally, the market was positively influenced by Brazilian President Luiz Inacio Lula da Silva’s decision to veto portions of a bill that would have increased long-term costs to the nation’s pension system. They also hailed Finance Minister Guido Mantegas pledge to maintain the governments’ 2010 fiscal goal of a surplus equal to at least 3.3% of gross domestic product. At the end of trading, Raw Materials and Telecommunications sector stocks were among leading gainers. Mining giant Vale rose 1.2%, southern steel maker Gerdau went also higher, rising about 1.8%.  The Telecommunications Industry leader Tele Norte Leste rose 2.6%. Despite a rise in global oil prices Brazil’s government-controlled energy giant Petrobras, ended lower, dropping less than 0.2%.  Aircraft manufacturer Embraer, rose at least 0.6% Mining utility Cemig advanced up about 2.0% to close at 25.40.Popular Posts:

• The Euro Is Bottoming Out Against the Japanese Yen Views: (67865)
• Why China is Winning the Economic War Views: (66068)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)

Share and Enjoy

Last week’s volatility in global stock markets appears to have resolved positively, and the Dow Jones Industrial Average is very close to confirming key reversal signals that could prompt a recovery of up to 7% from current levels to the 10,920.3 level.  Last week’s bullish engulfing candle (see the weekly chart below) provides the catalyst for the optimistic outlook.  This weekly candle was preceded by a sharp 68.2% Fibonacci Correction bouncing off the April high, and can be seen as a three-pronged minor correction phase.  Check out the Weekly Chart below.

This is the way the Weekly Chart looks:

A mere 87 points stand between 10,211.1 and the 10,298.2 level needed to be broken in order to leave the 9757.5 low behind and written to history. It is this event that would create the opportunity for a recovery to 10,920.3.  Please check the Daily Chart below.

This is the way the Daily Chart looks:

Popular Posts:

• The Euro Is Bottoming Out Against the Japanese Yen Views: (67865)
• Why China is Winning the Economic War Views: (66068)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)

Share and Enjoy

As I have written on a few occasions in the past on the Market Snapshots Category, the S&P 500, or “The World’s Barometer” can usually succeed in showing the trends the markets may be taking and give a glimpse into what may lye ahead for the World’s Financial Markets as well as the Global Economic Markets as a whole.  It seems that the worst may be over now for the US Markets and the World’s Economies as the SPX, after topping out in late April, forming a solid U top, is now signaling a clear bottom both with a double bottom on the Daily Chart below, and a major Japanese Candlestick OKR, an engulfing pattern as shown on the Weekly Chart at the bottom and explained in my OKR Tutorial.

This is the way the Daily Chart looks:

This is the way the Weekly Chart looks:

Popular Posts:

• The Euro Is Bottoming Out Against the Japanese Yen Views: (67865)
• Why China is Winning the Economic War Views: (66068)
• The S and P 500 Showing a Major Topping Pattern Views: (65177)
• US Dollar–Head And Shoulders Above the Crowd Views: (63804)
• China Res-Land: The Big Giant Goes Astray Views: (58773)
• A Market Forecast That Says ‘Take Cover’ Views: (58565)

Share and Enjoy