Friday, June 25, 2010

What's Ahead for Gold, Oil, and S&P

It’s been a crazy week for gold, oil, and the S&P 500 again. Since the market top in April we've seen large moves almost every day in the market. I'd say this is one of the toughest times for traders as you must be very quick to enter and exit if you want to lock in any profits. Good news is that things should start to smooth out in the next week or so if stocks kick into rally mode.

I've made a video of this week's price action showing how I see the market, what I think it's about to do, and what to be aware of. Click here to watch video.

Firms Furiously Buy Back Shares to Prop Up Stock Price

U.S. companies are showing they want to buy back their own shares at the highest rate in months as record levels of cash pile up on balance sheets.

Companies recently announced 27 new buyback programs in a week totaling $18.5 billion, the most since February, according to data from TrimTabs.

"We've seen a pretty big decline in share price, so companies are trying to prop them up, and these announcements are one way they can do that," David Santschi, an analyst at TrimTabs, told the Financial Times.

"The spike is highly unusual for June, which is not an earnings announcement month. That's a bullish sign." (more)

Wanna Buy An Island ?

Desperate attempt to repay debts also driven by inability to find funds to develop infrastructure on islands.

There's little that shouts "seriously rich" as much as a little island in the sun to call your own. For Sir Richard Branson it is Neckar in the Caribbean, the billionaire Barclay brothers prefer Brecqhou in the Channel Islands, while Aristotle Onassis married Jackie Kennedy on Skorpios, his Greek hideway.

Now Greece is making it easier for the rich and famous to fulfill their dreams by preparing to sell, or offering long-term leases on, some of its 6,000 sunkissed islands in a desperate attempt to repay its mountainous debts. (more)

Deutsche Bank: U.S. Financial Conditions Just Collapsed Back To Crisis Levels

Deutsche Bank has a new and improved index of U.S. financial conditions, and this index just slumped back towards the lows of our recent crisis.

Deutsche Bank's Peter Hooper:

Financial conditions appear to have worsened substantially in recent quarters based on our update of the broad index of US financial variables presented earlier this year at the US Monetary Policy Forum. In the wake of recent developments in Europe, increased stress in financial markets has pushed that index halfway back to its immediate post- Lehman crisis lows. (more)

Headwinds & Market Messages

The stock market for the past year has been supported by numerous economic and financial tailwinds that have helped propel it to retrace a significant portion of the 2007-2009 decline, roughly a 61.8% Fibonacci retracement for the S&P 500. That said many of the prior tailwinds have become headwinds leading to a deceleration in stock prices. Looking at various indicators suggests that these headwinds are likely to continue through the bulk of 2010 and implies a potential economic growth scare. Moreover, with a slew of potential market wild cards (BP oil spill, Euro debt crisis, China economic deceleration, US state fiscal nightmares) filling the investment landscape it would not take much for a growth scare to turn into a double-dip recession. Clearly the time to be bullish was in 2009, while at the present time capital preservation is likely to be the order of the day. (more)

The future of oil is the future of the gulf

Oil looks terrible right now. And while nobody wants to need what's gushing into the gulf, poisoning marine life and coating the coasts, our way of life depends on it. In fact, the U.S. needs the oil from the Gulf Coast and the jobs that deepwater drilling generates so badly, we can't afford to pause long enough to overhaul the regulators.

On May 30, President Obama issued a six-month drilling moratorium in the gulf, as recommended by Secretary of the Interior Ken Salazar. On June 7, a company called Hornbeck Offshore Services, which transports people and supplies for deepwater-drilling companies, led the charge challenging the moratorium. (more)

No Recovery in Real Estate

Pound reaches 19-month high against euro

The pound has hit a 19-month high as debt concerns weigh down on the euro.

It touched 1.2222 euros on Thursday, its highest since the immediate aftermath of the financial crisis in November 2008, before dropping back.

Markets continue to worry about the European debt crisis, with the perceived risk of a default by Greece hitting an all-time high.

Leading shares across Europe lost ground, with the UK's FTSE and Germany's Dax indexes down about 1.5%. (more)

Drowning in Debt? Dave Ramsey's Advice for Lightening the Load

Dave Ramsey is a high-octane personal finance guru who advises people on how they can get out of debt.
His advice is simple: Come clean, cut up your credit cards and take back your life.

In a segment that aired this morning on on "Good Morning America," the radio talk show host revisited nine people who had gotten his straight-talk advice about their debt troubles last year, checking up on them to see how they were doing.

When Ramsey met with them in January 2009, he learned that they collectively owed more than $260,000 -- not including their mortgages.

Inspired by Ramsey's advice, they've paid off more than $140,000 of their debt -- despite divorce, illness and the daily challenges of sticking to strict budgets in a tough economy. (more)

Funds versus ETFs

There are individuals who approach investing with a broad base of knowledge and experience. Some have plenty of time to pour over quarterly company statements, technical charts, economic data and to listen on conference calls. Others would rather do something else with their time in much the same way we don’t all spend evenings reading ‘dentistry for dummies’ so that we can perform our own root canal next week. And just so we’re sure on this point, the time limitation to going through all these exercises applies to the majority of financial planners and advisers too. For this reason, and because all investment platforms have to share one thing in common – diversification – the choice for many is to create diversification using the broadest investment products available. In other words, mutual funds and exchange traded funds (ETFs). (more)

Chart of the Day